America has never achieved prosperity through regulation or taxation. Instead, our greatest advancements—from industrial revolutions to space exploration—have come by empowering innovators, rewarding risk-takers, and leveraging market competition. The same is true for meeting our energy needs and climate ambitions.

If we want to lead the world in reducing emissions while securing economic growth and energy security, we must replace the stick with the carrot. Overregulation, top-down mandates, and punitive taxes may win headlines, but they rarely produce scalable, lasting results. A smarter approach lies in pro-growth policies rooted in behavioral economics and free-market principles.

Incentives Work. Punishment Backfires.

When it comes to decarbonizing oil and gas, heavy-handed regulation often stifles innovation, triggers defensive behavior, and creates unnecessary friction between industry and policymakers. In contrast, open markets and pro-growth tax policies that treat all industries equally will drive down costs, accelerate the adoption of clean technologies, and lead to improved environmental performance.

Behavioral economics tells us why. People respond more reliably to rewards than threats. Framing choices around potential gains rather than losses—such as immediate expensing for innovative technologies or faster permitting for verified low methane intensity—generates participation and results. It motivates companies to compete on performance, not just compliance.

Let the Market Compete on Environmental Excellence

Imagine if energy producers were publicly ranked on verified emissions data and offered performance-based tax relief or royalty discounts. Top performers would win new investors, better financing terms, and government procurement preferences, while underperformers would face escalating costs. That’s not punishment; that’s capitalism working as intended.

This approach works because it aligns business incentives with public goals. Companies have every reason to invest in leak detection, electrify equipment, or plug abandoned wells if those actions directly enhance their valuation and lower their tax burden. Instead of bureaucratic mandates, we offer a clear and measurable pathway to success in both the marketplace and the carbon economy.

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Data-Driven, Voluntary, Verified

A robust incentive framework starts with credible, standardized data. Programs like MiQ or OGMP 2.0 already certify methane performance; building on these, we should establish a voluntary “Gold Standard” certification, backed by federal recognition and tied to tangible benefits such as reduced royalties, accelerated permitting, and preferential access to government contracts.

Moreover, high-integrity carbon credits—especially those using empirical methodologies like BCarbon—can be further scaled with multipliers. A federal registry would ensure transparency, quality control, and broad market access. By embedding performance in every aspect of policy—taxation, procurement, insurance, permitting—we encourage the best behaviors without heavy-handed rules.

Why This Matters Now

The stakes are higher than ever. Global energy demand is growing fast, and the U.S. must remain the leader in both supply and sustainability. If we surrender our competitive edge to countries with weaker environmental standards, the planet won’t win—emissions will shift, not stop.

And let’s be clear: being pro-decarbonization is not the same as being anti-industry or anti-consumer. We can cut emissions, drive innovation, provide affordable energy, and enhance energy security all at once. But it requires abandoning ideological rigidity and embracing the economic principles that built this country.

A Better Path Forward

The U.S. should lead by example—not through mandates, but through markets. Let’s reward those who do the right thing, accelerate those willing to change, and invite innovation through competition. That’s how we turn a global challenge into a domestic growth opportunity—and how we make sure the 21st century belongs to us.

By Dan Romito, Managing Director, Pickering Energy Partners

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.