New York Governor Kathy Hochul signed the state’s 2025-2026 budget on Friday, which included more than $1 billion in climate change-focused investments, including funding to lower emissions from buildings and accelerate the rollout of electrified transportation.

The budget, notably, did not include a “cap-and-invest” program to charge large greenhouse gas (GHG) emitters, with proceeds to be invested in climate initiatives.

Unveiled by Hochul in 2023, the cap-and-invest initiative would require large greenhouse gas emitters and fuel distributors in New York to pay more than $1 billion per year to purchase allowances for the emissions associated with their activities, based on an economy-wide emissions cap, which would be reduced every year, on a trajectory aligned with the state’s Climate Act, with proceeds used to fund emissions reduction initiatives and support vulnerable communities facing rising energy prices.

In January, however, Hochul suggested that the program may be pushed out, and in March, the New York Department of Environmental Conservation (DEC) proposed GHG reporting regulations that would only have emitters providing disclosures required under the cap-and-invest program until 2027.

Key climate-focused allocations in the new budget include $450 million targeting reductions in building emissions, including investments in energy-efficient retrofits and clean heating technologies like heat pumps, more than $200 million for thermal energy networks, $250 million to support electric school buses, fast-charging stations and a NYSERDA rebate program for installing EV charging stations, as well as $200 million for renewable energy expansion and grid modernization.

Hochul said:

“We have secured a record $1 billion to build a greener, more sustainable New York as well as key investments to construct more playgrounds, swimming pools, and community centers that provide greater access to outdoor recreation.”