The EU Simplifies CBAM – What Are the Potential Implications?

The European Parliament and Council reached a provisional agreement (i.e., a post-consultation, non-binding political deal in relation to the final text of a legislative proposal) to streamline the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) on June 18, 2025. This is a key instrument to prevent carbon leakage and align trade policy with the EU’s climate goals. The changes are part of the EU’s broader sustainability legislative simplification package announced earlier this year. This proposal is intended to ease compliance burdens while maintaining the environmental integrity of the CBAM framework.

Wind energy projects along the coasts are facing uncertainty due to President Trump’s Presidential Memorandum¹ issued on January 20, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects.” This Memorandum introduces substantial policy changes that impact both onshore and offshore wind development.

Beginning on Monday, there have been a flurry of executive orders from the Trump administration reversing Biden-era energy policies, emphasizing oil and gas production, lifting the liquified natural gas (LNG) export permitting pause and withdrawing from all accords and commitments under the United Nations Framework Convention on Climate Change (UNFCCC) including the Paris climate agreement. The orders also target electric vehicles (EVs), wind energy, international climate aid and the use of the social cost of carbon in agency decision making. For close tracking of these orders and more to come, visit the Akin Trump Executive Order tracker. Concurrently, President Trump’s nominees for the Department of the Interior (DOI), Department of Energy (DOE) and Environmental Protection Agency (EPA) have each passed their initial rounds of committee confirmation votes, and now await votes before the Senate floor.

In the final days of his term, President Joe Biden has taken significant steps to solidify his administration’s climate legacy. The administration finalized rules for various clean energy tax credits established under the Inflation Reduction Act. However, these rules, intended to stimulate clean energy advancements through 2032, face opposition from Congressional Republicans, who are considering scaling back or repealing the credits through budget reconciliation.

The twilight hours of the Biden administration and the 118th Congress have been marked by intense legislative and regulatory activity, underscored by President-elect Trump’s derailment of last-minute congressional budget talks, and stalled progress on energy permitting reforms.

The Biden administration’s environmental policies and the future of infrastructure projects are facing pivotal legal challenges and political shifts. The U.S. Court of Appeals for the D.C. Circuit questioned the viability of the Environmental Protection Agency’s (EPA) 2024 power plant emissions rule, particularly its reliance on carbon capture technology, while the 6th Circuit overturned the EPA’s rejection of Kentucky’s smog plan, which comes only three days after the EPA issued its defense of its “good neighbor” smog control plan responding to the Supreme Court’s decision to halt its implementation in June. Meanwhile, the Supreme Court’s handling of the first National Environmental Policy Act (NEPA) case in some time, Seven County Infrastructure Coalition v. Eagle County, could substantially alter the scope of environmental reviews, with potential immediate implications for the oil & gas industry. These judicial reviews may be influenced by a potential change in administration and Congress, as Trump-era officials, including Vivek Ramaswamy, advocate for scaling back NEPA regulations to expedite infrastructure projects. Additionally, the Department of Energy’s recent clarity on liquified natural gas (LNG) export authorizations underscores the broader tension between expanding fossil fuel infrastructure and adhering to environmental regulations amidst a polarized political and legal landscape.

NYC Climate Week included over 900 events with an estimated 100,000 participants swarming the City. While indicative of growing interest in climate action, some note that the record turnout foreshadows a smaller presence at COP 29 in Azerbaijan.

Recent legislative and regulatory developments reflect ongoing tensions between environmental policies and economic priorities in the U.S. energy landscape. The House Energy and Commerce Committee’s advancement of three resolutions targeting Environmental Protection Agency (EPA) rules on power plants, vehicle emissions and air quality standards marks a broader Republican effort to counter President Biden’s environmental agenda, though these resolutions face likely vetoes. In contrast, House Speaker Mike Johnson has signaled openness to retaining certain green energy tax credits, reflecting a pragmatic approach as some Republican districts benefit from these investments. Simultaneously, bipartisan efforts to boost critical mineral production, led by Senators Hickenlooper and Tillis, aim to reduce U.S. reliance on Chinese imports, while the White House has raised tariffs on Chinese electric vehicles and solar products, a move seen as both protective of domestic industries and potentially disruptive to supply chains. Legal battles continue, as seen in the judicial blocking of the Interior Department’s methane rule in five states and ongoing litigation over EPA’s cross-state pollution rule, which the agency has been allowed to revise. Meanwhile, grid operators have expressed concerns that the EPA’s carbon emissions rule could threaten power plant operations, pushing for legal revisions to protect grid reliability. Together, these developments reflect the broader debate over balancing environmental regulations with economic and energy security concerns.