State lawmakers around the country are negotiating budgets for the coming year amid unprecedented uncertainty. Any decisions they make now about how to spend state money may need to be revisited after Congress finishes its budget reconciliation bill, which could hollow out Medicaid, the largest pot of federal funds that most states receive.
On the climate and clean energy front, the Trump administration has been trying to claw back money allocated to states for electric vehicle charging, home energy retrofits, electric school buses, utility bill assistance, and more. Even longstanding tax credits that states rely on to transition to renewable energy are at risk. On top of all this, the president has threatened to sic his attorney general on states with ambitious climate policies.
I wanted to know how all of this was affecting the way the most forward-thinking state leaders on climate were contemplating their next steps. States passed some of their most ambitious policies to fight climate change during Donald Trump’s first term as president, and they are the best chance the U.S. has to continue making progress over the next four years. But if last time the administration was throwing sand in the gears of climate action, this time it’s trying to tear up the road entirely.
After talking to state senators and representatives in Washington, Massachusetts, New York, and New Jersey, it was clear that every faced its own unique set of considerations and challenges, but there were a few recurring themes.
The cap and trade conundrum
“We’re in this weird no-man’s land,” New York State Senator Liz Krueger told me. Between losing access to funds the state was relying on and uncertainty around how the Trump administration will reshape environmental protection and clean energy tax credits, “the agenda we might have set out for ourselves a year ago does not necessarily jive with the reality we must now confront.”
Krueger was frustrated because New York has been in the process of developing a new revenue-raiser to help pay for climate programs called Cap-and-Invest, but it’s behind schedule. Eventually it will place a cap on carbon emissions from major polluters and charge them fees when they surpass it — but draft rules for the program are more than a year overdue. Governor Kathy Hochul has not said when her administration will get them out, and environmental groups are now suing the state for putting its climate targets at risk.
The delay has been “quite aggravating,” Krueger told me. But at the same time, she’s worried that if and when the regulations are out, the Trump administration will try to shut down the program. Trump signed an executive order in early April directing his attorney general to identify and “stop the enforcement” of state climate programs that “are or may be unconstitutional.” The order specifically called out California’s carbon cap and trade program, which is similar to the one New York is developing.
“I don’t think we should stop moving forward as planned. But I think hanging over us is the concern that the feds will try to stop us,” Krueger said. She hasn’t sensed much appetite in the legislature to propose new climate programs this session, but she said she’s still hoping to get through a bill that she’s sponsored for the past few years requiring utility regulators to develop a strategy to transition buildings away from using natural gas for heating — although again, she wondered aloud if Trump would quickly try to shut it down.
Washington State, on the other hand, already has a cap-and-invest program in place. Representative Joe Fitzgibbon, of Seattle was the most optimistic of the state legislators I spoke to. “Our legal framework for fighting climate change was not predicated on federal dollars,” he told me. Last year, the state spent nearly half a billion dollars raised through that program on a wide range of projects to enhance wildfire prevention, improve energy efficiency in schools and homes, install electric vehicle chargers, and electrify buildings and vehicles. “We’re not backing off on any of our policies or any of our targets,” he said.
Fitzgibbon was unconcerned about the executive order. Legal experts are skeptical that the courts would side with the White House in any challenges to state climate laws. Trump also went after California’s cap and trade law during his first term and lost. “We think it’s bluster. We think it’s him trying to get headlines, and we’re just not inclined to fan the flames,” he told me.
Instead, Fitzgibbon is pushing forward with a bill this session to strengthen the state’s clean fuel standard. Current law requires a 20% reduction in greenhouse gas emissions from on-road transportation by 2034, and his amendment would increase that to between 45% and 55% by 2038.
Climate goals in jeopardy
New York is also behind on its goal to procure 9 gigawatts of offshore wind by 2035. The state only has power purchase agreements with three offshore wind farms — the small South Fork project, which is already operating, and two larger ones under construction — for a total of 1.8 gigawatts. Then shortly after Krueger and I spoke, the Trump administration issued a stop work order on one of those bigger projects, Empire Wind. Since Trump has also paused federal permitting for new offshore wind projects, Krueger wasn’t sure whether New York officials would even try to solicit for additional contracts. “There’s no good answers,” she said, with a sigh.
Offshore wind is a major element of New Jersey’s plans to cut emissions, as well. But the Trump administration recently pulled the permits for the Atlantic Shores wind farm, the only project serving New Jersey that had said permits.
State Senator Andrew Zwicker told me the sector was already struggling due to rising costs, supply chain issues, and local opposition. Even before Trump came into office, he said, he’s had to fight to keep renewable energy on the agenda. “There is a narrative that we can’t afford renewables, and that the way to go is you need resiliency and redundancy. And the only way to do that is, in our case, with natural gas,” Zwicker told me. He hears that story from Republicans — but also, increasingly, from Democrats. “That’s being driven by the cost of electricity more than it’s being driven by an executive order from Trump,” he added.
Some cash is safe
There is one source of funding for climate action that all states have access to that may be more impervious to federal interference. This came up during my call with Michael Barrett, a State Senator in Massachusetts, who asserted that “most of our climate policies don’t require budgeting.” That’s because the legislature has designed many of the state’s clean energy programs — including the buildout of electric vehicle infrastructure, rebates for heat pumps and energy efficiency, and compliance with the state’s renewable energy standard — to be funded by fees on monthly electric and gas bills.
Massachusetts is still really early in its legislative calendar — it operates on a two-year schedule and has barely started holding hearings for bills — but Barrett said there are some strategic shifts the state should make in light of Trump’s actions. For example, Trump has stymied offshore wind development, but Barrett said there was less the president could do to hurt solar. “So if you want to preserve the state’s industrial clean energy capacity,” he said, “you pivot to both behind the meter and in front of the meter solar on the ground, on the roofs, on canopies.” He also advocated for more subsidies for EV charging infrastructure rather than for electric vehicles themselves. “You forgo subsidizing individual drivers,” he said. “Many of them will purchase EVs anyhow, because they can afford to, and you focus on getting the charging infrastructure into the ground.”
All of the other state legislators I surveyed for this piece have similar programs financed through utility bills. In general, utility regulation is an area where state leaders have significant sway. In New Jersey, for example, Senator Zwicker is working on a bill that would require utilities to invest in “grid enhancing technologies,” equipment that enables power lines to transmit more electricity without having to totally replace the line or build a new one. That could go a long way to bringing more renewable energy online in the future. In New York, Krueger’s big priority for this year is to pass her New York Heat Act, which would significantly change how gas utilities are regulated, prioritizing transitioning away from gas to electric heating, and cutting the subsidies that customers pay to expand the gas system.
Budgets are wearing thin
Though Barrett saw the ability for states to tack the cost of clean energy onto utility bills as reassuring, Zwicker found it concerning. “Every year, I personally have gotten more and more uncomfortable with putting everything on the backs of ratepayers,” he told me. “And we don’t have another model in place right now, so there’s no way to do anything else.”
New Jersey is facing many of the same challenges as New York and Massachusetts. The state’s economy has also taken a downturn, Zwicker told me, and budgets are tight. Governor Phil Murphy has proposed cuts to many areas, including climate spending. Zwicker said one of his big focuses right now is finding money to help low-income customers pay their utility bills, as the Trump administration is attempting to zero out federal funding for a longstanding energy assistance program.
New Jersey does have some money coming in for clean energy through utility bill fees, and it also funds climate action with proceeds from the Regional Greenhouse Gas Initiative, a program that charges power plant operators for their emissions. (Massachusetts and New York participate as well.)
But Zwicker was deeply concerned about the loss of federal funding and support. “New Jersey just can’t afford to do this by itself,” he told me. Electricity costs there are already among the highest in the country. “This is a national emergency, and the federal government has got to be a strong partner. Regardless of the fight over how we’re producing energy, if we can’t transmit it, if we don’t have a robust grid, that is as basic an infrastructure as is a highway or a bridge. Under this administration, it’s far from clear that they’ll put a penny towards anything around energy, period.”
Even Washington is not quite sitting pretty. Like New Jersey, the state is in a “pretty severe budget crisis,” Fitzgibbon said, and not in a position to backfill lost federal dollars. Its economy has taken a downturn after a post-pandemic spike. One thing the legislature is doing in response is re-allocating money in the budget that in the past had been set aside for technical assistance to help households, businesses, and Tribes apply for government grants — since federal dollars will likely be scarce, anyway. While the state can still make progress with its cap and invest funds, which can’t be re-allocated to other budget lines, grant funding from the Inflation Reduction Act would help the state cut emissions faster and more cost-effectively, he said. Washington was in line to get $71 million for electric vehicle charging and $21 million for truck charging, for example, but the Trump administration is trying to claw back that funding.
Limited optimism
At the end of my interviews, I asked lawmakers what they wanted people to know about what it’s like to do their jobs right now. Zwicker emphasized the sheer scale of the challenge of putting together a budget — especially one that advances climate action — under these circumstances. “Being part of a committee to put a budget together is always a challenge,” he said, “but when you add the threat of over a billion dollars of cuts to our school children, up to $10 billion to $14 billion of cuts for healthcare for seniors and the poor, and then you say, we need to continue to push on New Jersey’s clean energy goals, and get ourselves off of our addiction to fossil fuels, it’s an incredibly challenging task.”
Barrett wanted to make it clear that climate progress would continue under Trump. He said that even if Medicaid was gutted, the state’s efforts to cut emissions would suffer less than local public education — again, because so much of it is financed and implemented through utility regulation. “He can do a great deal of harm, but he cannot kill the resistance to climate change,” Barrett said of Trump. “We would have to play catch up in a big way after he left, but I suspect that we’re going to have to play catch up anyway.”
A chart shows the diverging output for gas and solar.EIA