In a sweeping move, U.S. President Donald Trump has signed an executive order aimed at nullifying state-level climate regulations that restrict fossil fuel use or enforce ESG standards. The directive, titled Protecting American Energy from State Overreach, positions federal authority above state climate actions, targeting laws in New York, California, Vermont, and others. 

Under the order, the U.S. Attorney General is tasked with identifying and challenging any state or local climate-related laws deemed unconstitutional or conflicting with federal energy policy. This includes statutes that impose carbon taxes, fine fossil fuel producers for historical emissions, delay permitting, or reference ESG or carbon neutral strategy principles. 

The order aligns with Trump’s broader energy agenda focused on boosting fossil fuel production and rolling back environmental regulations. It also positions state-led climate actions as threats to American energy independence, economic stability, and national security. Specific targets include New York’s and Vermont’s climate liability laws and California’s cap-and-trade emissions program. 

Critics argue the order undermines state rights and could derail progress on ESG and carbon neutral strategies. Democratic governors and climate alliances vow to resist, reaffirming commitments to clean energy and environmental protection. Meanwhile, the American Petroleum Institute welcomed the move, saying it shields energy producers from “unconstitutional” state interference. 

While the order does not directly dismantle state laws, it initiates federal legal action and sets the stage for major legal battles over the limits of federal preemption. It also raises concerns about the future of ESG-aligned investments, climate litigation, and corporate carbon reduction commitments. 

With lawsuits expected, this development underscores the political volatility surrounding ESG and carbon neutral strategy efforts. For states and companies advancing sustainability goals, Trump’s executive order could signal a turbulent policy landscape ahead. 

Sources: 

https://www.theguardian.com/us-news/live/2025/apr/09/donald-trump-tariffs-full-effect-executive-orders-coal-us-politics-latest-updates-news?filterKeyEvents=false&page=with%3Ablock-67f63ccb8f087f8f33468426 

https://www.latimes.com/environment/story/2025-04-09/trump-state-climate-laws-california 

https://www.nytimes.com/2025/04/09/climate/trump-threatens-climate-policies-in-the-states.html  

https://esgnews.com/trump-issues-order-to-block-state-climate-laws-aimed-at-cutting-fossil-fuel-use/