California lawmakers are looking for ways to respond after President Donald Trump signed a new budget bill that removes key clean energy incentives. The bill eliminates tax credits that were meant to support large-scale solar and wind projects, home energy improvements, and electric vehicle purchases.
According to Politico, the situation has created a difficult choice for California officials who now must decide between maintaining strict environmental standards and keeping clean energy projects moving forward. With state budgets already tight, replacing these federal incentives seems unlikely.
Clean energy supporters are now pushing California lawmakers to reduce environmental regulations to speed up project approvals. Senator Scott Wiener, who leads the Senate Budget Committee, suggested that clean energy projects might need to be exempt from the California Environmental Quality Act (CEQA), a law from 1970 that often slows down construction in the state.
New federal deadlines put pressure on clean energy projects
The new federal budget bill sets strict deadlines for energy projects. They must either start construction by July 4, 2026, or begin operating by the end of 2027 to receive federal support. These timelines are particularly challenging for California, which is known for its slow construction processes. According to POLITICO, 60 California projects that haven’t started construction might lose their tax breaks.
California doesn't have weekly blackouts or brownouts like Trump claims That's an exaggeration outages happen occasionally due to wildfires or heat waves, but nothing routine or widespread in 2025. The grid's actually hit clean energy highs without collapsing Truth over hyperbole
— Les (@BarfieldLe72032) July 8, 2025
Some progress has already been made with a recent bill that exempts certain projects from CEQA, including wildfire prevention work, high-speed rail, and factories for semiconductors and electric vehicles. However, environmental groups have expressed concerns about these changes, arguing they weaken important environmental protections.
Environmental organizations say they support faster development of clean energy projects but worry about potential negative effects. Bill Magavern from the Coalition for Clean Air emphasized that any streamlining should only apply to truly clean technology projects.
The state is also considering increasing support for electric vehicle buyers after the federal government eliminated a $7,500 tax credit. Governor Gavin Newsom has suggested using money from the state’s cap-and-trade program for new EV incentives. However, this might be difficult as $1 billion from this program has already been allocated to the state’s firefighting agency, from a total annual fund of about $4 billion, adding to the economic pressures facing California families already dealing with high costs.
