2025 State Energy Regulatory Overview: Key Trends and Legislative Updates in the Energy Sector

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Oil & Energy Online :: 2025 Annual State Energy Regulatory Round-Up
Friday, February 28, 2025

2025 Annual State Energy Regulatory Round-Up

by Rhonda Gerson, Oil & Energy Magazine

This article offers an annual review of enacted and pending state laws and regulations concerning biofuels, electrification, emissions, and the wider energy sector.

For the past few years, Oil & Energy Magazine has dedicated December and early January to compiling state-level energy-related legislation. Each year, we begin with the important note that the information presented is current as of the time of writing—January 2025 in this case. However, readers are advised to consult their state associations or legislatures for the most recent updates.

This year’s caution is particularly significant due to the ongoing presidential transition. President Trump has vowed to repeal parts of the Inflation Reduction Act (IRA), reverse many of Biden’s regulatory measures, streamline the permitting process, increase drilling, and rescind California’s Clean Air Act waivers regarding vehicle emissions. These actions will have direct implications for our audience. Concurrently, Trump is contemplating imposing tariffs on products from Canada, Mexico, and China, with no announcement yet on whether crude and other fuel products will be exempt. If these tariffs are implemented, they could disrupt heating fuel supply chains and elevate prices, placing additional pressure on states to hasten their electrification initiatives. (Refer to our “Federal Policy Update” on page 22.)

The election results indicate a notable backlash against policies perceived as imposing high costs and unrealistic clean air and electrification mandates on consumers. As Jim Collura, President and CEO of NEFI, pointed out in December’s Front Burner column, “Even in the bluest states and districts where Democrats prevailed, particularly in the Northeast, they did so with historically smaller margins. Exit polls indicate that three-quarters of voters consider rising costs a significant hardship for their families and a key factor in their voting decisions.” Collura further emphasized, “While federal policies may shift rightward, many blue states, especially in the Northeast, are likely to continue pursuing aggressive decarbonization strategies. However, the election’s clear message regarding costs and consumer hardships should prompt state policymakers to reconsider the implementation of electrification mandates and other measures that limit choices and disproportionately impact vulnerable populations.”

Oil & Energy engaged with association executives from several affected states to understand their perspectives on the current political landscape and its repercussions for their members.

Connecticut

Chris Herb, President of the Connecticut Energy Marketers Association, reported that their efforts successfully thwarted around a dozen bills in 2024. The proposed legislation sought to ban diesel trucks and gasoline-powered cars, mandate the installation of 310,000 heat pumps, and declare a climate crisis, among other detrimental initiatives affecting the industry. Anti-competitive price gouging legislation and a climate resiliency bill also failed to pass this year.

Notably, CEMA successfully opposed legislation that included:

• Declaration of a Climate Crisis
• Installation of 310,000 Heat Pumps
• Price Gouging
• Adoption of California Air Resources Board (CARB) standards for phasing out new gasoline-powered cars and diesel trucks by 2035
• Electrification of all State-Owned Buildings
• Data collection on heating oil and propane use by customers
• Transition to Net Zero Emissions by 2050
• Creation of a Clean Energy Council for coordinating clean energy deployment and climate mitigation programs
• Transition plans for fossil fuel workers to clean energy jobs
• Increasing electric battery storage by 1,000 megawatts
• Raising efficiency standards for appliances
• Expanding residential energy storage system deployment
• Increasing natural gas capacity

CEMA also secured a favorable energy assistance bill requiring the Department of Social Services (DSS) to adjust reimbursements to LIHEAP vendors, ensuring fairer treatment for dealers in the program. Collaborative efforts with PGANE, NECSEMA, the CT Motor Transport Association, the Beer Wholesalers Association, API, and AFPM were crucial to CEMA’s achievements this year, according to Herb.

Maine

In 2023, the Maine Energy Marketers Association successfully prevented mandates that would require homes and businesses to disconnect existing liquid- or gas-fired heating systems to qualify for heat pump installation rebates. Efficiency Maine remains focused on making electricity the primary heat source in residential settings. In September 2024, Maine initiated a $36 million Home Energy Rebate Program, funded by the IRA, to encourage homeowners to adopt energy-efficient technologies like heat pumps.

At the start of the new year, Governor Janet Mills announced plans to transform the Governor’s Energy Office (GEO) into a cabinet-level Maine Department of Energy Resources. This new department will take on the core responsibilities currently held by GEO, overseeing matters related to energy resources, policies, planning, data, markets, energy security, and program implementation.

Maryland

The Maryland Department of Environment has outlined over 100 priority actions to meet the state’s climate goals. This includes Governor Wes Moore’s executive order to establish a Climate Subcabinet and create a zero-emission heating equipment standard and a clean heat standard.

Massachusetts

The Clean Heat Standard’s finalization is mandated by law in Massachusetts. The Act Promoting a Clean Energy Grid, 2024 (CHS – 310-CMR 7.71) was signed into law in November 2024. According to Michael Ferrante, President of the Massachusetts Energy Marketers Association (MEMA), “the ultimate goal is to eliminate fossil fuel usage for space heating and transportation, modernize the electric grid to rely on renewable energy sources, and electrify all homes currently using heating oil, propane, and natural gas.”

Initially, the Senate version of the Act would have required retail heating oil and propane companies to report daily pricing and display that information on their websites. However, MEMA and industry partners successfully removed this requirement from the final bill. Under 210 CMR 7.71, retail heating oil, propane companies, and natural gas suppliers were required to register with MassDEP by January 31, 2025. Additionally, heating fuel storage facilities were mandated to register. Following registration, these companies must submit quarterly CO2 emissions reports detailing fuel delivered to Massachusetts customers, with the first report due by April 30, 2025.

Heating fuel storage facilities must also provide MassDEP with monthly reports on fuel shipments. The official draft of the CHS regulation was initially expected by the end of 2024, but MassDEP has revised the timeline, indicating that a proposed CHS regulation will be released in winter 2025, with a finalized regulation expected by fall 2025. The year 2026 will mark the “first compliance year” for the CHS, which will evaluate energy providers’ carbon and greenhouse gas emissions. Energy companies can earn credits for annual reductions or must purchase alternative credits. “Biofuel blends in heating oil are deemed a clean technology,” Ferrante points out. “If retailers do not install heat pumps or deliver biofuel to earn these credits, they will need to pay alternative compliance payments (ACPs).” Biofuel blend credits will depend on the feedstock, with crop-based biofuels capped at B20 and waste-based biofuels eligible for credits up to B99. During MEMA’s November 2024 Legislative Update meeting, it was estimated that the ACPs for heating oil will commence at approximately eight cents per gallon (cpg), increasing to 21.5 cpg by 2027 and 81 cpg by 2030. Propane ACPs are expected to reach 45 cpg by 2030.

New York

New York’s biofuel mandate will increase to a minimum ten percent (B10) blend in July 2025. Although this benefits liquid fuel retailers by promoting cleaner heating, it is a minor consolation in light of Albany’s push for widespread electrification. The Empire State Energy Association (ESEA) and New York State Energy Coalition (NYSEC) represent fuel marketers in New York and often collaborate with other industry partners on statewide legislation.

In late December, Governor Kathy Hochul signed the Climate Change Superfund Act, which requires companies that have significantly contributed to climate change to share the costs of necessary infrastructure investments for adaptation in New York state, amounting to $3 billion annually for 25 years. A critical issue for 2025 is the NY State Energy Plan (SEP), which outlines the state’s energy priorities and goals. The last fuel SEP was released in 2015 and updated in 2020. The state has begun planning, aiming to introduce a new State Energy Plan by the end of 2025. A Draft Scope was released in September 2024, and ESEA and NYSEC jointly submitted comments advocating for an “all of the above” strategy to combat climate change, suggesting that all carbon reduction methods be employed rather than solely relying on electrification. They also encouraged the state to incorporate renewable liquid fuels (RLFs) into its future energy strategy. Several bills are under consideration for reintroduction, including measures to allow renewable diesel and biodiesel for bioheating fuels, align the state’s GHG accounting with the Intergovernmental Panel on Climate Change, establish a clean fuel standard, develop a cap and invest program (currently suspended through 2025), create climate liability for fossil fuel activities, and implement “fuel switching” programs providing grants for heat pump conversions while prohibiting fossil fuel equipment installations in buildings of seven stories or fewer.

Pennsylvania

Pennsylvania’s energy regulations differ from those of many regional states due to a split General Assembly for the first time in over a decade and its status as a significant energy producer. Ted Harris, Executive Vice President of the Pennsylvania Petroleum Association, noted that Democrats hold a one-seat majority in the House, while Republicans maintain a larger majority in the Senate with 27 seats to the Democrats’ 22. This situation necessitates bipartisan agreement on policy, which has proven challenging. Looking ahead, Harris anticipates continued discord regarding environmental and energy policy, but acknowledges that Governor Josh Shapiro’s positions could influence outcomes. He remarked, “It will be interesting to see where the Governor lands on the broader political landscape during the next two years. He has expressed concerns about energy affordability, particularly regarding electricity costs. It seems there will be more discussions on energy from a top-down perspective, but time will tell. I won’t speculate, but I expect more debate around energy and environmental policies in the 2025-2026 legislative session.”

Vermont

Vermont has been at the forefront of considering Clean Heat Standards. The Affordable Heat Act (Act 18) was enacted in 2023, followed by an 18-month review process that concluded in January 2025. The Check Back Report indicated that Vermont’s CHS would incur costs of $955 million over the next decade, with residents using fuel oil, kerosene, or propane for heat and hot water, or gas for cooking paying an additional 58 cents per gallon. Most economic benefits are projected to arise from the sale of biofuels, which are seen as the most cost-effective lean heat measures. The report concluded that “a Clean Heat Standard is not a good fit for Vermont,” according to the Vermont Fuel Dealers Association.

However, challenges remain for Vermont fuel providers. The 2020 Global Warming Solutions Act (GWSA) mandates a 26% reduction in greenhouse gas emissions by 2025 compared to 2005 levels and a 40% reduction by 2030 compared to 1990 levels. This law allows special interest groups to sue the state if these targets are not met. A lawsuit has already been filed, and if a superior court judge determines that Vermont is not fulfilling its obligations, the Agency of Natural Resources may be compelled to enforce the Vermont Climate Action Plan, which continues to recommend the Clean Heat Standard and other programs aimed at raising the costs of oil and gas in Vermont.

In summary, we have provided a brief overview of greenhouse gas targets, renewable fuel policies, electrification initiatives, and other relevant information for states in the Northeast and Mid-Atlantic, as well as California and other regions with aggressive GHG emissions and electrification policies. This information is accurate as of January 2025, derived from reports by national and local energy and fuel associations, state offices, and news sources. We encourage readers to utilize available statewide resources and consult legal and tax professionals when formulating business plans related to local legislation and regulations.
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