America’s Climate Abdication: What Trump’s Endangerment Finding Repeal Means
On Thursday, the Trump administration rescinded the Environmental Protection Agency’s 2009 endangerment finding—the scientific and legal determination that greenhouse gas emissions endanger public health and welfare. EPA Administrator Lee Zeldin called it “the largest act of deregulation in the history of the United States.” For those of us who study the intersection of geopolitics and finance, this is not merely an American domestic policy story. It is a tectonic shift in the global energy architecture, and its reverberations will be felt acutely in Israel.
The endangerment finding, established under President Obama, provided the legal backbone for regulating carbon dioxide, methane, and four other greenhouse gases under the Clean Air Act. It underpinned emissions standards for vehicles, power plants, and oil and gas facilities. Its repeal dismantles the federal regulatory apparatus for climate action, withdrawing the world’s largest historical emitter from meaningful domestic climate governance just as the planet records its third consecutive year of record-breaking temperatures. The Sierra Club called it the formalisation of “climate denialism as official government policy.”
The Short-Term Dividend
Israel’s energy landscape has been transformed by the development of its offshore natural gas reserves—principally the Leviathan and Tamar fields. Fossil gas now accounts for approximately 70% of Israel’s energy mix, and the country has evolved from a net energy importer to a regional gas exporter, with record gas royalties exceeding $650 million in 2024. The $35 billion gas supply agreement with Egypt, signed by Leviathan partners in August 2025 and subsequently approved by the Israeli government, underscores that Israel’s energy diplomacy is inextricably linked to its national security architecture.
America’s wholesale retreat from climate regulation reinforces the global legitimacy of natural gas as a “transition fuel” for years to come. For Israel, this is a tailwind. The removal of US emissions standards and the effective abandonment of the electric vehicle push will sustain global hydrocarbon demand, bolstering the economic case for Israel’s gas exports. Energy Minister Eli Cohen’s framing of the Egypt gas deal as serving both “security-diplomatic” and “economic” interests is validated by this American retrenchment.
Moreover, the political cover is significant: Israel declined to join over 80 nations calling for a fossil fuel transition roadmap at COP30 in Brazil, and its failure to meet its 2025 target of 20% renewables will attract less scrutiny when the world’s hegemon has abandoned the field entirely. Gas exports to Egypt and Jordan increased 13.4% during 2024, even as the Gaza war raged—neither country halted imports despite intense domestic and regional pressure—demonstrating that energy interdependence reinforces Israel’s peace treaties and normalisation frameworks. Israel’s strategic positioning along potential energy corridors, including the India-Middle East-Europe Economic Corridor, could further enhance its role as a critical node in regional infrastructure.
The Hidden Risks
Yet the medium- to long-term implications are far more troubling. Drawing on option pricing theory, Trump’s rollback presents Israel with a complex portfolio of real options—some immediately valuable, others carrying substantial tail risk.
First, the climate itself does not negotiate. Israel is among the most climate-vulnerable developed nations. The Eastern Mediterranean is warming at roughly twice the global average. Water scarcity will intensify. Heat waves that currently stress the electricity grid—where 45% of total consumption is attributable to air conditioning—will worsen. And here the water-energy nexus becomes critical: Israel now derives approximately 80% of its potable water from desalination, an extraordinarily energy-intensive process. As climate change simultaneously increases water demand and electricity consumption for cooling, Israel faces a compounding vulnerability that a diversified renewables-plus-storage portfolio would hedge far more effectively than continued reliance on a single fossil fuel input.
Second, the energy transition is proceeding regardless of regulatory frameworks, driven by economics. Renewable costs continue to fall. Data centre operators increasingly insist on clean power. Market demand, not regulation, is becoming the primary driver. Israel, with superb solar irradiance and a globally renowned cleantech sector, risks being left behind by clinging too long to its gas bonanza. Trump’s climate abdication hands a strategic gift to Beijing, which already dominates solar, battery, and EV supply chains. Israeli cleantech firms face stronger gravitational pull toward Asian markets—precisely when Washington demands allies decouple from China. Israel must navigate this with extraordinary care.
Third, there is the stranded asset problem. Global emissions will likely continue declining despite Trump’s rollback, driven by state-level action, market forces, and international momentum. Israel’s massive gas infrastructure investments may face a shorter economic life than projected. The reserve horizon—estimated at roughly 18 years based on 2017 proven reserve data—could prove optimistic if global gas demand peaks sooner than expected. Meanwhile, Gulf states are not merely Israel’s potential partners but emerging competitors: as Saudi Arabia and the UAE accelerate domestic renewable transitions, they free up hydrocarbons for export, potentially undercutting Israeli gas pricing in Egypt over multi-decade contract horizons.
Fourth, the repeal’s legal fragility demands attention. The Supreme Court’s 2007 ruling in Massachusetts v. EPA determined that the agency is required to regulate greenhouse gases under the Clean Air Act. Courts have uniformly rejected every legal challenge to the finding, and the National Academy of Sciences confirmed in a 2025 report that the evidence is “beyond scientific dispute.” The repeal will face years of aggressive litigation with a realistic probability of being overturned. Israel’s long-term gas contracts should be stress-tested against a regulatory whiplash scenario in which US climate regulation is reinstated within five to eight years.
Climate Policy as Insurance
Allow me to extend the option-pricing framework to its logical conclusion. Climate policy is, at its core, an insurance premium. Nations pay a cost today to reduce the probability and severity of catastrophic future losses. Trump’s argument, stripped of rhetoric, is that America no longer needs this insurance. The premium is too expensive, the risks are overstated, and the market will sort itself out. For a continental-scale economy with vast geographic diversity, abundant water resources, and enormous adaptive capacity, this is reckless but survivable. For Israel—a nation of 9.6 million people occupying 22,000 square kilometres of semi-arid land, dependent on desalination for 80% of its potable water, bordered by fragile states, and already experiencing accelerating climate impacts—it would be suicidal. The actuarial logic is unambiguous: Israel’s expected losses from climate change—measured in water stress, infrastructure damage, agricultural disruption, and public health costs—are among the highest per capita in the developed world. The insurance premium, measured in renewable energy investment and adaptive infrastructure, is modest by comparison. Trump may cancel America’s policy; Israel must not cancel its own.
What Israel Should Do
The prudent response is not to celebrate Trump’s deregulation as an unqualified windfall, but to treat it as a short-term option premium that buys time without eliminating the underlying risk. Israel should use the breathing room to accelerate its renewable transition—the 30% renewables target by 2030 is already inadequate, with climate-compatible pathways suggesting 68–83% is needed. The government should fast-track solar deployment in the Negev and invest seriously in energy storage technology where Israeli innovators already hold comparative advantage. Simultaneously, Israel should maximise returns from gas assets while they retain peak value, executing the Egypt and Jordan agreements efficiently and pursuing the IMEC energy corridor. On the diplomatic front, Israel should resist aligning its climate posture with America’s retreat: the Abraham Accords increasingly involve clean energy cooperation as diplomatic currency, and Gulf states’ green hydrogen investments create opportunities that would be jeopardised by Israel being perceived as a climate laggard.
Trump’s repeal of the endangerment finding is the single most consequential act of environmental deregulation ever undertaken by a major economy. It will be challenged in court for years and may ultimately be reversed. But its immediate effect is to remove the regulatory floor beneath American climate policy. For Israel, navigating an increasingly bifurcated regulatory landscape between a deregulating United States and a European Union tightening its carbon border adjustment mechanisms adds further complexity. The strategic paradox is stark: the short-term beneficiary of sustained fossil fuel demand is also a long-term casualty of accelerating climate change in one of the world’s most vulnerable regions. As any options trader will tell you, the most dangerous position is one where you mistake the premium for the principal. And in the insurance business, the most reckless decision a vulnerable policyholder can make is to cancel their coverage because their neighbour did. Israel must not make either error.