The States vs. the Fed – who’s making the climate change rules

Fed up with the White House, all but 17 states are moving forward with their own emissions schemes

By Victoria Schlesinger

We all know the US Federal government hasn’t passed legislation or signed treaties to stymie the rise in greenhouse gases, and that environmentalists, business coalitions, and nations have raged about the inaction for years.

Most recently, and perhaps most damningly, Al Gore said during the UN-led climate change talks in December, My own country, the United States, is principally responsible for obstructing progress here in Bali.

To protest this foot dragging, states are taking the lead in combating climate change. In fact, they’re about to lap the Feds. With three regional agreements to limit emissions underway—in the Northeast, West, and Midwest—roughly two-thirds of the union is pursuing climate legislation.

Ironically, this is just how it should, and always does, work. Or so say the history books and John Larsen, associate with the World Resources Institute (WRI), an environmental think tank.

“Both in the environmental arena but also in other areas there are countless examples of where states lead on an issue in advance of the Federal government with the Fed’s often playing catch up,” Larsen says.

A report published in August by WRI points to nearly a dozen case studies in which state initiatives eventually led to Federal legislation, including a cap-and-trade system for reducing ozone pollution and certification standards and processes for organic food.  

“That is partly the intention of the Federal system in the first place. From the beginning there was this concept that states are the laboratories. They are free to experiment,” Larsen says.

And experimenting they are. States are quickly getting up to speed on which of their industries emit large amounts of carbon or rely on those that do, and looking to be the leaders in new types of energy and technology. All but 17 states are creating their own emissions-limiting plan, while governors work to agree on regional frameworks. So far all regional groups intend to develop cap-and-trade schemes and have an eye on the long-term option of linking the regional markets.

But most everyone agrees that ultimately we need federal legislation or we’ll end up with a tangle of incompatible rules that burdens businesses. “A Federal policy is needed otherwise it’s very difficult to get every state to act,” says Pat Hogan, a solutions fellow for the Pew Center on Global Climate Change, a policy think tank. “And businesses prefer less of a patch work [of regional rules].”

So while robust state activity is good, what it may be best for is pushing the Fed to action.

In the Northeast
States in the Northeast formed an alliance called the Regional Greenhouse Gas Initiative (RGGI) in mid-July 2003 with the goal of stabilizing emissions from power plants in the region at roughly 2003 levels by 2015 and then cut them 10 percent by 2018.

The ten states have developed a cap-and-trade system that will go into practice in 2009, with carbon permits allotted to each state that will be auctioned off to power companies. The states are still determining how proceeds from the auction will be used. Those participating include Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, Maryland, with DC, Pennsylvania, the Eastern Canadian Provinces, and New Brunswick observing. Observer states can attend meetings and watch the decision-making process, but are not allow to vote.  

In the West
States as far east as New Mexico and far north as the Canadian province British Columbia are partaking in the Western Climate Initiative (WCI), which aims to reduce its regional greenhouse gas emissions to 15 percent below 2005 levels by 2020. A total of six states and two Canadian provinces are participating.

In February 2007, the governors of Arizona, New Mexico, California, Oregon, and Washington launched the new alliance and saw Utah, Montana, and the Canadian provinces of British Columbia and Manitoba join since. Observers include Alaska, Colorado, Idaho, Kansas, Nevada, Wyoming, Canadian provinces Ontario, Quebec, and Saskatchewan, and Mexican state Sonora.

Still early in its planning process, WCI has yet to determine how wide a net to cast when choosing which emitters to include. They will go beyond just power plants, and aim for an economy-wide approach. “What we’re doing is designing the Federal system” says WCI chair Janice Adair. “We will be done before any action is taken at the Federal level, and what we want is to present our design as something for them to consider.”

The WCI plans to have a framework for their market by this summer.

The Midwest
In the same month that the western states announced their alliance, Wisconsin governor Jim Doyle became chairman of the Midwestern Governors Association (MGA) and made climate change a priority.

“He realized, like many other Midwest governors, the Midwest is an excellent region to produce new alternative energies and at the same time sequester carbon,” says Jesse Heier, director of Midwest Governor’s Association.

In November, under the direction of the MGA, six states and one Canadian province established the Midwestern Regional Greenhouse Gas Reduction Accord, agreeing to design a cap-and-trade system that will eventually lower emissions 60-80 percent below current levels. Because they are such coal-dependent states, they’ve agreed the system will encompass other industries as well, although could offer no specifics on which.

With their first advisory group meeting next month, Heier says, “We’re still in the formative process of getting everybody on board and moving forward.”

Illinois, Iowa, Kansas, Michigan, Minnesota, Wisconsin, and the Canadian Province of Manitoba signed the agreement, while Indiana, Ohio, and South Dakota are observers.

They intend to be up and trading by May 2010.

The South
With the exception of Florida and its new climate-savvy governor Charlie Crist, the south and southeastern states have not set goals for reducing their emissions, one of the first steps to organizing a regional greenhouse gas trading agreement.