States still have powerful energy and technology tools to cut emissions, but the path is getting harder as the Trump administration retreats from climate action and a key global warming threshold slips out of reach.

Why it matters: A UN report maps out what's needed now that a long-term breach of the Paris Agreement's 1.5°C goal is considered unavoidable — making rapid emissions cuts critical to limiting how high temperatures rise and for how long.

• While states can't replace the federal government, they retain control over consequential parts of America's energy system — and tools to cut emissions from them.

Zoom out: The United Nations Environment Programme's most optimistic scenario has warming peaking around 1.8°C before declining. Limiting the size and duration of that overshoot requires immediate emissions cuts.

How it works: Karen Palmer, a senior fellow and director of Resources for the Future's Electric Power Program, pointed to broad clean-energy standards, streamlined siting and permitting, and utility rules that encourage more efficient use of the existing grid as powerful state levers.

• She disputed the idea that all the electricity sector's "low-hanging fruit" has been picked, noting that potentially economic clean-energy projects remain stuck behind siting, permitting and interconnection barriers.

Case in point: Danny Cullenward, an economist and lawyer and senior fellow at the University of Pennsylvania's Kleinman Center for Energy Policy, said California demonstrates both the potential and pitfalls of state action.

• He called its battery deployment an "extraordinary success," partly traceable to the state requiring deployment before grid-scale storage became mainstream. Batteries are now displacing some gas generation throughout the day and night, he said.
• California's battery fleet has grown from less than 700 MW in 2019 to more than 21,000 MW today. Clean energy supplied 100% of demand on the state's main grid for at least part of 279 days last year, the governor's office told Axios.

Yes, but: The state climate landscape looks different than it did when Trump first withdrew from the Paris Agreement in 2017.

• Some states have scaled back or delayed earlier climate commitments as concerns about costs and rising electricity demand collide with emissions goals.

Threat level: Transportation remains a tougher challenge. Cullenward said federal rollbacks of EV incentives and legal challenges to California's authority to set vehicle standards mean many of the state's short-term tools "aren't really there right now."

• California is still using tools it controls: Gov. Gavin Newsom (D) recently signed six bills aimed at speeding EV charger deployment and expanding charging access.
• Longer term, Cullenward pointed to transit-oriented housing and reducing car dependency as important state and local levers.

The big picture: The question isn't whether states can fill the federal climate policy void. They can't. It's how much progress they can make with the policies they still control.

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The Transportation Department is slated to finalize rules today that weaken Biden-era auto mileage standards, Transportation Secretary Sean Duffy said over the weekend.

Why it matters: Transportation is the largest source of U.S. carbon emissions. Mileage and CO2 rules affect automakers' strategies, consumer costs and EV sales.

Driving the news: Trump touted the plan on Truth Social and said it would lower car costs, and Duffy said it would bring a "major victory" for American auto workers.

The other side: The rule "ignores the feasibility of clean technology and the millions of fuel-efficient cars already on the road," said the Center for Biological Diversity, which also points to long-term fuel cost savings.

Catch up quick: DOT last year proposed standards reaching 34.5 miles per gallon in model year 2031, compared to the Biden-era rule reaching 50.1 mpg.

A few things to watch...

🧮 The numbers: If the final rule mirrors December's draft, it will effectively require very little improvement in the next few years.

⚖️ The courts: Environmental groups will challenge the rule. CBD argues it violates the law requiring the "maximum feasible" standards.

🗳️ The politics: Look for both sides to make an affordability case. Trump officials will point to DOT analysis finding weaker standards lower vehicle costs.

• Opponents are already pointing to high gasoline prices in arguing against the move.
• One thing to watch is how all this plays in the tight Senate race in Michigan, home of the biggest U.S. automakers.

💵 The markets: Let's see if the rollout affects the share prices of big automakers and EV startups.

• A reason it might not: The 2025 GOP budget law already nixed civil penalties for noncompliance.
• And the regulatory climate will remain in flux while court battles play out.

U.S. cars and light trucks have become far more efficient since the imposition of mileage rules in the 1970s, though the path hasn't been straight.

How it works: This chart shows estimated mileage in "real-world" conditions, which is typically around 20-25% below the formal standards.

• These real-world estimates take into account factors such as halting and fast driving, use of air conditioning, and cold weather.
• This also includes EVs based on a conversion to "miles per gallon of gasoline equivalent," which boosts fleetwide efficiency.

⚛️ Holtec, the nuclear tech and services firm, has formally withdrawn its IPO statement with the SEC.

• The intrigue: When delaying its IPO earlier this month, Holtec initially said it would keep the document on file.
• State of play: A Holtec spokesperson tells Axios it's not going public in 2026 but did not provide further guidance.

🔋 Amprius, a battery tech firm, said it secured up to $75 million in Pentagon grant funding to produce high-density cells for unmanned aerial systems. It will retrofit an unnamed South Korean firm's U.S. production line, it said.

🛑 TechCrunch reports that Crusoe, a major AI data center company, "has ended plans to use a new line of stationary power plants developed by fellow Denver company Boom Supersonic."

⛏️ Solcoa Industries raised $75 million in seed equity and debt as it develops a new rare earth metal-making plant, Axios Pro first reported. Go deeper

🏭 Mojave Energy Systems, a startup that makes efficient HVAC systems, has raised a $19 million Series B. Go deeper

Want a steady diet of scoops and smart analysis? Talk to our sales team about Axios Pro Deals.

China will import at least 10 million metric tons of U.S. coal in both 2027 and 2028, the White House said after President Trump met with President Xi Jinping.

Why it matters: Trump is keen to expand markets for U.S. coal and slow — or even reverse — the fuel's domestic decline.

• It would mark a revival of exports to China that fell sharply in 2025 and were very low again in early 2026.

State of play: Chinese documents say the country will lower tariffs on U.S. coal commodities, but don't list the 10 million metric ton targets.

Reality check: The plan, part of wider trade talks, amounts to a small fraction of China's total coal imports.

• But it would represent about 12% of the total volume of coal the U.S. shipped abroad last year, per federal data.

"In the end, we think that the midterm election math will be a key calculus, and that White House Deputy Chief of Staff for Policy, Stephen Miller, could be a deciding voice on whether to hit the go switch on a diesel ban."