Energy Market Update

LevelTen Energy’s snapshot on U.S. and EU Power Purchasing Agreement (PPA) pricing is below. For more information on LevelTen please visit www.leveltenenergy.com.

A Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act, prompting the administration to shift to alternative trade authorities that may affect the cost and timing of imports used in renewable energy projects. A week before, Treasury released guidance on Foreign Entity of Concern (FEOC) compliance that outlines streamlined pathways for solar, wind, and battery projects to qualify for tax credits, while still introducing new supply‑chain due diligence requirements. Separately, the Environmental Protection Agency moved to rescind the 2009 greenhouse gas endangerment finding, eliminating the legal basis for federal greenhouse gas regulation and setting up anticipated legal challenges.

February 20,2026: Supreme Court Invalidates IEEPA Tariffs; Administration Moves to Section 122 and Section 301 Authorities

1. A Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), eliminating tariffs on imports from China, Mexico, and Canada, among others. The practical impact on North American trade is limited, as roughly 90% of imports from Mexico and Canada were already USMCA‑compliant and exempt.
2. In response, the administration announced a 15% universal tariff under Section 122 of the Trade Act of 1974, effective February 24, which allows tariffs for up to 150 days based on balance‑of‑payments deficits. This action temporarily replaces the broader tariff framework previously implemented under IEEPA.
3. The administration is also pursuing tariffs under Sections 301 and 232, which require formal investigations, consultations, and public processes before duties can be imposed. Section 301 tariffs, once implemented, have previously been upheld by federal courts and represent a more durable legal pathway for trade actions.
4. Shifts in tariff authorities may affect the timing, scope, and durability of tariffs on imported renewable energy equipment, including solar modules, inverters, wind components, and battery storage components. Temporary Section 122 tariffs and longer timelines for Section 301 actions could create near‑term cost uncertainty while delaying more targeted, country‑specific trade measures affecting clean energy supply chains.

February 12, 2026: Treasury Takes Moderate Approach to FEOC Guidance that is Positive for Renewables

1. The guidance introduces multiple compliance pathways, with the easiest (Identification, Cost Percentage, and Certification Safe Harbors) reserved for solar, wind, and battery developers/projects as well as manufacturers of inverters, battery modules using cells, and solar modules. These simplify supply chain tracking by limiting depth (often to manufactured product components only), aligning with existing domestic content bonus rules, allowing reliance on supplier certifications under penalty of perjury, and reducing the need for complex self-calculation of PFE exposure.
2. The guidance is positive relative to a worst-case scenario, easing compliance burdens, avoiding overly restrictive rules that could hinder innovation or buildout (especially in geothermal and nuclear), and enabling renewables developers to more confidently claim tax credits as non-FEOC content thresholds increase over time (e.g., 40–85% in 2026). However, it still imposes new due diligence and supply chain adjustment costs.
3. Treasury will accept public comments on the guidance until March 30, 2026, and plans to release a proposed rule later this year that incorporates the current guidance and adds details on ownership and effective control restrictions, allowing further industry input to refine the rules toward greater administrability.

February 12, 2026: Trump guts basis for climate regulation, setting up a courtroom clash

1. On February 12, 2026, the Environmental Protection Agency moved to rescind the 2009 Greenhouse Gas Endangerment Finding, a policy that previously gave the EPA ground to regulate greenhouse gas (GHG) emissions on the basis that GHG emissions threatened public health and welfare.
2. Without the endangerment finding, the EPA no longer has authority to regulate GHG emissions from cars, trucks, and power plants.
3. The EPA’s “primary argument is that the Clean Air Act was never intended to allow for regulation of greenhouse gases because climate change is a global phenomenon” therefore the EPA should only regulate “pollution with direct health impacts or that could create regional issues like acid rain.” The EPA has also stated that this deregulatory action will save Americans over $1.3 trillion.
4. Critics of the action have argued that the EPA’s savings estimate ignores the economic and human costs of climate impacts. The EPA’s own staff union issued a statement calling the EPA’s action a “deep betrayal of the EPA’s mission and duty to protect public health and safety, and Americans will pay the price.”
5. Several environmental groups and Democratic states have  vowed to sue the repeal on the basis that the action is unlawful and defies established climate science.

This section outlines significant developments and policy actions at the federal, state, and regional levels that impact sustainability, affordability, and reliability within U.S. electricity markets. The following points provide a concise overview of these notable initiatives:

• EPA Policy Changes: The Environmental Protection Agency has finalized the repeal of the 2024 Mercury and Air Toxics Standards (MATS) amendments, thereby relaxing compliance requirements for coal-fired power plants. The original 2012 MATS provisions remain in effect, supporting continued emissions control efforts and reliability across the sector.
• Reliability Backstop Procurement in PJM: PJM is proceeding with a transitional reliability backstop procurement to ensure adequate generation resources ahead of comprehensive market reforms. This initiative targets resources capable of near-term deployment as well as those suitable for long-term needs, addressing supply-demand imbalances and supporting system reliability.
• Illinois Governor Pritzker emphasized affordability in energy, health care, and housing. The state’s Carbon Mitigation Credit program and expected price caps are designed to lower electricity bills and protect consumers from escalating costs.
• The United States Department of Energy awarded Pennsylvania a grant for transmission and energy redevelopment studies, aiming to facilitate upgrades that support data center growth and enhance grid resilience. Additionally, a significant investment in Ohio’s gas generation infrastructure is expected to bolster generation capacity and reliability.
• New Hampshire advanced legislation permitting greater utility ownership of generation assets, with the goal of diversifying energy supply and strengthening reliability.
• The Federal Energy Regulatory Commission rescinded the Western Electricity Coordinating Council’s soft price cap, modernizing market oversight and promoting efficient contracting in Western markets.
• California’s Senate Bill 100 modeling demonstrates increased reliance on renewable energy, energy storage, and carbon capture technologies, reinforcing sustainability and reliability objectives for 2045.
• FERC and state commissioners discussed affordability concerns and the need for improved forecasting, coordination, and cost allocation in the electric industry, which are relevant to sustainable energy management.
• EPA finalized the repeal of the greenhouse gas (GHG) endangerment finding and associated motor vehicle GHG standards, citing a new interpretation of statutory authority that excludes global climate change concerns from regulation under the Clean Air Act section 202.
• The EPA's decision does not immediately affect power plant GHG standards issued under Clean Air Act section 111, but further repeals are anticipated in the near future.
• The rule change is expected to be challenged by environmental groups and certain states, with a judicial decision projected for spring 2027.

California Climate Disclosure Laws: Senate Bill (SB) 253 (Climate Corporate Data Accountability Act)

SB 253 is a California law enacted in October 2023 that requires large companies to publicly disclose their greenhouse gas (GHG) emissions. It is formally titled the Climate Corporate Data Accountability Act

The law applies to U.S.-organized companies with more than $1 billion in annual revenue that “do business in California,” regardless of where they are headquartered or whether they are public or private

Covered companies must report Scope 1, Scope 2, and Scope 3 GHG emissions using the Greenhouse Gas Protocol or another CARB-approved methodology

Scope 1 and Scope 2 emissions reporting begins in 2026, with the first disclosures covering emissions from the prior fiscal year. CARB has indicated an initial reporting deadline of August 10, 2026

Scope 3 emissions reporting begins in 2027, with CARB authorized to adjust timing to ensure feasibility and alignment with Scope 1 and 2 disclosures

Third-party assurance is required, but implementation is phased: 

• Limited assurance for Scope 1 and 2 will apply after initial reporting years
• Reasonable assurance for all scopes is expected by 2030
• CARB has provided flexibility for first-year reporting as regulations are finalized

The California Air Resources Board (CARB) is responsible for implementation and enforcement, including adopting regulations, approving assurance providers, and managing the public disclosure system

Companies must pay an annual filing fee (up to $1,000) to support CARB’s administration of the program. Separate administrative penalties may apply for noncompliance

Noncompliance can result in administrative penalties of up to $500,000 per reporting year, depending on the nature and duration of the violation however the CARB has noted they will not enforce penalties for year 1, if good faith efforts are made to report. Penalties will begin to be enforced in year 2.

New York Mandatory Greenhouse Gas Reporting Program

On December 1, 2025, the New York State Department of Environmental Conservation (NYSDEC) finalized regulations establishing a Mandatory Greenhouse Gas Reporting Program under 6 NYCRR Part 253. The rule requires certain entities operating in or serving New York to monitor, report, and retain records of greenhouse gas emissions, beginning with 2026 emissions reported in 2027

The following sources will be required to annually report emissions data to DEC

• Owners and operators of facilities in New York that emit 10,000 metric tons (MT) or more of carbon dioxide equivalent (CO2e) per emissions year. These facilities include electricity generation, stationary combustion, landfills, waste-to-energy, natural gas compressor stations, and other infrastructure
• Fuel suppliers that provide a quantity of fuel to an end user in New York that generates any amount of GHG emissions per emissions year. This includes suppliers of natural gas, liquid fuels, and petroleum products, liquefied natural gas and compressed natural gas, and coal
• Waste haulers and transporters (exporters) for which the estimated emissions from solid wastes transported to landfills or combustion facilities outside of New York exceed 10,000 MT CO2e emissions in any year
• Electric power entities that emit any GHG emissions or import megawatt hours into New York;
• Suppliers of agricultural lime and fertilizer that supply a quantity of agricultural lime and fertilizer necessary to generate any GHG emissions per emission year; Anaerobic digestion and liquid storage of waste at facilities, such as wastewater treatment plants and concentrated animal feeding operations, where wastes imported to the facility or generated at the facility in an amount that would generate 10,000 or more metric tons of CO2e per year.

The program phases in reporting beginning in 2027, with key milestones 

• January 1, 2026 – Applicability date for determining whether an entity is subject to reporting obligations
• Calendar Year 2026 – First emissions year to be monitored
• June 1, 2027 – Deadline to submit the first annual GHG emissions report (covering 2026 emissions)
• December 1, 2027 – Deadline for third‑party verification statements, where verification is required
• Annually thereafter – Reporting continues annually

If an entity meets the criteria of a Large Emissions Source for a given year, it will be required to engage a third-party verifier accredited by NYDEC to verify the reported emissions and industrial product data. Verification statements are due annually, with first verification statements due December 1, 2027, for 2026 data

For questions on these items and more please reach out to SustainabilityTeam@Constellation.com and your inquiry will be directed to an inhouse expert.