Kate Kyriakopoulou
Shortly after the United States election results, the notorious question of how critical the turning point in U.S. climate policy is has been making its rounds. Recent legislation allocated $369 billion for climate initiatives, marking the largest climate investment in American history, but upcoming policy shifts could dramatically reshape our environmental future. During the evolving climate policy landscape, the U.S. is likely to confront essential decisions that will impact everything from energy prices to international relations.
At the forefront of sweeping changes in U.S. climate policy under the new presidency, we take a deeper look at how these shifts affect federal regulations, state-level initiatives, economic opportunities, and global climate commitments. From the potential transformation of environmental regulations to the ripple effects across clean energy markets, these policy changes will influence American businesses, workers, and communities for decades to come.
Looking at federal climate policy changes, there has been progress in environmental regulations and implementation strategies. The Biden-Harris Administration spearheaded climate action, with investments reaching $450 billion in clean energy manufacturing and deployment that created over 330,000 clean energy jobs.
However, several critical environmental protections can face potential changes, such as:
The impact is particularly notable in the energy sector, where twice as much U.S. wind, solar, and battery deployment is expected over the next seven years compared to previous projections.
Timeline for Policy Implementation
The federal government set ambitious implementation targets across multiple sectors and established clear milestones.
Impact on Existing Climate Programs
The Inflation Reduction Act, representing perhaps the largest climate investment so far, is projected to deliver 1 billion tons of greenhouse gas reductions by 2030. 75% of private clean energy investments have occurred in counties with lower-than-median household incomes, demonstrating the broad economic impact of these initiatives.
The federal government’s approach combines regulatory measures with financial incentives, including over $26 billion through the Infrastructure Act to support nature-based solutions. This comprehensive strategy encompasses funding for ecosystem restoration and for wildfire risk reduction.
With regards to state-level climate leadership, there is an unusual surge in local climate action, with 45 states plus D.C. and Puerto Rico now having developed comprehensive climate action plans. This development covers over 96% of the U.S. population, demonstrating the growing momentum in state-level climate initiatives.
The states are leveraging federal support, with the Climate Pollution Reduction Grants program providing $5 billion to states and municipalities. The impact is substantial—23 states have implemented these measures as their first meaningful climate planning efforts since 2018. Collectively, 654 priority measures across various sectors were proposed, with transportation leading the way with 190 measures across 46 plans.
Regional partnerships have yielded interesting results with the Regional Greenhouse Gas Initiative (RGGI), which includes ten northeastern states, and launched the first U.S. cap-and-trade program. The Western Climate Initiative has evolved into a reliable partnership between California and Quebec. These regional initiatives can help states extend their environmental influence through collaboration.
Despite potential tensions, there has also been progress in state-federal coordination. States representing 65% of global GDP have aligned their commitments with the 1.5-degree Celsius warming limit. The U.S. Climate Alliance, which began with just three states in 2017, has expanded to include 25 states and Puerto Rico. These states, representing 54% of the U.S. population and 57% of the U.S. economy, have committed to achieving net-zero emissions by 2050.
States continue to take bold steps with ambitious policies that often surpass federal standards. California leads this charge with stringent vehicle emissions standards that 13 other states have adopted. This state-level leadership plays a vital role in maintaining climate progress. Bottom-up leadership could reduce U.S. emissions by up to 37% by 2030.
With regards to the economic landscape of climate policy, both major challenges and opportunities are revealed. Unfortunately, climate change costs the world $16 million per hour, with projections showing average global incomes falling by 19% before 2049.
Clean energy development has also noted an increase. The U.S. investment in domestic clean manufacturing has quadrupled in the last two years. The Inflation Reduction Act has sparked over $265 billion in clean energy projects across 40 states. This shows the economic potential of climate initiatives and these investments prove most effective in lower-income areas. Private clean energy investments have reached 75% in counties with below-median household incomes.
The job market has also undergone transformations. Key impacts from the transition to a low-carbon economy that is reshaping the US workforce landscape include:
Industry Adaptation Strategies
Businesses implement innovative adaptation strategies across sectors. According to the Carbon Disclosure Project, 225 of the world’s 500 largest companies have identified climate change opportunities worth over $2.1 trillion. Industries are particularly focusing on:
The international landscape of U.S. climate policy reflects dramatic shifts in global commitments and partnerships. It is recorded that U.S. international public climate finance grew from $1.5 billion in fiscal year 2021 to $9.5 billion in fiscal year 2023.
Paris Agreement Withdrawal
When it comes to the United States’ commitment to international climate agreements, there has been a tremendous deal of volatility. More specifically, it became the first and only nation to formally withdraw from the Paris Agreement, creating ripples across international climate diplomacy. This withdrawal process, carefully structured within the agreement’s framework, required a three-year waiting period following ratification before any nation could initiate departure. The U.S. rejoined the agreement in January 2021, but the withdrawal-rejoin cycle and the approach to climate commitments are concerning and challenging due to differing leadership.
Global Climate Finance Impact
Under current leadership, climate finance commitments have shown growth.
Key developments include:
To achieve net-zero emissions by 2050 requires approximately $7.3 trillion in annual investments, totalling nearly $200 trillion. This represents an unparalleled financial challenge that demands coordinated international action.
International Partnerships
To address global climate challenges, it is necessary to actively engage in bilateral and multilateral partnerships. EPA supports these international collaborations through technical expertise and capacity-building initiatives. The United States has established agreements focusing on:
Looking ahead, there are growing geopolitical tensions as countries debate responsibility for emissions reductions. The competition is intensifying for control over resources and technologies needed for clean energy transition, particularly in developing countries, which face the most acute physical effects of climate change through 2040.
Commitments such as the US guarantee for the Asian Development Bank’s Climate Facility demonstrate dedication to global climate action, though obstacles remain in meeting the scale of required funding and maintaining consistent international cooperation.
U.S. climate policy stands at a defining moment, marked by investments and sweeping changes across federal, state, and international levels. Domestic efforts complement international commitments, demonstrated by the nearly sixfold increase in climate finance from $1.5 billion to $9.5 billion between 2021 and 2023.
Under the new presidency, energy and climate priorities might center on deregulation and a significant tilt toward fossil fuel dominance, which contrasts sharply with global and domestic efforts to address climate change through renewable energy and emissions reductions. Nonetheless, heightened global and domestic focus on climate change may present obstacles to sticking to this trajectory.
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