Climate change has posed increasing challenges for decades. In the United States, federal and state regulations and stakeholders have evolved to address the effects of human activities, climate change and climate risks—including rising global temperature, heatwaves, wildfires, sea level rise, higher rates of precipitation and extreme weather events. These regulations focus on reducing greenhouse gas (GHG) emissions, improving reporting systems, and accelerating the deployment of clean technologies in both public and private sectors. In this article, we review the regulatory timeline, highlight key legislative milestones, and discuss the impacts on energy markets, businesses, and consumers. We also draw comparisons with United Nations, European approaches and review emerging proposals that aim to enhance both emissions controls and climate change mitigation.
Historical Evolution
The Clean Air Act (CAA), first enacted in 1963 and amended in 1970, 1977, 1990, and 2022 has been a cornerstone of U.S. environmental policy. Initially designed to control the concentration of criteria pollutants like sulfur dioxide and particulate matter, its scope later expanded to include GHGs that drive global temperature increases, effect human health, various ecosystems and influence climate change impacts. A 2007 Supreme Court decision (Massachusetts v. EPA) mandated the Environmental Protection Agency (EPA) to regulate carbon dioxide (COâ‚‚) and other GHGs, marking a turning point in federal climate policy.
Key Milestones
- 2007: The Supreme Court ruling spurred the EPA to include GHGs under the CAA, recognizing climate risks and the increase in average temperatures, which increases the frequency of heatwaves, wildfires, and extreme weather events with higher amounts of precipitation
- 2010–2011: The EPA set the first vehicle greenhouse gas emissions standards, aimed at reducing overall emissions and mitigating the long-term impacts of climate change.
- 2022: The Inflation Reduction Act clarified that carbon dioxide is a pollutant covered by the Clean Air Act.
- 2025: The Trump Administration announced an open portal for polluters to request a presidential exemption from the CAA.
Impacts Across Sectors
- Energy Markets: Federal emissions standards have shifted investments from coal toward natural gas and renewables.
- Business Operations: Companies face higher compliance costs but also benefit from long-term efficiency gains. Many have invested in cleaner technologies to manage climate risks and remain competitive.
- Residential Consumers: Stricter standards and improved energy efficiency programs lower utility bills over time and enhance energy resilience against heatwaves and extreme weather events.
- Environmental Benefits: Reduced emissions contribute to improved air quality and a slower rate of global temperature increases, which is crucial for mitigating sea level rise and other climate change impacts.
Overview of the Clean Power Plan (CPP)
The Clean Power Plan was a rule under the Clean Air Act. Introduced in 2015, the CPP was a cornerstone of the Obama Administration’s strategy to reduce carbon emissions from power plants, particularly those reliant on coal. The plan sought to set state-specific targets and encouraged a shift towards cleaner energy sources and a low-carbon economy.
The CPP faced substantial legal challenges and opposition from states and industries that viewed it as an overreach of federal authority. The plan was ultimately repealed and replaced by less stringent measures called the Affordable Clean Energy Rule under the first Trump Administration.
The Biden Administration introduced the Clean Power Plan 2.0 in 2024 to reinstate stringent emissions control measures for power plants and to reduce the concentration of air pollutants. The Supreme Court halted implementation of the CPP 2.0 and it has not been implemented. Since then, the second Trump Administration has again promised to fight against the CPP 2.0.
Impact on Energy Markets and Business Operations
Although neither CPP was ever fully implemented, its proposal influenced market trends by accelerating the shift from coal to renewable energy sources. Many power companies and stakeholders began modernizing their infrastructure in preparation for the CPP, including transitioning to cleaner technologies and diversifying their energy portfolios. Investments in wind, solar, and battery storage technology increased in anticipation of stricter emission standards. However, regulatory uncertainty has led to volatility in energy markets overall.
GHG Reporting Program
In addition to emission standards, federal regulations require industries to report their GHG emissions. The EPA’s Greenhouse Gas Reporting Program (GHGRP) is a key component of these transparency initiatives, established to provide detailed data on emissions from large industrial sources.
Timeline and Implementation
- 2009: The GHGRP was initiated to help track GHG emissions from large facilities, serving as a foundation for future regulatory actions.
- Updates and Revisions: The program has undergone several revisions to incorporate new metrics, adjust reporting thresholds, and enhance the granularity of emissions data.
- Current Emphasis: Today, the GHGRP continues to be critical for tracking progress toward national emissions targets, informing both policy decisions and business strategies.
The Inflation Reduction Act of 2022 includes significant clean energy provisions aimed at reducing greenhouse gas emissions and accelerating the transition to renewable energy. The IRA was projected to reduce U.S. greenhouse gas emissions by about 40% by 2030 compared to 2005 levels. It is considered the most significant climate change legislation in U.S. history, aiming to stimulate clean energy growth, create jobs, and reduce climate risks while promoting energy affordability and resilience.
Major Provisions:
1. Clean Energy Tax Credits
- Production and Investment Tax Credits: Extended and expanded tax credits for solar, wind, geothermal, and other renewable energy projects.
- Clean Hydrogen and Carbon Capture Credits: Incentives for clean hydrogen production and carbon capture utilization and storage (CCUS).
- Nuclear Power Support: Credits for existing nuclear plants to maintain low carbon and clean energy generation.
2. Electric Vehicle (EV) Incentives
- Consumer Tax Credits: Up to $7,500 for new EVs and $4,000 for used EVs, with income and vehicle price limits.
- Domestic Manufacturing Requirements: Vehicles must meet battery material and assembly sourcing standards to qualify.
3. Clean Energy Manufacturing
- Advanced Manufacturing Credits: Support for companies producing solar panels, wind turbines, batteries, and critical minerals.
- Energy Community Investments: Enhanced credits for projects in former fossil fuel communities.
4. Residential Energy Efficiency
- Home Energy Rebates: Financial support for low- and middle-income households to upgrade to energy-efficient appliances and improve home insulation.
- Solar and Battery Storage Incentives: Expanded residential clean energy tax credits covering rooftop solar, battery storage, and heat pumps.
5. Methane Emissions Reduction
- Methane Fee: Imposes a fee on excess methane emissions from oil and gas operations, encouraging emissions reductions.
- Monitoring and Mitigation Support: Funding for monitoring technology and leak detection.
6. Clean Energy Investments and Loans
- Green Banks: $27 billion allocated to finance clean energy projects in underserved communities.
- Loan Guarantees: Support for large-scale energy infrastructure projects.
7. Environmental Justice and Community Support
- Equity-Focused Investments: Grants and tax credits to support clean energy projects in disadvantaged communities.
- Energy Transition Assistance: Programs to support workers and communities impacted by the transition away from fossil fuels.
Trump Funding Freeze
The Trump Administration has frozen funding for some programs within the IRA since coming into office in 2025. The federal loans and grants have been immediately impacted, while other IRA programs have been rumored to see changes in the coming months and years.
Pioneering Policies
California has long been a leader in climate change regulation. Its policies not only target emissions reductions but also drive mitigation strategies against weather variability, extreme heat and wildfires.
- Global Warming Solutions Act (AB 32): Passed in 2006, AB 32 set a goal to reduce GHG emissions to 1990 levels by 2020. It mandated detailed emissions reporting and spurred the creation of a cap-and-trade program.
- Cap-and-Trade: Launched in 2013, California’s market-based system provides flexibility for achieving emissions targets while funding mitigation and low-carbon initiatives.
- Vehicle Emission Standards: Among the nation’s strictest, these standards have pushed the auto industry toward electric vehicle (EV) production, reducing overall emissions and the impacts of fossil fuel use.
Climate Accountability Package
In 2023, California enacted a series of climate-related disclosure laws collectively referred to as the Climate Accountability Package. This package includes SB 253 and SB 261, which mandate comprehensive disclosures about GHG emissions, climate-related financial risks, and the use of voluntary carbon offsets. These laws apply to certain public and private U.S. companies operating in California, with the goal of enhancing transparency and accountability in corporate climate actions.
- Climate Corporate Data Accountability Act (SB 253): mandates that U.S. corporations with annual revenues exceeding $1 billion and conducting business in California must annually report their global GHG emissions. This includes direct emissions (Scope 1), indirect emissions from purchased energy (Scope 2), and all other indirect emissions in the value chain (Scope 3). The reporting requirements commence in 2026.
- Climate-Related Financial Risk Act (SB 261): requires large companies operating in California to biennially report their climate-related financial risks. This legislation aims to provide transparency on how climate change may impact a company’s financial health and operations.
New York’s Ambitious Targets
New York has emerged as a key state in climate change leadership, particularly through the Climate Leadership and Community Protection Act (CLCPA) of 2019.
- Emission Reduction Targets: The CLCPA calls for an 85% reduction in GHG emissions by 2050, combining aggressive emissions controls with significant mitigation investments.
- Renewable Energy Investments: The state promotes offshore wind, solar power, and battery storage to diversify its energy mix and reduce dependency on fossil fuels.
- Economic and Social Benefits: The legislation emphasizes community investments, addressing both climate change impacts and the social dimensions of climate risks, such as human health and public health issues arising from extreme weather patterns.
Other State-Level Efforts
Several states—including Massachusetts, Washington, and Colorado—have enacted policies that prioritize energy efficiency, detailed emissions reporting, and renewable energy incentives. Despite variations in scope and stringency, these policies share common goals:
- Mitigation of GHG Emissions: Local initiatives often exceed federal standards to directly tackle regional climate risks.
- Enhanced Transparency: Many states have implemented mandatory reporting systems to track emissions and hold companies accountable.
- Support for Clean Technologies: State-level incentives and grants have bolstered the development of technologies such as electric vehicles, smart grids, and energy storage solutions.
The European Union has long been recognized for its robust climate policies, which are much stronger than U.S. federal policy.
- Emissions Trading System (ETS): The EU ETS is one of the world’s largest cap-and-trade programs, effectively capping total emissions and promoting reductions through market-based mechanisms. Its success has influenced similar programs in the U.S., such as California’s cap-and-trade.
- Renewable Energy and Efficiency Directives: EU policies require member states to achieve specific renewable energy targets and improve energy efficiency. These directives have helped stabilize global temperature increases and mitigate extreme weather events.
- Integrated Approach: The EU’s holistic framework—combining market mechanisms, strict standards, and technology incentives—provides a model for aligning emissions controls with mitigation strategies.
- The Corporate Sustainability Reporting Directive (CSRD) is a key piece of European Union legislation that requires companies operating within the EU to report GHG emissions and other climate change impacts of their businesses under a double materiality standard. Double materiality means that firms must report on how sustainability factors impact both finances and the environment. The CSRD positions the EU as a global leader in corporate sustainability reporting, driving greater accountability and promoting sustainable business practices.
Additionally, outside of the EU, there are also governing bodies within the United Nations that are also focused on taking steps to address the ways human activities affect human health, ecosystems, air quality, air pollution, global warming, and carbon dioxide levels in the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) is a governmental body within the United Nations that helps governments adopt responsible policy making that is oriented towards mitigating the effect of climate change.
The evolution of climate change regulation in the United States is characterized by a mix of federal and state-level policies that target both emissions reductions and broader mitigation strategies. The Clean Air Act laid the foundation for reducing air pollution to mitigate the effects of climate change—such as rising global temperature, heatwaves, sea level rise, and extreme weather patterns. Recently the Inflation Reduction Act directed significant funding towards renewable energy. However, in the U.S., it is often the individual states that are driving climate change regulation forward. As the federal policymakers continue on a pendulum of progressing and retracting climate policy, state leaders like California and New York have aggressive local standards and market-based mechanisms for climate action.