State Governmental Leadership in U.S. Climate Policy

Under the Trump administration, the United States left the Paris Agreement and dramatically rolled back federal climate action. Into that void stepped a new class of leaders—states and local governments. Not only have many states adopted policies to reduce emissions and led in cutting emissions, they have also worked with foreign governments even while the federal government was backpedaling. Although there are indications that we’re entering a period of sustained federal effort on the climate front, state governments will nevertheless continue to play a key role.

When I moved to California over fifteen years ago, I did not have any particular interest in state environmental law. Coming from the Midwest, it did not seem like a high priority. It was during the Bush Administration that the leadership of states like California really entered the spotlight. I’m now the faculty director of the Center for Law, Energy, and the Environment at the University of California, Berkeley, which works closely with state policymakers in California and elsewhere on sustainability issues. While our focus has been on state-level policymaking, we are well aware of the importance of national policy. And in fact, the logical next step in national climate action is to find opportunities for the federal government to leverage the efforts of states.

States have pioneered policies for energy storage, electric vehicles, energy efficiency standards for appliance and buildings, low carbon fuel standards, and emissions trading. State emission reductions were all the more important under Presidents Bush and Trump, when the federal government abandoned the effort to reduce emissions and promoted production of fossil fuels. As soon as President Trump announced his intent to withdraw from the Paris Agreement, the governors of New York and California announced the formation of the U.S. Climate Alliance along with their intentions to comply with the United States’ emissions reduction commitment under the Paris Agreement. States that committed to upholding the U.S. pledge have cut their emissions 17 percent below their 2005 level (not including temporary 2020 reductions due to the pandemic.)

It is likely that many states will remain ahead of the nation as a whole for years to come, meaning that their emission cuts will continue to augment national efforts. An enormous amount of time, effort, and expertise have gone into shaping policies, with California and a few other states in the lead. These states have learned a lot about what works and what doesn’t. They have developed roadmaps for drastic reductions of emissions in coming decades that can provide models for developing federal policies.

Despite the tradition of federal exclusivity in international affairs, states like California have also played important roles beyond U.S. borders. Through their commitments and actions, they sent a strong signal that important parts of American society were still committed to climate progress. Actions taken under the Trump administration have left other countries uneasy about future American commitments. They would surely be far more uneasy if the only message received during the Trump years had been from Trump himself.

Through evaluation of state programs, the provision of financing, and improved coordination, the federal government could fully leverage these state efforts to augment federal climate efforts. Evaluation of state efforts could guide federal policy development. The federal government should fund more systematic efforts to measure what has and hasn’t worked for states. It could also provide financial supports for innovative state programs, and provide a clearer sense of what types of state experiments would be particularly useful.  On the international side, the federal government could make more conscious use of the “state channel” to augment its own efforts to reduce emissions.

The Scope and Ambition of State Policy

Although a few states like California and New York tend to draw the most attention, efforts to address climate change and promote renewable energy are widespread. The majority of states have adopted renewable portfolio standards, which require that a certain percentage of electricity sold by each utility come from renewable sources. States also took the lead in setting a price on carbon. In addition to the better-known California program, a consortium of states in the northeast and mid-Atlantic states have formed an emissions trading system. (An emissions trading program sets a ceiling on the amount of total amount of emissions—the “cap”—and establishes a market in which firms can trade the right to emit specified amounts—the “trade”) The state of Washington is now on the cusp of launching its own emissions trading system, a modified version of California’s system.

California legislation focusing specifically on climate change dates back to a 1988 law mandating an inventory of California greenhouse gas emissions. California’s climate efforts have steadily increased over time. In 2002, the state took advantage of an exception to federal preemption of emissions standards for new cars by enacting legislation requiring reduction of CO2 emissions. This was almost a decade before the federal government adopted similar rules. In 2006, Governor Arnold Schwarzenegger signed the California Global Warming Solutions Act, usually referred to as AB 32, which required California to reduce emissions to the 1990 level by 2020. AB 32 created a cap-and-trade program to achieve this goal. Later legislation requires a 40 percent cut below 1990 levels by 2030. California law also mandates that the state get 60 percent of all electricity from renewable sources by 2030 and 100 percent from carbon-free sources by 2045. Another notable measure is the Low Carbon Fuel Standard, which regulates vehicle fuels sold in the state based on their total carbon emissions—from production through combustion—and has helped jump-start the country’s electric vehicle market.

These policies are part of a suite of climate changes measures adopted by the state. Recent California governors, both Republicans and Democrats, have helped pave the way for these policies with ambitious executive orders setting targets for emission reduction, internal combustion engine phase-out, and state carbon neutrality.

State efforts have accelerated despite heavy headwinds at times from Washington. Between Trump’s election and the end of 2018, six states, including California and New York, made binding commitments to 100 percent renewable or carbon-free power by 2050 or even earlier.  In 2018, after the Trump Administration had begun to roll back limits on carbon emissions and promote fossil fuels, California mandated that all new homes have solar energy and enacted a mandate for carbon-free electricity by mid-century.The same year, Washington State set goals for zero reliance on coal by 2025, a carbon-neutral grid by 2030, and total reliance on renewable energy by 2050. New Jersey’s governor signed an executive order to begin rejoining the eastern regional carbon trading system. He also signed new legislation requiring one-third renewable power by 2025 and 50 percent by 2030, with special provisions to encourage solar and offshore wind. State efforts accelerated further after 2018.

Clearly, the drive toward climate action at the state level was strong enough to survive the adverse national political climate. Indeed, states like California and New York were very active in litigating against Trump’s regulatory rollbacks, with significant success in the courts. Just as states were not deterred by a hostile national climate, the prospect of positive federal action has not made them complacent.

Lessons Learned from State Policy

The simplest, most basic lesson to be learned from the experience of California and other states is that it is possible in the context of U.S. society to make substantial emission cuts while maintaining a dynamic economy. That is not an insignificant lesson, given the prophecies of economic doom and dire consequences of a transition from fossil fuels.

The experience of California and other states also identifies some tools that have been used with success. Unlike a carbon tax, these are tools that are within the realm of possibility in America today, although the political barriers to national adoption are not insubstantial. Emissions trading is one of those tools. Renewable portfolio standards, or more generically, clean energy standards, are another. California’s standards for new vehicles, which have been widely adopted by other states, and its low carbon fuel standard have also been successes. California achieved its 2020 emissions target four years early. California has also collected billions of dollars in revenue from the sale of emissions allowances, using the money for efforts to reduce emissions and assist disadvantaged communities. California has also adopted an incentive systems for electric vehicles and energy storage, helping to jumpstart these technologies.

The design details of these state systems are complex, resulting from years of study by state agencies with input from economists and energy modelers. National policymakers can take advantage of these hard-earned lessons in designing their own emissions reduction instruments.  California’s scoping plans have identified pathways for long-term carbon reductions based on complex energy modeling and economic analysis, combined with careful consideration of environmental and land use impacts. 

National policymakers can also learn from some of the failures encountered by state policymakers. Despite its impressive general successes, not all of California’s programs have been equally successful. California’s pioneering cap-and-trade program offers a mix of lessons for national leaders: while it has generated billions of dollars for state climate investments and contributed to meeting early emission reduction targets, experts have highlighted concerns including the oversupply of allowances, price and revenue instability, and unclear capacity to drive deep emission cuts in the long term. In addition, environmental justice advocates have criticized the distribution of impacts and benefits under the state’s market-based frameworks—an issue state legislators have addressed, perhaps belatedly, through equity-focused funding and air quality programs.

These issues can be remedied. Washington State’s new trading system has profited from the California experience and adopted several improvements. California itself has adopted the Transformative Climate Communities program in order to give communities that are heavily impacted by pollution more ability to control local pollution.

Other state policies have also run into rough sledding. California’s efforts to increase urban density and combat sprawl, so as to decrease transportation emissions, have run into resistance at the local level. Local governments have used their control over land use decisions to inhibit apartment construction.  Some legislative steps, however, have begun to address this issue. Another sticking point has been retrofitting older buildings. California’s efforts to incentivize owners to retrofit buildings have been stymied by weak uptake by owners and may need to be replaced by retrofit mandates. Those problems are probably not susceptible to direct federal interventions, but the federal government needs to consider how to move state and local governments in the right direction.

States will continue to play a major role in implementing climate policy even if the federal government assumes the lead. While the federal government regulates wholesale markets and interstate transmission, states regulate power generators and local distribution of electricity. Solar and wind generation, along with electricity storage, involve siting decisions that can only be made at the state level. States will control connections between the local grid and charging stations for electrical vehicles. They and their subdivisions control urban planning and public transit, which are key to reducing transportation emissions. States have far more capacity than the federal government to work with farmers and forest owners to increase carbon sequestration. States will also continue to pioneer and test new policies before they are adopted at the federal level.

The federal government could do more to support state efforts. States need fuller access to national energy markets for their consumers and generators in order to achieve their goals.  Federal support for expanded transmission would help states reach their climate goals at much lower cost. States also need help in dealing with the problem of “carbon leakage,” when emissions restrictions in one state can result in shifting production of energy or goods to other states. Because states are small and have open borders, they are more exposed to this risk than the U.S. would be as a whole. The federal government can help protect states against leakage, and it could also give its blessing to state efforts to prevent leakage. By doing so, it could help block lawsuits claiming the anti-leakage measures overstep the boundaries of state legal authority. Finally, the federal government has technical capacity that could provide vital assistance, especially to smaller states, in performing the modeling needed to shape state policy.

Augmenting Climate Diplomacy

Foreign affairs are generally the domain of the federal government. Unfortunately, the U.S. government’s stance on climate change has been inconsistent. Under Presidents Clinton and Obama, the U.S. played a leading role in negotiating major international agreements like the Kyoto Protocol and the Paris Agreement, only to see those efforts abandoned or reversed under Presidents Bush and Trump. States have helped fill the gap, if only partially, while also extending international cooperation down to the subnational level through coalitions with their foreign counterparts. California and other states have also made international connections of their own. 

California has been particularly successful in leveraging its leadership position and economic prominence in the international sphere. California governors have met with foreign leaders such as President Xi, and there are continuing cooperative efforts involving state institutions (including the University of California) and their Chinese counterparts.

Governor Arnold Schwarzenegger, himself an international celebrity, engaged in global outreach about California’s climate initiatives, as did the head of the California Environmental Protection Action, Linda Adams. Governor Jerry Brown’s initial focus was on California policy. Driven by frustration with federal efforts, contacts from foreign leaders drew California back into the global arena. California forged links with other subnational governments, particularly on issues involving deforestation. California also has bilateral agreements involving China, Mexico, Canada, Israel, and others. It has even linked its cap-and-trade system with Quebec’s.

California was instrumental in forming the Under2 Coalition, which has members in the United States along with areas as diverse as Canada, Brazil, and Indonesia.  The coalition’s Memorandum of Understanding (MOU) states that the “guiding principle for reduction of greenhouse gas (GHG) emissions by 2050 must be to limit global warming to less than 2°C,” a goal that it then translates into specific emissions targets. By the time of the Paris conference, a group of more than 100 subnational governments were able to have an active voice. Governor Brown also played a role under the Paris Agreement, even though as a subnational government California cannot be a party to the agreement.

As with domestic policy, these international efforts have been most obviously important during periods of federal backsliding. They have remained important, however, even when the U.S. has played a more positive role. First, the U.S. is not the only country where state and local governments have stepped ahead of their national governments. It can be awkward for the U.S. government to work directly with those subnational governments given sensitivities about national sovereignty. U.S. states, however, can help support climate efforts by their foreign counterparts. Second, international tensions due to unrelated issues can impede U.S. cooperation on climate policy with other governments. State governments, which have much less visibility, can provide another avenue for climate cooperation even when relationships between national governments are conflicted.

The California China Climate Institute at Berkeley is an example of this kind of cooperative relationship. Stemming from discussions between Governor Brown and the Chinese environment minister, CCCI connects researchers in the University of California with their counterparts in China. It also has connections with national and subnational policymakers in both countries. Despite tense diplomatic relations, it remains crucial to find ways for China and the United States to work together on climate issues.

Conclusion

We’re all used to thinking of the federal government as the dominant player in public policy, and all the more so in areas with an international dimension. The picture in U.S. climate law is quite different. States have taken the initiative, with the federal government somewhat fitfully playing catch-up. The federal government’s most irreplaceable role may be in funding, where it can devote resources far beyond the capacity of the states to research, development, and expansion of new energy technologies.

Beyond that, the federal government has the ability to impose nationwide restrictions on emissions and to operate as a formal actor in international public law. How effectively the federal government can play those roles will depend on whether, after the Trump era, it can reestablish the credibility of its policy commitments. States have played an important role in backstopping U.S. policy and in developing new policy initiatives, operating as laboratories of democracy. They have actively resisted backsliding by the federal government and have provided alternative policy and diplomatic channels.   

As the Biden administration is seeking major forward steps in climate policy, states can provide valuable assistance, given their greater experience in the climate arena. They can also leverage federal policies to create changes on the ground that will persist despite any future policy fluctuations at the federal level. Their own climate initiatives have created a valuable new arena for cooperative federalism, which the federal government should take advantage of in its own climate efforts.

Sources: Bloomberg Green, Bloomberg Law, Cal Matters, California Air Resources Board, California Climate Investments, California Legislature, California Office of Environmental Health Hazard Assessment, California Public Utilities Commission, California Strategic Growth Council, Center for American Progress, Daniel Farber (2021), E&E News, Energy Efficiency for All, Grist, Jetta Cook (2021), L.A. Times, National Conference of State Legislatures, National Regulatory Research Institute, People’s Republic of China Ministry of Foreign Relations, Regional Greenhouse Gas Initiative, Under2 Coalition, United States Climate Alliance, University of California Berkeley California-China Climate Institute, University of California Berkeley School of Law’s Center for Law, Energy & the Environment, and University of California Los Angeles School of Law’s Emmett Institute on Climate Change and the Environment.

[1] While my focus here is on efforts to forestall climate change by cutting emissions, state and local governments have also done considerable work to manage the risks created by climate change, from sea level rise to more severe wildfires. The federal government can learn from these policies in managing its own lands and in helping to support similar programs in less forward-thinking states.