California lawmakers reeling from President Donald Trump’s assault on clean energy are considering a controversial strategy to keep projects on track — slashing environmental permitting further.
That plan could intensify a fight between clean energy advocates and environmentalists over the trade-offs between building fast and environmental protection that’s already playing out at home.
California officials are scrambling to respond to congressional Republicans’ budget “megabill,” signed into law Friday, which demolishes Biden-era tax credits that incentivize construction of large-scale solar and wind projects, home energy efficiency improvements and electric vehicle purchasing — centerpieces of blue states’ strategies to wean themselves off fossil fuels.
Clean energy groups say it will be impossible for California — which already faces a tight budget — to replace those incentives, and are instead pushing lawmakers to cut red tape and allow projects to get shovels in the ground faster.
They already have a champion in Sen. Scott Wiener, the influential Senate Budget Committee chair, who said in an interview Wednesday that lawmakers should consider exempting clean energy projects from the California Environmental Quality Act, the 1970 law often blamed for slowing construction in the state.
“Wouldn’t it be a tragedy for California if we lost a bunch of these clean energy projects because of a screwed-up permitting system?” Wiener said.
The megabill requires energy projects to start construction by July 4, 2026 or begin service by the end of 2027 to qualify for federal subsidies, crushing deadlines even in states that aren’t as notoriously slow to build as California. And things could get worse after hard-line House conservatives said they’d received assurances from Trump that he would further constrict the incentives.
A POLITICO analysis conducted last month as the bill was taking shape found 794 projects nationwide — including 60 in California — that had not started construction and risk losing crucial tax breaks.
“There is no sugar-coating this,” said Alex Jackson, executive director of the trade group American Clean Power-California. “This is a major setback to the affordable clean energy transition.”
Jackson said the biggest step California can take is getting out of its own way, arguing that lawmakers need to build on a bill passed last week that exempts a wide swath of projects from CEQA, from wildfire fuel breaks to high-speed rail to semiconductor and EV factories.
Environmental groups are still smarting from that effort, spearheaded by Wiener and Gov. Gavin Newsom, which they say undermined key environmental protections. Those hard feelings played out in the state Capitol last week, as Sen. Caroline Menjivar declined to support a handful of smaller CEQA streamlining bills during a committee hearing, saying lawmakers “need to tip the balance the other way now.”
Environmental groups say that they aren’t opposed to building clean energy projects faster, but are wary after the recent exemption for advanced manufacturing plants, which they argue can leach toxic waste.
“We would want any streamlining to be restricted to truly clean tech, unlike the advanced manufacturing provision just put in law,” said Bill Magavern, policy director at Coalition for Clean Air.
The discussion about where California goes next after the megabill isn’t all conflict. There’s a general agreement that the state should invest more in EV incentives after Republicans eliminated a $7,500 federal tax credit for car buyers. Newsom floated that idea in November, saying that he wanted revenues from the state’s cap-and-trade auctions to be spent on new EV incentives if the federal tax credit went away.
But that will be easier said than done, as groups fight for their piece of a finite pool of funding. Newsom and lawmakers, who are negotiating an extension of the emissions trading system, have already committed $1 billion in auction revenues this year to backfill the state’s firefighting agency, a huge chunk from a program that’s generated around $4 billion annually in recent years.
Melissa Romero, policy advocacy director for California Environmental Voters, said that using cap-and-trade dollars to support an agency typically funded by the general budget makes supporting the EV market more challenging.
“If we do support and prioritize clean air and clean cars, then that decision was counter to that,” Romero said.
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