President Trump has successfully initiated an aggressive dismantling of federal climate policies, laws and regulations early in his second term. Executive orders have weakened the Environmental Protection Agency, suspended support for clean energy infrastructure, and introduced legal threats against state-administered carbon pricing systems. Concurrently, the administration has curtailed access to public climate data and disbanded scientific advisory boards. Congressional allies have supported the agenda, notably by repealing California’s EPA waiver and retracting core Inflation Reduction Act (IRA) tax provisions—an action with disproportionate negative consequences for clean energy deployment in Republican-leaning states. Finally, passage of the “One Big Beautiful Bill” eliminates tax credits in much of the clean energy sector inclusive of transportation and electricity production. One clean energy sector that remains fully supported by the federal government is the biofuels space, conditional upon domestic feedstock production, which is consistent with the Trump Administration’s stated policy of supporting American farmers. These developments represent a wholesale U.S. federal retreat from climate policy, which dramatically sharpens the divide between federal action and state policy. Across polling data, state initiatives, and international frameworks, the evidence suggests that U.S. isolation is the exception, not the rule. This issue examines three core dimensions of this divergence:

Survey data indicate broad public misalignment with federal rollback efforts. According to Yale and George Mason University’s Climate Change in the American Mind: Spring 2025 report, 79% of registered voters support remaining in the Paris Agreement, and 75% support regulating carbon dioxide as a pollutant. The same report showed support for clean energy development remains widespread across party lines: 74% favor increased renewable energy use, 64% identify clean energy as a top federal priority, and a majority of conservative Republicans oppose the dismantling of science-based climate programs.

State-level carbon markets remain fully functional and resilient with each of the three markets trading at prices based on each of their own fundamental and State policy drivers. In Washington State, the June 2025 Cap-and-Invest auction cleared at $58.51, with compliance entities purchasing 93% of available allowances. Secondary market prices exceeded $60, marking a high not seen since 2023. In the northeastern U.S. RGGI market, the June auction cleared at $19.63, with full subscription and continued participation by compliance entities [Washington Auction #10 Summary, June 2025; RGGI Auction #68, June 2025].

California’s cap-and-trade program is advancing through the legislature with a bill to extend statutory authority through 2045. This is expected to be passed by September 2025 and signed by the Governor no later than October 2025.  Should it successfully pass, the California Air Resources Board (CARB) is expected to commence with the formal regulatory rulemaking to further tighten the market immediately following the extension, which  would reinforce market stability and emission reductions over the long term.

New entrants to the carbon market ecosystem are also notable. New York State is scheduled to implement its own cap-and-invest program in 2026 following a one-year delay (similar to the one-year delay that California experienced prior to the start of its program in 2012). And Colorado’s emissions trading framework is now operational. Meanwhile, the expansion of state low-carbon fuel standards (LCFS) seems more and more likely: eight states, including Minnesota, Illinois, and New Jersey, have introduced LCFS legislation that could expand clean fuel policy coverage to 30% of U.S. gasoline and 25% of diesel consumption [Pillsbury, 2025].

International trends suggest continued movement toward formalized carbon pricing mechanisms. No country joined the U.S. in exiting the Paris Agreement in 2025. At COP29, countries adopted final rules for Article 6.2 and 6.4, enabling both bilateral emissions credit transfers and the launch of a UN-administered crediting platform. As of mid-2025, roughly 100 bilateral credit transfer agreements have been executed [World Bank, State and Trends of Carbon Pricing 2025].

Global direct carbon pricing coverage rose to 28% from 24% year-on-year, with meaningful progress in middle-income economies such as Brazil, India, and Turkey. Compliance-market retirements tripled, and governments raised over $100 billion in carbon-related revenues in 2024, more than half of which were earmarked for energy transition or public infrastructure programs [World Bank, 2025].

Further, President Trump fueled victories of climate-friendly leadership in Canada (Market Carney led the Liberal Party to a minority government victory, winning 168 seats and just shy of the 172 seats required to form a majority government) and Australia (The Australian Labor Party gained seats in a landslide re-election). These new governments will continue and likely strengthen their current climate programs (as per their constituents’ wishes) instead of rolling them back.

Conclusion: The White House is out of step. The data is clear. Federal retreat has not dampened global climate ambition or slowed state-level momentum. Furthermore, U.S. public opinion is not on the side of this Administration when it comes to climate policy. If anything, the current administration has served as a counterweight that galvanized broader commitment. Climate policy today is not a top-down mandate; it is being carried forward by bottom-up consensus—in state legislatures, boardrooms, bilateral treaties, and carbon markets. ECP looks forward to continuing our participation in many of the existing markets and looks forward to investing in several pending markets.

Sources:

Yale Program on Climate Change Communication and George Mason University, Climate Change in the American Mind: Politics & Policy, Spring 2025

World Bank, State and Trends of Carbon Pricing 2025

Washington Department of Ecology, Auction #10 Summary Report, June 2025

RGGI Inc., Auction #68 Results, June 2025

Pillsbury Law, "Eight States Eye Low Carbon Fuel Standard Legislation" (2025)