US appeals court blocks Trump bid to cancel $20bn climate grant programme

A federal appeals court in Washington has ruled that the Environmental Protection Agency likely acted unlawfully when it tried to cancel a multibillion-dollar clean energy grant programme created under former President Joe Biden. The decision temporarily blocks the Trump administration's effort to dismantle the fund, although the money will remain frozen for now. The case centres on roughly $20bn in grants tied to the Greenhouse Gas Reduction Fund, a programme designed to support clean energy projects through nonprofit intermediaries.

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The full US Court of Appeals for the District of Columbia said on Tuesday that the EPA cannot freeze the grants while the legal dispute continues. The court reversed an earlier decision by the same panel, but it also put its ruling on hold to give the agency time to seek emergency intervention from the US Supreme Court. EPA Administrator Lee Zeldin has argued that the programme does not fit the agency's priorities and has accused recipients of fraud, waste and mismanagement.

The fund was created by Congress through Biden's 2022 Inflation Reduction Act and has been described as a kind of green bank. According to the programme design, federal money was awarded to nonprofit groups that would then provide loans and investment for small energy projects, energy-efficient buildings and clean-energy infrastructure. The organisations involved, including Climate United Fund and Coalition for Green Capital, have denied wrongdoing and say the administration is unlawfully withholding money already approved by Congress.

The ruling is significant because it affects one of the largest climate finance programmes established under the Biden administration. It also highlights the legal limits on how far a new administration can go in reversing a programme that has already been funded by Congress. For clean-energy groups, the case has immediate financial consequences because the grants remain tied up while the legal fight continues.

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The dispute has become part of a wider effort by the Trump administration to roll back Biden-era climate policy. Zeldin publicly criticised the fund in February, calling it an example of government waste and saying the money had been placed with outside financial institutions. The EPA then froze billions of dollars held at Citibank for distribution, prompting the recipient organisations to sue.

Their argument is that the administration is trying to end the programme because it opposes its climate goals rather than because of proven misconduct. What happens next will depend on whether the Supreme Court agrees to step in and whether the freeze remains in place during further litigation. The underlying question is whether the EPA had the authority to halt grants that had already been approved under federal law.

Until that is resolved, the programme remains suspended and the legal battle over its future is set to continue.

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