In his second term, President Trump has so far largely succeeded in dismantling federal climate regulations. This includes greenhouse gas (GHG) emission standards from stationary sources (for example, power plants) and mobile sources (particularly vehicles) from both the Obama and Biden administrations. Even more importantly, the Supreme Court’s conservative majority has ruled to limit EPA’s ability to regulate GHGs, and they are likely to take this a step further in an ongoing case on the Biden administration’s 2024 rule.
These developments will all but cut off EPA’s future ability to revive GHG regulations as they have existed under Section 111 of the Clean Air Act. In the absence of any federal regulations on GHG emissions from the power sector, this would open up the possibility for federal common-law lawsuits against GHG emitters—which would be costly for utilities to manage—and would also likely result in an inconsistent patchwork of state climate regulations.
We believe that the future of climate policy will rely on Congress adopting new approaches, likely relying more on the kinds of subsidies and incentives for low-carbon energy that made up the Inflation Reduction Act (IRA).
GHG Regulations Have Come and Gone
In 2009, the Obama administration issued the Endangerment Finding, asserting that greenhouse gases can be regulated under the Clean Air Act as a result of the 2007 legal finding in Massachusetts v. EPA. This court decision held that greenhouse gases are a threat to public health and welfare. The Endangerment Finding formed part of the legal basis for the GHG standards for power plants and much of the legal basis for GHG emissions standards on vehicles.
The Supreme Court has ruled that strategy went beyond the Environmental Protection Agency’s (EPA) authority; the court is likely to determine the same thing about the Biden administration’s 2024 rule. On top of these court decisions, the first and second Trump administrations have taken every opportunity to roll back climate-focused regulations implemented by their Democratic predecessors.
Any attempt to overcome the obstacles established by the Supreme Court and the Trump administration to effectively regulate GHG emissions will force Congress to take the lead in creating new authorities for the EPA to regulate GHGs from power plants or create an alternative approach to federal climate policy such as a cap-and-trade program or expanding clean energy subsidies similar to those in the IRA. We believe regulations on vehicle emissions are headed in a similar direction.
Power Plants
The Supreme Court has steadily chipped away at the EPA’s authority to regulate greenhouse gases (GHG) as a pollutant under Section 111 of the Clean Air Act. First to come before the court was the Obama administration’s Clean Power Plan (CPP). The CPP was finalized in 2015 and would have set state-by-state power sector GHG emissions reduction targets based on “generation shifting,” or changing the generation mix in the power sector from coal to gas and to renewables. The rule was stayed by the Supreme Court and ultimately never went into force. Then, in 2022, the court ruled it invalid, holding that the EPA lacked clear authorization from Congress to require generation shifting and could only regulate “inside the fenceline” of a power plant.
A challenge to the Biden administration’s rule establishing GHG standards for power plants also appears likely to reach the court in coming years. This litigation is centered around whether carbon capture and storage (CCS) can fairly be used as the best system of emission reduction (BSER) in the rule. Although CCS is “inside the fenceline”, challengers argue that the technology is not adequately proven to be used as a BSER. If the Supreme Court were to rule in favor of the challengers, it would likely foreclose the possibility of EPA using CCS as a BSER, eliminating the last strong option for GHG regulation under Section 111 of the Clean Air Act.
The Trump administration is not waiting while that case moves through the courts. In June 2025, the EPA formally proposed repealing the Biden administration’s 2024 GHG standards on power plants. The GHG standards repeal appeared on the most recent update to the Unified Agenda, with EPA indicating that it plans to finalize the repeal this summer. This was followed by the February 2026 rollback of the Endangerment Finding.
Transportation
The Trump administration’s efforts to block regulators from addressing the impact of vehicle emissions on climate have been no less aggressive and are hastening a tear-down of current vehicle regulations. While Trump declined to revoke the Endangerment Finding in his first term, the EPA moved quickly to revoke it in his second alongside a roll-back of all GHG regulations from light-, medium-, and heavy-duty vehicles.
While Trump’s EPA was unsuccessful in revoking California’s waiver to establish its own more stringent transportation emissions regulations in his first term, in his second the administration found an easier path: using the Congressional Review Act (CRA), a tool meant to block single regulations rather than upend settled law. These strategies are being litigated and are likely to wind up before the Supreme Court.
Limits on California’s authority, and that of other states who can choose to follow California’s emissions standards, escalated in mid-2025 when Senate Republicans used the CRA to overturn the Advanced Clean Trucks (ACT) and the Advanced Clean Cars II (ACC II) rules, which would have allowed California to set emissions limits stricter than federal standards on vehicles and promote vehicle electrification.
Congress is now considering stamping out any possibility of California reviving its authorities by considering revoking all waivers that have allowed for vehicle emissions regulations since 2009, a stretch for a mechanism meant to consider recently finalized rules. Under the CRA, no rule can be imposed that is “substantially the same” as a rule struck down, making it challenging for California to enact similar programs and putting the ball back in Congress’s court should it want to allow California access to its regulatory authority.
The Future of Climate Policy Depends on Congress
Pending the outcome of litigation on the Biden administration’s power plant GHG regulations, Congress will ultimately be responsible for shaping the future of climate policy in the United States. The Supreme Court stated in West Virginia v. EPA that Congress must give EPA clearer regulatory authority when it comes to pushing for significant changes to the power sector. With both “generation shifting” and the use of CCS likely off the table to regulate power plant GHG emissions, EPA will have very limited regulatory tools available under Section 111 of the Clean Air Act. To reestablish federal GHG standards for the power sector, Congress will need to step in to grant EPA explicit regulatory authority: this could look like a clearer authority to mandate emissions reductions, or the creation of a cap-and-trade program or a carbon tax. Alternatively, Congress could go in a different direction for climate policy, such as by building on the Inflation Reduction Act of 2022 and subsidizing the construction of low-carbon power generation.
At the moment, given the current political dynamics, climate legislation would face an uphill climb to passage. Nonetheless, there is significant appetite among Democrats and some Republicans for proactive climate and clean energy policy that can survive court challenges. While we believe investors and corporations are comfortable with the current regulatory structure, they will need to follow developments closely, as the ground is likely to continue shifting.
Read more from Capstone’s Energy Team:
Plastic Recycling Mandates Face Threats While Battery Mandates Gain Steam
The EU Chemical Industry’s Looming Carbon Cost Pain and Reform Uncertainty
The European Commission’s Hydrogen Pivot
