Generic Hero BannerGeneric Hero Banner
Latest market news

Environmental markets wary of Trump's next moves

  • Market: Electricity, Emissions
  • 28/04/25

US President Donald Trump's recent threat of legal challenges against state climate and clean energy policies has roiled environmental markets waiting to learn the scope and avenues those confrontations could take.

Trump's 8 April executive order, which directed the Department of Justice (DOJ) to consider contesting state policies that threaten "American energy dominance", targeted California's cap-and-trade program by name, but it may also extend to other policies, including renewable portfolio standards (RPS). But uncertainty about the extent of the administration's ambitions has injected another variable into an already volatile economic landscape.

Market anxieties may not fade soon. US attorney general Pam Bondi has until early June to report on actions she has taken and make recommendations for other steps by the White House or Congress. Conservatives in some states already have asked her to scrutinize particular programs.

Administration arguments

One angle from which the DOJ could attack state programs is the well-trod "dormant Commerce Clause", a legal doctrine that says state laws cannot discriminate against or impose undue burdens on another state's economic activity. But such a challenge is more difficult if a program is merely stipulating, "if you want to come to our state, our electricity market or our fuel market, here are the rules to play by", according to Matthew Dobbins, a partner at Vinson & Elkins and member of the law firm's environment and natural resources team in Houston.

Courts have dismissed lawsuits that tried this approach against low-carbon fuel standards in California and Oregon, as well Colorado's RPS. In addition, an appeals court last year threw out a case against Washington's cap-and-invest program, ruling it did not overstep in its handling of in-state versus out-of-state electricity suppliers. The US Supreme Court may soon decide whether to hear an appeal of the case.

More broadly, a 2023 Supreme Court decision upholding a California law restricting interstate pork sales based on animal treatment makes such dormant Commerce Clause challenges "a lot harder", according to Nico van Aelstyn, partner at Sheppard Mullin in San Francisco.

The DOJ could try using the "Equal Sovereignty" doctrine, which stipulates that one state's rights cannot exceed another's, van Aelstyn said. This has been used in cases against California's vehicle emissions standards and other states' climate "superfund" laws, which penalize oil and gas companies for historical emissions. But van Aelstyn described it as "not really tested yet."

That administration has also been hoping to fast-track Supreme Court rulings on the executive orders by justifying them through "declared emergencies," according to Dobbins.

This use of emergency powers will likely reveal how far the court will go to "pressure test" the administration's requests for speedy judicial relief, as justices work through a growing emergency docket through the end of term in June or July.

Relitigating the past

Amid growing trade tensions between the US and Canada, the DOJ could also revive a 2019 lawsuit against California's cap-and-trade program.

A US district court at the time ruled that federal purview over foreign affairs does not preempt the state linking its program with Quebec's. Although the first Trump administration appealed the ruling, former president Joe Biden withdrew the case, leaving the matter undecided with one claim potentially still ripe for judicial review.

"What that'll probably come down to is how much Canada has expressed its anger . . . and if the administration is willing to go 'all in' on trying to provoke one of our largest trading partners," Dobbins said.

But even if California severed ties with Quebec, the province is a small part of the market, and its absence is unlikely to cripple the state's program.

Meanwhile, in the markets…

Trump's executive order has put states and US companies alike on the back foot, adding to a "shock and awe" barrage from tariffs and potential rollbacks to federal clean electricity incentives, said Tom Harper, a partner on consultant Baringa's energy advisory team in New York City.

That volatility has led clean energy developers and buyers to hold off on decisions until they have a bit more stability.

"You're almost in a state of paralysis because you can't go and deploy a team on a project. You can't go and arrange finance because the cost is moving day to day," Harper said.

The tariffs have also fed growing concerns about the US economy, which have spilled into environmental markets. The California Carbon Allowance (CCA) market, already a bit bearish because of ongoing delays to planned program changes, plunged the day after Trump's executive order. Argus assessed CCAs for December delivery that day at $26.74/t — at the time their lowest price since November 2022. The lack of certainty around federal legal developments continues to whittle away at bullish signals, leaving market participants to wait for a clear outcome.

Adding another layer of uncertainty is the fact that disputes may spill outside of the court system. Following the same logic as of Trump's "national energy emergency", the US Federal Energy Regulatory Commission (FERC) could hypothetically issue an emergency order to halt carbon and clean energy programs. The recent resignation of a Democratic commissioner, giving Trump the ability to install a Republican majority, could facilitate that pathway. But using FERC to shutter these programs would be on weak legal footing, van Aelstyn said.

The Trump administration has no issue using extrajudicial tools to enforce its policies, such as its January pause on federal funding that left states like California — which receives more than $100bn in backing and grants from the US government each fiscal year — grappling with potential budget holes. Two federal courts have said the administration must dole out the funds, but agencies have been slow to comply.

"If they can withhold congressionally appropriated research funds for universities because they don't like their policies with regard to free speech on their campuses, what else might they do?" van Aelstyn said. "Withhold Medicaid funding to states where they don't like their renewable energy standards?"


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
22/05/25

Brazil senate passes environmental licensing bill

Brazil senate passes environmental licensing bill

Sao Paulo, 22 May (Argus) — Brazil's senate approved a bill that aims to standardize and, in some cases, speed up environmental licensing that the oil industry has blamed for slowing exploration projects . The bill, which the senate approved Wednesday in a 54 to-13 vote, aims to create national standards for environmental licensing, with the goal of simplifying the process for projects that have a limited environmental impact. The bill also aims to create a new type of environmental license for projects that are considered government priorities. These projects would be subject to a more simplified licensing process that would take one year at most. The creation of a new type of licensing for these projects would potentially facilitate oil exploration in the Amazon, the senate said. The change comes as state-controlled Petrobras pushes to begin offshore drilling in the environmentally sensitive Foz do Amazonas offshore basin . The bill would also exempt agricultural projects from obtaining environmental licensing but would continue to require farmers to obtain authorization to remove native vegetation. It also allows small- and medium-sized projects to self-declare their environmental commitments, without the need to have a proper license. Senator Eliziane Gama criticized that proposal, using the disaster in the Brumadinho dam — which burst in 2019 and was considered a medium-sized project — as an example. Brazilian energy think tank Instituto Acende called the bill an important milestone for Brazil, adding that if approved, it would "reduce legal uncertainty, administrative inefficiencies, and obstacles to sustainable development". Environmentalists slammed the proposal, with Observatorio do Clima calling it the "greatest attack on environmental legislation in four decades". The legislation would approve nearly all new projects without environmental impact studies, the group said. The bill will now return to the lower house because senators altered the original text. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

UK N2EX peak-load discount reaches record in May


22/05/25
News
22/05/25

UK N2EX peak-load discount reaches record in May

London, 22 May (Argus) — Peak-load power on the UK's N2EX day-ahead spot market has cleared at its widest discount to the base load this month, driven by rising solar generation and falling national demand. The N2EX has cleared at £75.92/MWh ($85.66/MWh) for base load so far this month, while peak-load hours have delivered at £70.23/MWh. This is on track to be the widest peak-base discount on record in the UK, surpassing the peak discount of £4.40/MWh in August last year — which came amid record low peak demand for the month and unseasonably strong wind output. UK solar generation has averaged 7GW in peak hours so far this month, up from 6.2GW last month and 4.7GW in May last year. In these hours, solar has accounted for around 22.5pc of domestic generation, the highest share for any month on record. Embedded solar output during peak hours for the remainder of the month is currently forecast at 6.1-10.4GW, peaking on 23 May and bottoming out on 24 May. And national demand is forecast to range 16.0-22.4GW over the same period, with peak demand ranging 14.1-23.9GW. Solar output is on track to generate more power than gas-fired units during peak-load hours for the second time on record after August last year. Gas-fired generation has been 6.2GW in peak-load hours so far this month, around 800MW below solar. In comparison, peak-load gas burn was just 50MW below solar in August last year. The rise in solar generation has also continued to weigh heavily on the UK's net imports in the hours around midday. Net imports during base-load hours have stood at 3.9GW so far this month, down from 4.3GW in April and well below 4.8GW in May last year. Imports have only been around 4.6GW in settlement periods 27-28, between 13:00-14:00 local time, below 5.9GW during the same interval last year and 5.1GW in 2023. A decline in peak-load demand compared with previous years has also weighed on power prices in these hours. UK national demand has been 22GW so far in May, the lowest for the month aside from May 2020. But demand in peak hours has been around 200MW lower than in May 2020 at 21.7GW, while late-night and early morning demand has been 1GW above 2020 levels. This has largely been driven by a rapid increase in embedded solar for self-consumption in recent years, which could accelerate further with the recently passed Great British Energy Act, allocating £200mn for rooftop solar and other renewable energy schemes in 7,000 schools, hospitals and community buildings. The bulk of solar installations in the UK are between 0-4kW, totalling 1.4mn as of March and equivalent to 4.2GW, or 23pc of the UK's total solar capacity, government data shows. Some 73pc of the new solar installations in March were on residential buildings, adding a total of 68MW. And 3.3GW between transmission and distribution-connected solar projects won contracts for difference in the last allocation round held last year. Almost 1.1GW of this is due on line in 2026-27 and 2.2GW in 2027-28. By Timothy Santonastaso N2EX monthly peak-base spread £/MWh May solar output GW Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US could undermine global climate co-operation: Podesta


22/05/25
News
22/05/25

US could undermine global climate co-operation: Podesta

London, 22 May (Argus) — The global climate community will have to pay close attention to the fact that the administration of US president Donald Trump "may do whatever they can to undermine global co-operation in the energy transition" in forums such as the G7 and the UN Cop 30 climate summit, former US government climate advisor John Podesta told the Financial Times Climate and Impact Summit Europe today. "I hope people will resist them," he said, after pointing out that during Trump's first term, the US administration was "essentially… passive" on the climate on a global stage. Podesta said that through Trump's attacks on former president Joe Biden's clean energy-supporting Inflation Reduction Act , the US has "handed a victory particularly to China". The act had become an energy transition model around the world, Podesta said, pointing to the EU's Green Industrial Deal. "The way to decarbonise and deal with climate change is through investment, innovation and technology… and what we have done is thrown in the towel and thrown in the hand", he said. "There was I think, bi-partisan consensus in the US and consensus in Europe that we need to react to [China's domination in the green industry sector]," he added, saying that there is an economic security dimension with leaving China in a dominant position. Clean energy deployment in the US is likely to stay robust in the short term, he said. Some Republican state governors have raised objections to the administration's rollback of clean energy support, but business investing in that area is keeping its collective head down, Podesta said, largely because "the administration has been engaged in a process of intimidation". Podesta said that there remains significant sub-national action in the US, but warned that the Trump administration is trying to undermine that too. The administration has moved to "attack the underlying science" and the "human capital" in institutions such as US climate and weather agency the National Oceanic and Atmospheric Administration, Podesta said. "If you eliminate all the information sources maybe the problem goes away", he added. The government has already pulled the US out of the Paris climate agreement and could withdraw from the UN Framework Convention on Climate Change (UNFCCC) — the UN's climate body. But there are legal issues around this, including whether the government may need a "supermajority" in the Senate, Podesta said. "The law has not been a constraint on this government," Podesta added. By Georgia Gratton, Caroline Varin & Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

European Parliament adopts carbon border changes


22/05/25
News
22/05/25

European Parliament adopts carbon border changes

Brussels, 22 May (Argus) — The European Parliament today approved changes to the bloc's carbon border adjustment mechanism (CBAM) that are estimated to exempt 90pc of importers from the measure, linked to the EU emissions trading system (ETS), although a final legal text still needs to be agreed with EU member states. The parliament adopted by a large majority the European Commission's proposal, with a minor amendment to clarify that CBAM covers electricity importers but not power generated "entirely" in the European Economic Area (EEA) countries Iceland, Liechtenstein and Norway and imported to the EU. These countries are covered by the EU ETS. The adopted text also confirms the start date for CBAM certificate sales as 1 February 2027, pushed back from 2026 previously, to "address significant uncertainties related to the year 2026". Parliament said the new de minimis mass threshold of 50t would exempt 90pc of importers from the CBAM. The commission designed the changes to continue to cover the bulk of CO2 emissions from imports of iron, steel, aluminium, cement and fertilisers. Most fertiliser imported to the EU is in the form of bulk shipments, which are well above 50t. Russia earlier this week launched a formal dispute procedure at the World Trade Organisation against CBAM as an "alleged export subsidy". By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Iraq signs integrated energy deal with China’s Geo-Jade


22/05/25
News
22/05/25

Iraq signs integrated energy deal with China’s Geo-Jade

Dubai, 22 May (Argus) — Iraq's oil ministry has signed an agreement with China's Geo-Jade Petroleum and local firm Basra Crescent to expand the capacity of the 20,000 b/d Tuba oil field and develop a suite of downstream and power assets, in a move that mirrors recent integrated energy deals with international partners. A key component of the South Basrah Integrated Energy Project will be to raise Tuba's production capacity to 100,000 b/d, oil minister Hayan Abdulghani said at the signing ceremony in Baghdad on 21 May. The project will also include processing of up to 50mn ft³/d of associated gas. Downstream components include a 200,000 b/d refinery, a 620,000 t/yr petrochemical plant and a 520,000 t/yr fertilizer facility. A 650MW thermal power plant and a 400MW solar plant will also be part of the project, Abdulghani said. No financial details or project timelines were disclosed. The agreement marks a further step in Geo-Jade's expansion in Iraq, following its successful participation in the country's fifth and sixth licensing rounds. While the company now holds multiple upstream assets in Iraq, it has yet to bring any into production. The deal follows a similar multi-billion dollar agreement signed with TotalEnergies in 2023 , which bundled gas processing, water treatment and solar power with development of the Ratawi field. In February this year, BP signed a major upstream deal with Iraq that also includes power, water and potentially exploration. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more