California faces clean energy crisis as 60 projects near collapse

Sacramento, California – Reeling from the rollback of federal clean energy incentives under the Trump-signed congressional “megabill,” California lawmakers are considering whether to loosen state environmental regulations in an effort to keep renewable energy projects alive. The move threatens to deepen a long-simmering tension between the urgency of climate action and the principles of environmental protection that have long guided state policy.

At the heart of the debate is the California Environmental Quality Act (CEQA), the landmark 1970 law that mandates environmental review for major developments. Critics argue CEQA is too often wielded as a weapon to stall or block projects — including solar farms, wind installations, and transmission lines essential to meeting the state’s decarbonization goals. Supporters say it’s a crucial safeguard against environmental harm and a mechanism for communities to have a voice in local development.

Senator Scott Wiener, chair of the Senate Budget Committee and a prominent voice in the state’s clean energy transition, has signaled he’s open to exempting some renewable projects from CEQA altogether. “Wouldn’t it be a tragedy for California if we lost a bunch of these clean energy projects because of a screwed-up permitting system?” Wiener said in an interview Wednesday.

The stakes are high. The newly signed federal budget bill slashes Biden-era tax credits for clean energy construction, building electrification, and electric vehicle purchases — cornerstones of California’s climate plan. Under the new law, projects must break ground by July 2026 or begin service by the end of 2027 to qualify for any remaining federal incentives. In a state where permitting delays are routine, that’s an ambitious — and for many developers, unreachable — deadline.

According to Politico, there are 794 projects across the country, including 60 in California, at risk of losing crucial funding due to these changes, making this a major setback to the affordable clean energy transition.

Environmental advocates are urging caution. Many are still upset over a bill passed last week — also championed by Wiener and Governor Gavin Newsom — that carved out CEQA exemptions for advanced manufacturing facilities, high-speed rail, and wildfire mitigation projects. Groups like the Coalition for Clean Air say such carve-outs threaten to gut environmental oversight in the name of speed.

“We would want any streamlining to be restricted to truly clean tech,” said Bill Magavern, the group’s policy director, pointing to recent exemptions for projects that can release toxic waste.

Even as lawmakers debate CEQA’s future, a parallel fight is unfolding over how to salvage California’s electric vehicle market after Republicans eliminated a $7,500 federal tax credit for EV buyers. Governor Newsom has suggested using revenues from the state’s cap-and-trade auctions to replace the lost federal dollars — but that fund is already stretched thin.

“If we do support and prioritize clean air and clean cars, then that decision was counter to that,” said Melissa Romero of California Environmental Voters, referring to the $1 billion in cap-and-trade funds lawmakers have already allocated to bolster the state’s firefighting agency.

California’s next steps will likely test not just its regulatory framework but its political identity — as a national leader on climate policy caught between environmental legacy and climate urgency.