Last week saw the Trump administration taking steps to implement its deregulatory climate agenda, signalling a move from what were once predictions to reality. Among the most consequential moves are efforts to reassess the 16-year-old Endangerment Finding and reduce the social cost of carbon (SCC) —policies that have long served as cornerstones for federal climate action. While these measures do not explicitly impact carbon markets, these metrics can influence program design and often provide justification for setting stricter emissions caps or implementing steeper reduction efforts. For example, the California Air Resources Board (CARB) uses the SCC to evaluate the costs and benefits of scenarios under their climate policies, and the SCC has informed discussions around tightening the cap in the Regional Greenhouse Gas Initiative (RGGI).
Removing the 16-Year-Old Endangerment Finding
Established by the EPA in 2009, the Endangerment Finding is a landmark decision that identified six greenhouse gases, including carbon dioxide and methane, as threats to public health and welfare. Last week, EPA Administrator Lee Zeldin suggested a reconsideration and possible removal of the Endangerment Finding. The finding has set the legal foundation for regulating carbon dioxide and other greenhouse gases under the Clean Air Act for the past 16 years, by recognizing them as pollutants. Dismantling this would effectively strip the EPA of its authority to enforce emissions standards for vehicles, power plants, and industries. Supporters of this move claim it alleviates regulatory burdens on businesses, but critics see it as a blatant disregard for overwhelming scientific evidence linking greenhouse gases to climate change. If successful, removing the Endangerment Finding could set back decades of progress in environmental protection and public health.
During Trump’s first term, the Endangerment Finding was not fully removed, but attempts were made to weaken or alter it. In 2017, then- EPA Administrator Scott Pruitt, called for a review of the 2009 finding, suggesting that the agency might no longer view greenhouse gases as a direct threat to public health and welfare. A legal case was set in motion, and the Massachusetts v. EPA Supreme Court decision upheld the EPA's authority to regulate greenhouse gases. This made it difficult for the administration at the time to fully remove the finding. Instead, they argued that the scientific basis for it needed to be revisited. Presently, legal experts warn that overturning the Endangerment Finding could face significant judicial hurdles, given its foundation in extensive peer-reviewed research and previous Supreme Court rulings.
Revising The Social Cost of Carbon
Zeldin also confirmed that revisions will be made to the SCC, which is a metric used to estimate the economic damages associated with an additional tonne of carbon dioxide emissions. This comes at the heels of the U.S.’s withdrawal from the Paris Agreement, which happened much faster in 2025 than it did in Trump’s first term. The SCC has historically guided U.S. climate regulations by quantifying the benefits of reducing greenhouse gas emissions. The previous value was USD 190 per tonne of carbon dioxide as per the EPA’s 2023 update, and while the EPA is currently completing its review to submit a new value, it is likely that the value will fall to below USD 5 per tonne. This aligns with Trump’s previous term, where he reduced the SCC to less than USD 5 per tonne as well.
Environmental advocates and policy experts are concerned that any reduction in this value would dismiss the rising risks of climate change and the mounting costs of inaction. This could also weaken the cost-benefit assessments that often validate the design and stringency of certain carbon markets.
31 Actions to Rollback Climate Regulations
As part of a broader deregulatory effort led by the Trump administration's Environmental Protection Agency (EPA), last week a proposal was released with 31 actions aimed at dismantling regulatory measures on pollution across industries such as power plants, refineries, and automobiles. This initiative, described by Zeldin as the most comprehensive deregulation effort in U.S. history, targets controls on mercury, toxic air pollutants, soot, wastewater, workplace chemicals, and greenhouse gas emissions. All else equal, removing this federal support is likely to impact regional carbon pricing programs, such as the Regional Greenhouse Gas Initiative (RGGI) as there is less incentive to reduce emissions.
Proponents argue that these rollbacks will lower living costs and bolster energy production, to underscore Trump’s “energy dominance” platform, but critics warn of significant public health and environmental consequences. The EPA is also working to hold back $20 million of federal funding promised by the Biden administration to reduce greenhouse gas pollution.
If the EPA follows protocol, dismantling these regulations will be legislatively complex, although it should be noted that in his first term President Trump managed to roll back nearly 100 environmental regulations. The announcement alone is not sufficient to remove the regulations, as a legislative process would have to be undertaken to revoke them and to provide a new regulation. This could be made more time-consuming given a reduced EPA workforce.
Looking Forward
This retreat from strong federal climate policies weakens America's position as a global leader in addressing climate change and may embolden other nations to scale back their own commitments. Domestically, it could catalyze states with climate ambitions, such as California and New York, to strengthen their strategies in the absence of federal support. This highlights a growing divide between states advancing aggressive climate policies and those aligning with the federal deregulatory agenda, potentially creating an uneven national response to climate change.
ClearBlue will continue following these developments and will provide updates for clients as needed.