Dan Cronin

Given the 24 hour news cycle around the US Congressional and Presidential Election, it would be easy to focus only on what happens in Congress or who is the president when it comes to looking at how the U.S. government responds to a problem like climate change. This would ignore a significant amount of policy and activity in America.

Often it is government at the state and local level that acts first and drives national policy. This has been the case on issues like the push for tax cuts in the 1970s and the fight over gay marriage in the last decade.

Recently, state actors have set the agenda when dealing with the issue of climate change. Under the leadership of governors and legislatures, states have taken the initiative on a host of climate-related issues. Importantly, these changes will continue regardless of who wins controls the White House and Congress after the November election.

Power Up

In the U.S., electric power distribution is regulated by both the federal and state governments. Through the Federal Energy Regulatory Commission, whose members are appointed by the President, the federal government sets the rules for the wholesale sales and transmission of electricity in interstate commerce. Across the country, state public utilities commissions have the ability to regulate the local power distribution and sale of electricity within a state from an entity to a user, and the building of facilities involved in power transmission, generation, and distribution of electricity. Typically, these commissions are appointed by state governors. With this authority, state governors and legislatures have been able to push for reductions in greenhouse gas emissions from the power sector.

To achieve these emission reductions, states have set targets of either 100 percent renewable energy or 100 percent clean energy by 2050 or sooner. These approaches differ in that renewable targets mean the state’s electricity comes only from sources like solar, wind, and hydropower. This approach has been implemented in Hawaii, Maine, Minnesota, and Rhode Island, as well as Puerto Rico and Washington DC.

In contrast, states that set clean energy targets allow for power to be generated from any non-carbon-emitting resources, such as nuclear generators. Among the states that use this approach include Arizona, Wisconsin, Connecticut, Virginia, California, Nevada, New Jersey, New Mexico, New York, and Washington.

By implementing these policies, states are helping to cut America’s overall carbon emission levels. To understand the scope of their impact, consider that the U.S. Energy Information Administration finds the power sector in the 14 states plus D.C. and Puerto Rico generated over 273 million metric tons of in 2017, which is just over five-percent of the total emissions in the U.S.

Cap it Off

While multiple attempts to pass emissions trading legislation failed in Congress a decade ago, this has not been the case in the states. Over the past fifteen years states have been able to create their own carbon emissions trading systems.

Currently, ten states in the Northeast and Mid-Atlantic U.S. are part of the Regional Greenhouse Gas Initiative (RGGI). The initiative was launched in 2009 and is the first U.S. cap-and-trade program to reduce carbon dioxide (CO2) emissions from the power sector.

As a sign of the program’s success, over the past decade emissions regulated by the program have been cut in half from their 2005 high, and investments from allowance auctions have created close to $3 billion in economic value. In 2017, RGGI members declared they would decrease emissions another 30 percent by 2030.

Outside of the RGGI states, California has implemented an emissions trading system. The program is a key component of the state’s plan to cut greenhouse gas emissions to 1990 levels by 2020, 40 percent below 1990 levels by 2030, and 80 percent below 1990 levels by 2050. Unlike the RGGI states, California’s program applies to multiple sectors of the state’s economy and is linked with the cap-and-trade system in the province of Quebec.

In addition to its cap and trade program, recently, California has also announced it will push for further emissions cuts in the transportation sector. Under an executive order signed by Governor Newsom, and opposed by the Trump Administration, by 2035 all new passenger vehicles sold in the state must be zero-emission. This move echoes past efforts by California to lead in efforts to curb vehicle emissions and according to reports it is expected to lead to a 35% decline in greenhouse gas emissions.

I’ll see you in court

States not only have the power to implement new programs, they also can use the courts. State attorneys general can sue the federal government to block laws or regulations from being implemented. For example, last year 21 states sued the current administration over its decision to eliminate the Obama Administration’s Clean Power Plan and replace it with a new rule.

States also can take legal action to force the federal government to address a problem. In the early 2000’s a coalition of states, local governments, and non-profit organizations sued the EPA to make the agency to regulate greenhouse gas emissions. The Supreme Court ruled 5–4 in the case of Massachusetts v. EPA that the Clean Air Act gives the EPA the authority to regulate tailpipe emissions of greenhouse gases and remanded the case to the EPA. This ruling forced the agency to review its contention that it has discretion in regulating greenhouse gas emissions. Ultimately, the EPA found that greenhouse gases “in the atmosphere may reasonably be anticipated both to endanger public health and to endanger public welfare.”

In addition to taking actions against the federal government, states and localities can use their legal power to sue companies. Similar to what we saw the states suing tobacco companies in the 1990’s states like New York have begun to file suits against oil and gas companies.

This new front in the fight over climate change hinges on the argument that companies knew their products caused problems such as sea level rise and willfully misled the public about those and other dangers related to global warming, and now should pay for the damage they caused.

In the coming years, state driven cases will be impacted by the Supreme Court moving in a more conservative direction. This change is highlighted by Circuit Court Judge Amy Comey Barret replacing Justice Bader Ginsburg on the Supreme Court. The Supreme Court’s decisions are binding and have far reaching consequences, but it cannot decide all matters. The Supreme Court picks which cases it hears- around 80 cases a year. In contrast, the Federal appellate courts hear around 50,000 cases a year; where the Supreme Court does not agree to take the appeal, those decisions are final.

Lab work

During the 1930’s Supreme Court Justice Louis Brandeis wrote that states are the laboratories of democracy. In his view, “a state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

As we have seen, on the issue of climate change many states have taken up that mantle, regardless of who is in power in Washington, DC after the November election. A 2019 report from America’s Pledge found that if state and local governments fully implement the policies already in place, along with changing conditions in the power sector- U.S. emissions would fall 19 percent below 2005 levels by 2025.

Whichever way the U.S. Federal Government ultimately chooses to address climate change in the future it is likely they will be following a path first set out by the states.

Originally published at https://carbontracker.org on October 26, 2020.

Carbon Tracker is an independent financial think tank that carries out in-depth analysis on the impact of the energy transition on financial markets.