Trump’s New Executive Order Poses a Threat to California’s Climate Goals

April 16, 2025 TruthUSA

Analysis

Former President Donald Trump has expressed his plans to dismantle California’s cap-and-trade program, which serves to generate revenue for the state while also aiming to cut down greenhouse gas emissions. If the Trump administration succeeds, it could significantly undermine California’s efforts to lead in climate change policies, depriving various state initiatives of crucial funding, although success is far from certain.

Cap-and-trade is a market-based approach favored by several economists for reducing pollution. Rather than imposing strict emission bans or setting fixed limits on pollution outputs for individual companies, the state establishes an overall emissions cap and auctions permits that allow companies to emit a portion of these total emissions.

The Legislative Analyst’s Office (LAO) reports that the program raises approximately $4.4 billion each year on average. As per existing legislation, certain state programs automatically receive a portion of these funds; however, both the governor and the legislature can choose how to allocate some of these resources each fiscal year.

A significant share of these funds is targeted at decarbonizing the transportation sector. In Gov. Gavin Newsom’s 2025–2026 budget, $936 million is designated for California High-Speed Rail, $374 million for the Transit and Intercity Rail Capital Program, and $187 million for Caltrans’ Low Carbon Transit Operations Program, as reported by the LAO.

If the Trump administration manages to abolish cap-and-trade, the effects would be particularly detrimental to the High-Speed Rail project. This program already struggles with funding issues for completing the route from Merced to Bakersfield by the early 2030s. During this administration, the likelihood of securing new federal grants appears slim, and the Department of Transportation may seek to retract federal grants promised during the Biden era. This scenario positions cap-and-trade funds as the only dependable source of revenue for high-speed rail. Without these funds, the project could face delays until a Democrat is back in the White House or might even be completely scrapped.

As previously mentioned, I believe that California’s High-Speed Rail initiative misuses taxpayer dollars and should be terminated, thus a win for the administration on this matter could be considered beneficial.

Other transit initiatives backed by cap-and-trade funding also raise questions. Many local transit expansion projects are not only expensive and slow to complete but also result in only minor increases in ridership after they are finished. Additionally, transit operations, due to their reliance on costly and inflexible unionized labor, are inefficient and could benefit from streamlining if state funding decreases.

While cap-and-trade itself is not necessarily a flawed concept, channeling funds from productive sectors into inefficient projects turns the California program into a net liability. Therefore, a federal challenge to the cap-and-trade initiative should be welcomed.

Nonetheless, this challenge may not succeed. In an executive order issued by Trump on April 8, he directed Attorney General Pam Bondi to “identify all State and local laws, regulations, causes of action, policies, and practices (collectively, State laws) burdening the identification, development, siting, production, or use of domestic energy resources that are or may be unconstitutional, preempted by Federal law, or otherwise unenforceable.”

At the beginning of his order, Trump singled out California’s program, stating that it “punishes carbon usage by instituting unattainable caps on the carbon levels businesses can use, effectively coercing them into paying substantial fees to ‘trade’ carbon credits to satisfy California’s extreme requirements.”

If Bondi opts to revoke cap-and-trade, she should brace for a vigorous defense from the state government, which had previously allocated funds to contest the Trump administration’s actions.

During Trump’s last term, the Department of Justice (DOJ) attempted and failed to dismantle the cap-and-trade program. In 2019, the DOJ filed a lawsuit, arguing that California overstepped federal authority by implementing its program alongside the Canadian province of Quebec. However, a District Court judge ruled in favor of California.

The DOJ later appealed to the Ninth Circuit Court, but prior to the case being heard, Trump lost the 2020 election, leading to Joe Biden taking office. As the Biden administration endorsed California’s climate policies, the DOJ dropped the lawsuit. Consequently, the District Court’s determination became final, as the legal principle of res judicata (claim preclusion) prohibits the reassessment of that issue.

This indicates that Bondi will need to devise a new justification for invalidating the cap-and-trade program and persuade judges that her arguments are robust. Since she would be starting from scratch, the new administration might have the opportunity to escalate the issue to the Supreme Court, which is expected to maintain a conservative majority at least until 2029.

It is likely that litigation surrounding California’s cap-and-trade initiative will persist throughout the second Trump administration, evolving into one of the many legal conflicts between the federal executive and California state government.

The opinions stated in this article are those of the author and do not necessarily reflect the views of The Epoch Times.

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