At the time of this writing the NYS budget is two weeks late and with continued breakdowns in negotiations a final agreement does not feel close. While having an on time budget with judicious allocations is important, none of the fiscal numbers before the legislature feel “real” this year knowing that the Trump administration can withhold all federal funding to New York on a malicious whim, which is at least one third of our annual spending on the environment, education, nutritional assistance, infrastructure and Medicaid. Whatever they decide in the coming weeks and months may have to be drastically reconsidered later in the year if Trump follows through on his monetary threats.
2025 was projected to be a strong economic year for New York and Governor Hochul introduced a budget in January that reflected that strength, with $10 billion more in spending from the previous year. In the context of climate change, the FY2026 NYS budget may have been one of the last opportunities for New York State to redirect the trajectory of this global catastrophe through the leadership of our policies and the influence we have on international markets, as the tenth largest economy in the world. Unfortunately, Governor Hochul’s Executive Budget proposal, while generous on spending, delayed key steps to implement the Climate Leadership and Community Protection Act (CLCPA), largely caving to the pressure of the fossil fuel industry.
Central to meeting the emission mandates of the CLCPA is the establishment of New York’s ‘Cap and Invest’ Program, a market-based approach to reducing greenhouse gas (GHG) emissions and generating revenue to fund the clean energy transition, which includes affordability rebates to low to middle income New Yorkers. As proposed, the program would have established a sector-wide limit on pollution, created a credit-based financial incentive for businesses to reduce emissions, and reinvested the revenues back into disadvantaged communities, low to middle income households, small businesses, and decarbonization initiatives across New York. The regulations for the program were set to be finalized in the first half of 2025 and credit auctions were planned for the second half of fiscal year 2026, with a projected revenue of $1.5 billion. But instead of using the budget process to advance the final details for ‘Cap and Invest,’ Governor Hochul put the program on ice indefinitely, citing concerns for ‘affordability.’ The irony, of course, is that ‘cap and invest’ was created precisely to make energy more affordable while we transition away from increasingly erratic costs of oil and gas.
In its place, the Governor proposed $1 billion of general obligation funding under the ‘sustainable futures’ program to be spent over the next five years on decarbonization projects. While this one-time funding is welcome, it still lets polluters off the financial hook and requires the public to continue to bootstrap climate progress themselves, without mandated emission reductions. This setback is part of a repeating pattern, where the Governor heralds some major facet of New York’s climate law and then claws back its implementation at the last moment when big polluters protest. In 2023, Hochul proposed to water down the accounting measures for greenhouse gas emissions, which would have allowed for fossil fuel companies to pollute more and for a longer time under CLCPA targets.
In 2024, she suspended the ‘Congestion Pricing’ program for NYC at the 11th hour at great cost to air quality and clean transportation funding. But this unlawful, last minute gutting of the ‘Cap and Invest’ program may be the worst setback of climate progress to date, as it significantly undermines the affordability of the transition away from fossil fuels across multiple sectors, hurting working families most. In late March 2025, the Sierra Club along with a number of other organizations sued Hochul’s Department of Environmental Conservation asking the court to reinstate a workable timeline for ‘Cap and Invest’ in accordance with the provisions of CLCPA.
The ‘Cap and Invest’ program has received extensive stakeholder engagement since 2023, which includes DEC and NYSERDA conducting exhaustive modeling and outreach, garnering over 6,000 public comments and contributions from 128 organizations, with multiple hearings and public information sessions. This work is built on the comprehensive multi-year Climate Action Council process, and thousands of hours of executive staff work. The groundwork for the program is already done and ready to be implemented. By statute, the regulations for ‘Cap and Invest’ are already more than a year late. This delay undermines years of effort and collaboration which ultimately deepens the climate crisis and costs the state critical funding that could have been used to offset utility bills, decarbonize infrastructure, and support small businesses. It’s time for cap and invest to start working for all New Yorkers.
Admittedly, with the growing overreach of the Trump Administration, it is now difficult to gauge the future success of “Cap and Invest’ in a vacuum as potential federal interference intensifies. In early April, Donald Trump ordered the U.S. attorney general to identify state laws that address climate change, Environmental, Social, and Governance (ESG) initiatives, environmental justice and carbon emissions, and to take action to block them.
"Many states have enacted, or are in the process of enacting, burdensome and ideologically motivated 'climate change' or energy policies that threaten American energy dominance and our economic and national security," the order said. Trump could try and stop ‘Cap and Invest’ before it gets off the ground. In the order, Trump specifically cited laws in New York that recoup money from fossil fuel companies for their contribution to climate change and lawsuits that have sought to hold energy companies accountable for their role in global warming.
Hochul has apparently been caught in the middle. Her progressive base desperately wants her to fulfill the mandates of New York’s ambitious Climate Law and the Trump administration is threatening to dismantle it, or at the very least withhold federal funds if she does not capitulate. To date, Hochul has remained defiant to the demands on both sides. But her rebuke of the Trump administration has been far stronger than her hand wringing about fulfilling our climate obligations. Ideally, at some point soon, she will realize that the “pressure from the left” is actually “support from her base” and that she will find strength in advancing all that Trump seeks to destroy, while providing a pathway forward for an affordable and equitable renewable New York.
The good news is that Hochul will have new talented leadership on her team with Amanda Lefton as Commissioner of the Department of Environmental Conservation. Lefton was a former director of the federal Bureau of Ocean Energy Management (BOEM) and has held previous positions in NY, as Assistant Deputy Secretary for Energy and the Environment and with The Nature Conservancy as their New York Deputy Policy Director. Lefton played a critical role in negotiating the original passage of the Climate Leadership and Community Protection Act and is recognized as a relentless problem solver and principled defender of nature. As Director of BOEM she transformed an agency known for facilitating offshore oil and gas leases into a platform by which wind energy was the sole focus of permitting. Her return to New York could be a welcome harbinger of renewed progress and diplomacy on the environmental front. Within weeks of her onboarding, the ‘Cap and Invest’ program was rebranded as ‘The Clean Air Initiative’ and a more accelerated public comment period for the program was established. So perhaps there is reason for hope.
I will not predict the outcome of the budget fight even though Governor Hochul reminded the Legislature recently of “how nice Albany was in the Summertime.” Late budgets are unfortunate in that they leave little time in the remaining legislative session to address issues that fell out of the budget, like NY HEAT, comprehensive packaging recycling, expanding the bottle bill, reducing PFAS contamination, advancing building decarbonization, expanding green transportation, and protecting our remaining wild places. But it is our hope that she and the Legislature put the most climate focused fiscal plan forward as an antidote to the dysfunction spewing from Trump’s cynical policies.