Could States Lead Climate Justice Funding?

A hand-painted cardboard sign reading "Climate Justice Now" held above a crowd at a protest, with a thermometer and globe illustration drawn into the lettering. — Markus Spiske on Unsplash

Much of the current US climate debate is framed as a fight over authority. Who gets to govern climate action? Federal agencies drafting regulations, states passing their own laws, courts narrowing or expanding those powers, and corporations pushing back against both. The climate action landscape is crowded, but the conflict can be described in simple terms: a jurisdictional struggle over who is in charge.

In 2025, the Department of Justice filed lawsuits against New York and Vermont over their “climate superfund” laws—statutes designed to require fossil fuel companies to help pay for climate damages—arguing that these state laws are preempted by federal law and violate constitutional limits on state power.

At the same time, the DOJ moved to block Hawaii and Michigan from pursuing their own climate-related cases against fossil fuel companies, reinforcing the claim that such actions fall under federal jurisdiction rather than state control.

But states are not backing down. Across the country, state and local governments from California to Colorado continue to pursue litigation against major oil companies, seeking compensation for climate-related damages and, in some cases, for long-standing deception about the harmful risks of fossil fuels extraction and production.

The central question is straightforward: When it comes to the climate, who has the power or governance to act? Which institutions have the resources to act, and how are those resources allocated? That’s where climate funding enters the conversation.

Authority Tightens, Funding Expands

Court decisions and political shifts have made broad federal climate regulation more contested. Agencies face tighter interpretations of their authority, and major rules are increasingly vulnerable to legal challenge.

If the legal landscape is narrowing what regulators can do, the financial landscape is, in some ways, expanding what can still be done.

Decisions about funding are rarely neutral.

In this kind of environment, funding mechanisms take on added weight. They are harder to unwind quickly, less dependent on sweeping legal interpretations, and are often embedded in long-term programs.

When rulemaking slows or fragments, implementation of funds becomes the real arena for climate action. States reemerge as operational actors. They aren’t a substitution for federal power, but become entities that translate legislation into infrastructure, investments, and outcomes. States sit at the point where abstract policy becomes material change.

Climate Policy Is Also a Funding System

Over the past few years, federal climate policy has been built as much through spending as through rulemaking.

Laws like the Inflation Reduction Act of 2022 and the Bipartisan Infrastructure Law of 2021 channel hundreds of billions of dollars into clean energy, resilience, and environmental justice programs, but much of that money does not flow directly from Washington to communities. It moves through state governments.

Under the Inflation Reduction Act, state energy offices help administer programs like home energy rebates and efficiency upgrades. Similarly, the Bipartisan Infrastructure Law routes funding for grid modernization, water systems, and climate resilience through state-level agencies and planning processes.

In practice, that structure gives states significant climate influence.

States help design implementation plans, oversee grant distribution, and translate federal guidelines into actual projects on the ground. That means decisions about funding are rarely neutral. States shape which communities receive flood protection, which regions attract clean energy investment, and which environmental harms are prioritized—or deferred.

National government programs like the Justice40 Initiative, which aims to direct 40 percent of certain federal climate benefits to disadvantaged communities, still rely heavily on state-level execution to determine how those benefits are defined and delivered.

This is a consequential layer of governance for states. The power to allocate is, in many cases, the power to decide outcomes.

Convergence: Litigation Meets Allocation

For now, these two arenas—litigation and funding—largely operate on separate tracks.

Lawsuits are about liability: assigning blame, recovering damages, establishing precedent. Funding, by contrast, is about implementation: distributing resources, building infrastructure, translating policy into outcomes. One looks backward to responsibility; the other looks forward to delivery.

But the separation may not hold.

A growing number of state attorneys general are already operating in coordinated legal coalitions, filing joint briefs, intervening in federal rulemaking disputes, and aligning strategies across jurisdictions.

At the same time, environmental organizations and advocacy groups are increasingly active in shaping how climate policies are executed by pressuring agencies, tracking spending, and pushing for accountability in how funds are deployed.

The question is whether these two dynamics could be intersected more deliberately. What would it look like, for instance, if litigation strategies were designed both to establish liability and to reinforce how climate funds are protected and directed? Or if state legal offices worked more systematically with environmental justice groups—beyond courtrooms—in ensuring that any financial settlements, penalties, or federal investments translate into tangible community outcomes?

States have long been sites of policy experimentation.

There are precedents, if not yet a model. State attorneys general have long acted as policy actors, not just litigators, shaping enforcement priorities and filling gaps left by federal inaction. Extending that role into the financial architecture of climate policy would not require a new institution, only a shift in coordination.

The Risk and the Possibility

There is a risk that a more state-driven climate system would reproduce inequality in a different form.

Climate policy already varies widely across states, shaped in part by political control and institutional capacity. That variation can translate into uneven protections and intrastate conflict, where some states aggressively pursue emissions reductions and environmental justice goals, while others lag or resist altogether.

Even federal investments are not distributed neutrally. Programs under the Inflation Reduction Act, for example, rely heavily on state-level implementation, raising concerns that disadvantaged communities could still be left behind without deliberate targeting.

Political turnover adds another layer of instability. State priorities can shift quickly, reshaping how funds are allocated or whether climate commitments are enforced at all.

And yet, the same decentralization creates openings. States have long been sites of policy experimentation, and their proximity to communities can allow for more adaptive, locally grounded approaches. Frameworks like the Justice40 Initiative, which aim to direct a significant share of climate investment benefits toward underserved communities, offer at least a partial structure for doing this more intentionally. If paired with stronger coordination between legal advocacy and funding oversight, such efforts could begin to close the gap between accountability and delivery.

What emerges may not be a coherent system, but a landscape where the outcomes of climate justice increasingly depend on how—and where—state power is exercised, and where that power can move faster and closer to the communities most affected.

While legal disputes define the boundaries of power at one level, resource flows determine the nature of climate governance.

Rules, Resources, Results

We began with authority: who has the power to define and govern climate action in the United States? That question remains contested, and likely will for the foreseeable future, as courts, federal agencies, and states continue to test the boundaries of their roles.

Moving past the matter of who gets to write the climate laws, the real power lies in the processes that finance, implement, and sustain policies. While legal disputes define the boundaries of power at one level, resource flows determine the nature of climate governance at another.

This does not resolve the conflicts at the heart of US climate politics, but it does reframe them. It’s no longer only who governs, but who delivers.

In that case, the future of climate justice in the United States may depend less on formal authority and more on which actions actually reach the communities they aim to serve.