Order Code RL33812
Climate Change: Action by States To Address
Greenhouse Gas Emissions
Updated April 27, 2007
Jonathan L. Ramseur
Environmental Policy Analyst
Resources, Science, and Industry Division

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Climate Change: Action by States To Address
Greenhouse Gas Emissions
Summary
In the absence of a federal climate change program, a number of states have
taken actions that directly address greenhouse gases. States’ efforts cover a wide
range of policies. Although much of the early activity was largely symbolic, the
more recent state actions have been more pragmatic. The states’ motivations may be
as diverse as the actions themselves. Some states are motivated by projections of
climatic changes, while others expect their policies to provide economic
opportunities or other co-benefits, such as improvements in air quality, traffic
congestion, and energy security. Another driver behind state action is the possibility
of catalyzing federal legislation.
Forty-two states have conducted greenhouse gas inventories; at least 30 states
have either completed or are in the process of preparing climate change action plans;
12 states have set statewide greenhouse gas targets. However, a smaller but growing
number of states have implemented or are creating mandatory emission reduction
programs.
The most significant developments have come from California and from a group
of states in the Northeast and Mid-Atlantic. The Regional Greenhouse Gas Initiative
(RGGI), a partnership of nine Northeast and Mid-Atlantic states, sets up a
cap-and-trade system aimed at limiting carbon dioxide emissions from power plants.
California has undertaken several initiatives that seek to reduce greenhouse gas
emissions. In 2004, the state issued regulations to reduce greenhouse gases from
motor vehicles. At least 12 other states have indicated they intend to follow
California’s new vehicle requirements. In 2006, California passed two climate
change statutes. The first would establish a statewide cap on greenhouse gases. The
second would effectively limit the use of coal-generated electricity in California. The
state has also taken action to reduce the carbon intensity in its transportation fuels.
Predicting the precise consequences of the state-led climate change actions is
difficult. Some actions, particularly the mandatory emission reductions, may create
economic effects, especially in the automotive manufacturing and electricity-
generating sectors. Many observers suggest that the quantity and range of state
actions will catalyze federal activity. Industry stakeholders are especially concerned
that the states will create a patchwork of climate change regulations across the nation.
This prospect is causing some industry leaders to call for a federal climate change
program. If Congress seeks to establish a federal program, the experiences and
lessons learned in the states may be instructive.
Although some states are taking aggressive action, their possible emission
reductions may be offset by increased emissions in states without mandatory
reduction requirements. This is perhaps the central limitation of state climate change
programs in actually affecting total greenhouse gas emissions. Legal challenges
represent another obstacle for state programs, particularly for the more aggressive,
mandatory programs.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Direct Action Versus Indirect Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Direct Actions by States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
State Action Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Greenhouse Gas Emissions Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Greenhouse Gas Emissions Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Greenhouse Gas Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Greenhouse Gas Registries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Mandatory Greenhouse Gas Reporting . . . . . . . . . . . . . . . . . . . . . . . . 11
Mandatory Programs to Reduce Greenhouse Gases . . . . . . . . . . . . . . . . . . 12
Emission Reduction from Power Plants . . . . . . . . . . . . . . . . . . . . . . . 12
Emission Reductions from Motor Vehicles . . . . . . . . . . . . . . . . . . . . . 15
California’s Statewide Emission Reductions Law . . . . . . . . . . . . . . . . 16
Other Mandatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Potential Effects of State Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
States as Policy Laboratories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Possible Economic Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Patchwork of Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Limitations of State Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Figures
Figure 1. States with Completed Climate Change Action Plans . . . . . . . . . . . . . . 5
List of Tables
Table 1. Statewide Greenhouse Gas Targets Compared with Emissions Data
from 1990 and Recent Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 2. Top-Ranked Carbon Dioxide Emissions by Nation and U.S. States
(2001 data) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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Climate Change: Action by States
To Address Greenhouse Gas Emissions
Introduction
Over the past century, particularly in recent decades, scientists have documented
increases in global temperature and sea levels, decreases of sea ice in the Arctic, and
melting of continental ice sheets and mountain glaciers. There is increasing evidence
that human activities are at least partially responsible for some of these effects.1 This
is based upon the combination of two conclusions. First, global temperature
increases are linked in some manner to the measurable increases of greenhouse gas
concentrations in the atmosphere.2 Second, human activities (e.g., fossil fuel
combustion, industrial processes, and deforestation) have contributed to the increased
concentration of greenhouse gases in the earth’s atmosphere.
The link between greenhouse gas emissions and climate change has motivated
efforts to achieve reductions of emissions. In 1992, the United States ratified the
United Nations’ Framework Convention on Climate Change (UNFCCC), which
called on industrialized countries to initiate greenhouse gas reduction.3 However, in
early 2001, President George W. Bush rejected the UNFCCC 1997 Kyoto Protocol,
which called for legally binding commitments by developed countries to reduce their
greenhouse gas emissions.
Over the past decade, the federal government has promulgated or proposed a
variety of voluntary and regulatory actions that, while not specifically seeking to
reduce greenhouse gases, may have yielded emission reductions as a byproduct.4 In
recent years, there has been some congressional support for a mandatory reduction
program. For example, the Senate version of the Energy Policy Act of 2005 included
a “sense of the Senate” Resolution5 stating:
1 This report does not address the debates associated with the climate change science nor the
role of human activity.
2 For example, carbon dioxide, the primary greenhouse gas, has risen worldwide from 280
parts per million (ppm) to over 380 ppm over the past 150 years.
3 The United Nations Framework Convention on Climate Change (UNFCCC) defines
greenhouse gases to include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluorane.
4 For example, federal programs that promote energy efficiency or the use of renewable
energy sources have the potential to reduce greenhouse gas emissions.
5 Senate Amendment No. 866 to H.R. 6, passed by voice vote June 22, 2005. A motion to
table the amendment was rejected by a roll call vote (44 - 53).

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It is the sense of the Senate that Congress should enact a comprehensive and
effective national program of mandatory, market-based limits and incentives on
emissions of greenhouse gases that slow, stop, and reverse the growth of such
emissions at a rate and in a manner that, No. 1, will not significantly harm the
U.S. economy and, No. 2, will encourage other action and key contributors to
global emissions.
In the 109th Congress, Members introduced several bills that would have established
a mandatory greenhouse gas reduction program, but none of the proposals were
reported out of committee.6 In the 110th Congress, Members have proposed several
bills that would reduce greenhouse gases. For more information on the progress and
details regarding this legislation, see CRS Report RL33846, Climate Change:
Greenhouse Gas Reduction Bills in the 110th Congress, by Larry Parker and Brent D.
Yacobucci.
In the absence of action by the federal government to establish a national
program that directly addresses greenhouse gas emissions, a number of states (and
local governments, whose actions are not covered in this report7) have taken action
in this arena. States’ efforts cover a wide spectrum, from developing climate action
plans to setting mandatory greenhouse gas emission standards. While state action is
not a new development — some states set greenhouse gas reduction goals as early as
1989, and many states completed action plans in the 1990s — much of the early
activity was focused mostly on rhetoric outlining preferable actions rather than on
regulatory requirements. However, recent state action has been more significant. A
growing number of states now have regulatory programs that limit greenhouse gases
from particular sources.
The motivating factors for the various states’ actions may be as diverse as the
actions themselves. Some actions are motivated by projections of climatic changes,
such as sea level rise or agricultural impacts. Some states view their greenhouse gas
policies as economic opportunities. States want to position themselves for a “less-
carbonized” future,8 by promoting, for example, alternative energy supplies,
particularly sources available in-state. Other states champion greenhouse gas
reduction policies because of the possible co-benefits: improved air quality, reduced
traffic congestion, and less reliance on foreign energy supplies. Another motivating
factor for state action is the possibility of catalyzing federal legislation.
6 For a more thorough discussion regarding federal climate change legislation and policy,
see CRS Report RL31931, Climate Change: Federal Laws and Policies Related to
Greenhouse Gas Reductions, by Brent D. Yacobucci and Larry Parker, and CRS Report
RL32955, Climate Change Legislation in the 109th Congress, by Brent D. Yacobucci.
7 A number of local governments are pursuing activities that may directly or indirectly
reduce greenhouse gas emissions. For example, at least 171 local governments (cities,
counties) in 35 states have joined the Cities for Climate Protection (CCP). Participating
entities commit to reduce local emissions that contribute to global warming. For more
information on this program, see [http://www.iclei.org/index.php?id=1118].
8 See Rabe, Barry, 2006, “Second Generation Climate Policies in American States:
Proliferation, Diffusion, and Regionalization,” Issues in Governance Studies, The Brookings
Institution, August 2006.

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This report covers state actions that directly and explicitly address greenhouse
gas emissions. First, the report describes the different types of state actions, both
individual and cooperative efforts, that are either proposed or underway, and
highlights several of the more significant developments. Second, the report examines
state actions from a federal policymaking perspective, including both the potential
effects of state-led actions and their limitations.
Direct Action Versus Indirect Action
Direct state actions that address greenhouse gas emissions include laws,
regulations, or policies that are established explicitly to reduce greenhouse gas
emissions. In some cases, it is difficult to draw a line between direct and indirect
actions, because a specific policy may be undertaken for multiple purposes, including
greenhouse gas reduction. One of the best examples of this ambiguity is a
Renewable Portfolio Standard (RPS). An RPS requires that a certain amount or
percentage of electricity is generated from renewable energy resources (e.g., solar,
biomass). According to the Environmental Protection Agency (EPA), 24 states have
implemented some type of RPS.9 Although greenhouse gas reduction is not the
primary driver for an RPS in most states, some states list their RPS as part of a
comprehensive strategy to reduce greenhouse gases.
Indirect actions are often characterized as “no regrets” approaches, providing
net benefits regardless of the magnitude of their impacts on climate change. For the
purposes of this report, indirect actions are those developed primarily to address other
concerns, such as improvements in energy efficiency, energy security, or air quality.
Examples of indirect actions include:
! Building codes: A majority of states have building codes that
promote energy efficiency in commercial and residential structures;
many of these states’ standards are more stringent than federal
policy.10
! Appliance Standards: Twelve states have set energy efficiency
standards for appliances that are not covered under the federal
program.11
9 See EPA, Summary of State Clean Energy-Environment Policy Data Table (current as of
1/1/2007), at [http://www.epa.gov/cleanenergy/stateandlocal/activities.htm]. See also the
Pew Center on Global Climate Change, Map: States with Renewable Portfolio Standards,
at [http://www.pewclimate.org].
10 EPA data indicate that 26 states have commercial codes more stringent than federal energy
efficiency standards; 22 states have residential codes more stringent than federal energy
efficiency standards. See EPA, Summary of State Clean Energy-Environment Policy Data
Table (current as of 1/1/2007).
11 See EPA, Map: State Energy Efficiency Actions - State Appliance Efficiency Standards
(as of 1/1/2007), at [http://www.epa.gov/cleanenergy/stateandlocal/activities.htm].

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! Agricultural policies: Several states promote agricultural practices
that may indirectly reduce greenhouse gas emissions. For example,
a “no-till” farming technique saves fuel and man hours, while
keeping carbon stored in the soil.12
This report, however, does not attempt to discuss the extremely wide variety of
such indirect actions.
Direct Actions by States
States are implementing a range of direct actions to address greenhouse gas
emissions. States’ efforts have progressed recently in both quantity and substance.
Arguably, early state actions were largely symbolic. In the late 1980s, Vermont13 and
Oregon14 were the first states to set greenhouse gas reductions goals, but during the
subsequent decade (1990-2001), both states increased their greenhouse gas
emissions: Vermont by 18% and Oregon by 30%.15 However, a majority of states
have more recently begun to develop their own climate change strategies or policies,
with a small but increasing number of states adopting or proposing more significant
provisions, including mandatory greenhouse gas reductions.
States have developed and are crafting climate change policies both individually
and in cooperation with other states. This section describes the spectrum of direct
state actions, identifies the level of participation in various activities, and highlights
individual and cooperative state programs when appropriate.
State Action Plans
At least 30 states have either completed or are in the process of preparing
climate change action plans (see Figure 1). Typically, state action plans are drafted
by a climate change task force, composed of members with diverse backgrounds and
expertise. In general, task force members examine their state’s sources of greenhouse
gases, and identify and rank the policy options that are most appropriate (i.e., cost-
effective, politically feasible, etc.) for controlling emissions in their state. Often the
state action plan is made available for public comment, revised if necessary, and then
submitted for approval to state officials.
12 Georgia promotes this technique through its No-Tillage Assistance Program (NTAP),
which provides equipment and funding assistance. See Pew Center on Global Climate
Change, State and Local Net Greenhouse Gas Emissions Reduction Programs, at
[http://www.pewclimate.org].
13 Vermont Executive Order 79 (October 23, 1989) called for a 15% reduction below 1989
levels by 2000. See U.S. Congress, Office of Technology Assessment, 1991, Changing by
Degrees: Steps to Reduce Greenhouse Gases, p. 327.
14 Oregon Senate Bill 576 (1989) set a goal of 20% reduction of 1988 levels by 2005. See
U.S. Congress, Office of Technology Assessment, 1991, Changing by Degrees: Steps to
Reduce Greenhouse Gases, p. 327.
15 See World Resources Institute, Climate Analysis Indicators Tool, at [http://cait.wri.org/].

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Figure 1. States with Completed Climate Change Action Plans
Source: Prepared by the Congressional Research Service with data from U.S. EPA Climate Change
Division and Pew Center on Global Climate. Online links to individual state action plans are available
through EPA’s website, at [http://www.epa.gov/climatechange].
Reflecting the fact that states have different economic sectors, natural resources,
and political structures, state climate change action plans can vary substantially.
Some state action plans focus more on indirect, “no regrets” strategies, such as
improved energy efficiency, which will likely yield benefits irrespective of climate
change effects. Other state action plans are more comprehensive and recommend a
portfolio of direct efforts that address greenhouse gases. Although the state climate
change action plans may recommend an array of policy options, the plans do not
necessarily result in direct actions to reduce greenhouse gases. However, the number
of completed state plans indicates the interest that a majority of states have in
addressing climate change mitigation on some level.
Greenhouse Gas Emissions Targets
State emissions targets are goals by which a state can measure its progress in
achieving greenhouse gas emissions reduction. By themselves, state emissions
targets do not directly reduce greenhouse gases. The targets are often established by
the executive branch of state government (e.g., through an executive order) and may
not have the support of state’s legislative branch. However, a target signals that state
officials, at least from one branch of the government, consider climate change an
important issue.

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Fourteen states have established statewide targets for greenhouse gas emissions
(see Table 1).16 Considering the greenhouse gas limits and targets set on the
international stage in past years, these state targets are relatively modest.17 Other than
California’s 2020 target (discussed later), the statewide targets do not constitute
legally binding requirements. Nearly all of these states are in either the Northeast or
on the west coast of the United States. The New England states’ targets are similar,
if not identical, because they are part of a cooperative plan developed in 2001.18 Of
the 14 states in Table 1, New Mexico and Illinois stand out because they have
substantial coal production.19
Table 1 compares the states’ emissions in 1990 with emissions from the most
recent three years of available data (overall greenhouse gases and carbon dioxide).20
The emissions data show the reductions states would need to make to meet their
established targets. Although some of the states appear within reach of their 2010
targets, the most recent data from many of these states suggest that emissions are not
decreasing, but at best are leveling off. More years of data are needed to evaluate
progress, primarily because many of the states issued their greenhouse gas targets
after 2003, and state-level data after 2003 are not yet available. Moreover, the
emissions targets were typically created in conjunction with greenhouse gas reduction
policies — some of them mandatory limits on specific industries or segments of state
activities — whose implementation is not reflected in the available emissions data.
16 Several states have also developed more narrow targets, either for industry or electricity
generation or only for carbon dioxide emissions.
17 The U.S. Kyoto target was 7% below 1990 levels, averaged over the commitment period
2008 to 2012. For more on international climate agreements and U.S. involvement, see CRS
Report RL33826, Climate Change: The Kyoto Protocol and International Actions, by Susan
R. Fletcher and Larry Parker..
18 New England Governors/Eastern Canadian Premiers, Climate Change Action Plan
2001, August 2001, at [http://www.negc.org].
19 In 2005, Illinois and New Mexico ranked 9th and 11th, respectively, in coal production.
New Mexico ranked 3rd in natural gas production, a fuel that releases significantly less
greenhouse gas than coal or oil when burned. See U.S. Department of Energy, Energy
Information Administration Statistics, at [http://www.eia.doe.gov/].
20 The emissions data in Table 1, particularly the 1990 levels, may differ from the official
estimates provided by individual states. The objective of the table is to compare emission
levels over time, and assess the challenge of meeting emissions targets. Because some states
only have estimates for 1990 levels, this report uses data from the World Resources Institute
(greenhouse gas levels) and the EPA (carbon dioxide levels).

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Table 1. Statewide Greenhouse Gas Targets Compared with
Emissions Data from 1990 and Recent Years
Greenhouse Gas Emissions Carbon Dioxide Emissions
State
Greenhouse
(million metric tons of
from Fossil Fuel
Gases Target(s)
CO2 equivalent)
Combustion (million
metric tons)
1990
1999 2000
2001
1990 2001
2002
2003
AZ21
2000 levels by
2020; 50% below
70
87
91
94
62
87
87
88
2000 by 2050
CA22
2000 levels by
2010; 1990 levels
by 2020; 80%
415
417
434
451
359
383
380
384
below 1990 by
2050
CT23
1990 levels by
2010; 10% below
43
44
45
44
41
41
40
42
1990 by 2020
IL24
1990 levels by
2020; 60% below
237
270
277
271
192
223
226
227
1990 levels by
2050
ME25
1990 levels by
2010; 10% below
21
21
23
23
19
22
23
23
1990 by 2020
MA26
1990 levels by
2010; 10% below
89
85
86
87
83
81
82
86
1990 by 2020
NH27
1990 levels by
2010; 10% below
16
18
18
18
15
17
17
20
1990 by 2020
21 Arizona Executive Order 2006-13 (September 7, 2006).
22 California Executive Order S-3-05 (June 1, 2005) set the 2010 and 2020 targets; AB 32
(discussed below) made the 2020 target mandatory.
23 Connecticut Public Act No. 04-252 (June 14, 2004).
24 Announcement from Illinois Governor Blagojevich (February 13, 2007), related to
Executive Order 2006-11 (October 5, 2006).
25 Maine LD 845 (HP 622) (effective September 13, 2003).
26 Massachusetts Climate Protection Plan of 2004 (Spring, 2004).
27 The Climate Change Challenge (December 2001).

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Greenhouse Gas Emissions Carbon Dioxide Emissions
State
Greenhouse
(million metric tons of
from Fossil Fuel
Gases Target(s)
CO2 equivalent)
Combustion (million
metric tons)
1990
1999 2000
2001
1990 2001
2002
2003
NJ28
1990 levels by
2020; 80% below
123
132
133
132
114
123
123
124
2006 by 2050
NM29
2000 levels by
2012; 10% below
2000 by 2020;
59
64
66
67
52
57
55
57
75% below 2000
by 2050
NY30
5% below 1990
by 2010; 10%
234
236
239
239
208
207
200
214
below 1990 by
2020
OR31
Stabilize by
2010; 10% below
1990 by 2020;
39
52
50
51
31
42
40
40
75% below 1990
by 2050
RI32
1990 levels by
2010; 10% below
10
14
12
13
9
12
12
11
1990 by 2020
VT33
1990 levels by
2010; 10% below
7
8
8
8
5
7
6
6
1990 by 2020
28 New Jersey Executive Order No. 54 (February 13, 2007). New Jersey set a target (3.5%
below 1990 levels by 2005) in 1998 (New Jersey Administrative Order 1998-09, March 17,
1998) that was not achieved. Per telephone discussion with New Jersey state official
(January 5, 2007).
29 New Mexico Executive Order 05-033 (June 9, 2005).
30 New York State Energy Plan (June 2002).
31 Oregon Strategy for Greenhouse Gas Reductions (December 2004).
32 Rhode Island Greenhouse Gas Action Plan (July 2002).
33 This target is discussed in Vermont’s state plan, Fueling Vermont’s Future: Vermont
Comprehensive Energy Plan and Vermont Greenhouse Gas Action Plan (July 1998).

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Greenhouse Gas Emissions Carbon Dioxide Emissions
State
Greenhouse
(million metric tons of
from Fossil Fuel
Gases Target(s)
CO2 equivalent)
Combustion (million
metric tons)
1990
1999 2000
2001
1990 2001
2002
2003
WA34
1990 levels by
2020; 35% below
1990 levels by
82
95
95
97
71
85
78
80
2035; 50% below
1990 levels by
2050
Source: Prepared by the CRS with data from the following: state targets compiled by Pew Center on
Global Climate Change, at [http://www.pewclimate.org]; greenhouse gas emissions data from World
Resources Institute, Climate Analysis Indicators Tool, at [http://cait.wri.org/] (this website notes that
the greenhouse gas data excludes land use changes); carbon dioxide data from EPA’s Climate Change,
State Emissions website, at [http://epa.gov/climatechange/emissions/state.html].
Note: The states’ targets are for all greenhouse gases. Carbon dioxide emissions from fossil fuel
combustion are also included, because (1) this is the primary source of greenhouse gases in most states
and (2) the carbon dioxide data provide two additional years of information.
Greenhouse Gas Emissions Tracking
Reliable greenhouse gas emissions data are a keystone component of any
climate change program. To implement effective solutions to climate change,
policymakers need up-to-date and accurate information detailing the volume and
sources of greenhouse gases in their states. Precise monitoring is particularly vital
for market-oriented approaches to greenhouse gas control. Whether a
market-oriented program is based on tradeable emissions credits or a carbon tax,
reliable and transparent emissions data would be the foundation for developing the
allocation systems, reduction targets, and enforcement provisions.
The federal government has several programs in place that either track or
estimate greenhouse gas emissions:
! Power plants subject to the 1990 Clean Air Act acid rain program
must monitor and report to EPA various air pollutants, including
carbon dioxide.35
34 Washington Executive Order 07-02 (February 7, 2007).
35 Section 821, 1990 Clean Air Act Amendments (P.L. 101-549, 42 USC 7651k). For more
information regarding federal programs see CRS Report RL31931, Climate Change:
Federal Laws and Policies Related to Greenhouse Gas Reductions, by Brent D. Yacobucci
and Larry Parker.

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! The Department of Energy administers a voluntary greenhouse gas
reduction registry. This program started in 1994, pursuant to Section
1605(b) of the Energy Policy Act of 1992 (P.L. 102-486).36
! The EPA prepares an annual inventory of the nation’s greenhouse
gas emissions and sinks, which is submitted to the United Nations
in accordance with the Framework Convention on Climate Change.
Many states have developed, or begun to develop, their own greenhouse gas
tracking programs. Although tracking programs may overlap in purpose and
terminology, for this report, tracking programs are divided into three categories:
inventories, registries, and mandatory reporting.
Greenhouse Gas Inventories. At least 42 states have developed
greenhouse gas inventories. Inventories typically provide estimates of emissions for
various categories: economic sector (e.g., energy, agriculture), emissions source (e.g.,
automobiles, power plants), greenhouse gases (e.g., carbon dioxide, methane). In
general, states create their inventories by following guidelines developed by the
Environmental Protection Agency (EPA) that are based on internationally recognized
standards. Inventories are often used to obtain an overall assessment of a state’s
emissions levels and sources, and are perhaps best suited for monitoring trends
and/or developing comprehensive strategies. Although some states have performed
inventory updates, most of the states’ inventories only cover 1990 emission levels.
Greenhouse Gas Registries. A state greenhouse gas registry is a further
step in greenhouse gas tracking. In general, state greenhouse gas registries are
voluntary programs that allow facilities to submit and officially record emissions
data. Five states have passed legislation to establish greenhouse gas registries, of
which three are now underway:37
! New Hampshire: The New Hampshire Greenhouse Gas Registry
went into effect in 2001. The registry is intended to record
emissions reductions in a state database that can be used in
addressing possible future requirements.
! California: The California Climate Action Registry began operations
in 2002. This state registry is arguably the most comprehensive, as
participants register all of their GHG emissions for operations in
California; other state (and federal) registries cover only emission
reductions. The registry has over 100 participants.
36 For more information on this program, see [http://www.eia.doe.gov/oiaf/1605/
frntvrgg.html].
37 The other two states are Maine and Georgia. Maine’s registry is not yet operational, but
the state does have a mandatory reporting requirement (discussed below). Georgia, instead
of tracking greenhouse gas emissions, established a registry for counting the offsetting
reductions in greenhouse gases obtained by carbon sequestration. Not counted as one of the
five states, New Jersey repealed a previously enacted registry program in 2004.

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! Wisconsin: The Wisconsin Voluntary Emission Reduction Registry,
a registry of voluntary reductions of greenhouse gases, went online
in 2003.
Other states are joining forces to establish regional registries. Ten New England and
Mid-Atlantic states are developing the Eastern Climate Registry.38 In addition, the
Lake Michigan Air Directors Consortium (LADCO) is working on a registry for
several states in the Midwest.39
The states’ voluntary registry programs encourage participation through
incentives. Perhaps the primary incentive is the opportunity for participants to create
an official record of emissions reductions, which the parties hope will count as
emissions credits in future mandatory reduction programs. At a minimum,
participants typically receive some public recognition for their efforts, which may
help promote a company’s environmental stewardship profile.
Mandatory Greenhouse Gas Reporting. Mandatory reporting programs
allow states to monitor greenhouse gas emissions from precise sources. Although the
primary purpose of mandatory reporting is typically to support an emission reduction
program, a reporting program can potentially provide benefits without an
accompanying reduction requirement. For example, if companies’ greenhouse gas
emissions were made publicly-available and thus comparable, the companies might
have an incentive to reduce emissions voluntarily.40 However, there is some concern
that emissions may increase under a mandatory reporting program, especially if
companies suspect that the state will establish a mandatory reduction regime in later
years. For instance, facilities may attempt to “game” the system by deliberately
increasing emissions (or over-reporting them) in order to gain additional allowances
once a reduction program is established.
A few states already require, and others are in the process of developing,
greenhouse gas emissions reporting as part of an emissions reduction program
(discussed in the next section). Four states currently have a mandatory reporting
program that is not linked with an emissions reduction requirement:
38 These states include Connecticut, Delaware, Maine, Massachusetts, New York, New
Hampshire, New Jersey, Pennsylvania, Rhode Island, and Vermont. For more information
on this partnership, see [http://www.easternclimateregistry.org/].
39 Illinois, Indiana, Michigan, Ohio, and Wisconsin. For more on this registry, see
[http://www.ladco.org/regional_greenhouse.htm].
40 This notion is analogous to the arguments in support of EPA’s Toxic Release Inventory
(TRI) Program, which requires facilities to submit annual data concerning their releases of
chemicals to the environment. The TRI program is generally considered a success, as
releases have decreased since the program’s inception. Rabe, Barry, 2002, Greenhouse &
Statehouse: The Evolving State Government Role in Climate Change, Prepared for the Pew
Center on Global Climate Change.

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CRS-12
! Wisconsin: In 1993, the state established a mandatory reporting
program that includes carbon dioxide reporting for facilities
generating over 100,000 tons annually.41
! New Jersey: Certain facilities in New Jersey that report air pollutant
emissions must also submit emission data for carbon dioxide and
methane. This requirement went into effect in 2003.42
! Maine: Facilities in Maine that emit any criteria pollutant over a
specific reporting threshold must also report greenhouse gas
emissions. This provision went into effect July 2004.43
! Connecticut: Starting in 2006, facilities subject to federal reporting
under Title V of the Clean Air Act must submit greenhouse gas
emissions data on an annual basis.44
Mandatory Programs to Reduce Greenhouse Gases
Mandatory programs to require greenhouse gas reductions represent the most
aggressive end of the state action spectrum.45 As with state actions overall, these
programs can vary significantly in scope, stringency, and design. Mandatory
programs are generating considerable interest and some controversy. This section
discusses the different types of mandatory programs and highlights particular state
actions that are currently in effect or under development.
Emission Reduction from Power Plants. A sector-specific approach that
focuses on carbon dioxide is relatively easier to implement than an economy-wide
program that includes multiple greenhouse gases. The electricity-generating sector
is often considered a primary candidate for emission reduction, because in most states
electric power plants account for the highest percentage of carbon dioxide
emissions.46 Many of these facilities are already tracking their carbon dioxide
emissions as required by the 1990 Clean Air Act.
Regional Greenhouse Gas Initiative.47 One of the more significant
climate change developments at the state level is the Regional Greenhouse Gas
41 Wisconsin Chapter NR 438.03.
42 New Jersey Administrative Code 7:27-21.3.
43 Maine Department of Environmental Protection Rules, Chapter 137 (per 38 MRSA,
Section 575).
44 Connecticut Public Act No. 04-252 (June 14, 2004).
45 Several states have voluntary reduction programs. Most of these were discussed earlier
in the context of state emissions registries.
46 Based on 2001 data. Energy Information Administration, Emissions of Greenhouse Gases
in the United States 2004 (Table C2).
47 For a more in-depth analysis, see CRS Report RL33962, Greenhouse Gas Reductions:
California Action and the Regional Greenhouse Gas Initiative, by Jonathan L. Ramseur.

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CRS-13
Initiative (RGGI). RGGI is a market-oriented effort of nine states — Connecticut,
Delaware, Maine, Maryland,48 Massachusetts,49 New Hampshire, New Jersey, New
York, and Vermont — to reduce carbon dioxide emissions from power plants. RGGI
would set up the nation’s first mandatory cap-and-trade program for carbon dioxide.50
The initial objective of RGGI is to stabilize current carbon dioxide emissions from
power plants in RGGI states, starting in January 2009, followed by a 10% reduction
by 2019. A primary strategy of RGGI is to create a program with flexibility, so that
in the future other emission sources/sectors, greenhouse gases, or states could be
included. Rhode Island is expected to join RGGI in 2007.51
Some observers consider RGGI to be a possible test-case for a federal cap-and-
trade program, and thus several of RGGI’s design elements are generating interest
and debate. For example, one specific feature — the emission allocation scheme —
is drawing both praise and criticism. In both RGGI’s Memorandum of
Understanding and its Model Rule, states agreed that at least 25% of emission
allowances will be allocated for a “consumer benefit or strategic energy purpose.”52
Some states (e.g., Vermont, New York, Massachusetts) have indicated that they
intend to allocate 100% of their states’ allowances for that purpose. This action
would require power plants to purchase the set-aside allowances, most likely through
an auction, instead of receiving them at no charge.53
Although RGGI is one of the more aggressive state programs addressing climate
change, the program will likely face several obstacles. For example, RGGI
proponents expect the program to face legal challenges, which could delay program
initiation. In addition, a critical design detail — electricity imports from non-RGGI
states — is unresolved. This is often described as the “leakage” problem. Leakage
48 Maryland Governor O’Malley signed RGGI’s Memorandum of Understanding on April
20, 2007, making Maryland the first state that was not an original RGGI participant to join
the regional initiative.
49 Massachusetts and Rhode Island were involved in RGGI’s development since its inception
in 2003. However, both states’ governors declined to sign the Memorandum of
Understanding in 2005, citing costs as their primary rationale for not participating. Under
a new governor, Massachusetts joined RGGI as a participant in January 2007.
50 In a cap-and-trade system, regulators set a cap (or limit) on the overall emissions of a
given gas from a specified group of sources, such as power plants. The emissions allowed
under the new cap are then allocated in the form of credits (or permits) to individual sources.
Sources that emit more than their allowance must buy credits from those who emit less than
their allowance, thus creating a financial incentive for sources to reduce their own
emissions. For more information on cap-and-trade systems, see EPA’s website at
[http://www.epa.gov/airmarkets/capandtrade].
51 Rhode Island Governor Donald Carcieri announced (January 30, 2007) that his state plans
to join the initiative.
52 See RGGI Model Rule, issued August 15, 2006, p. 42; and RGGI Memorandum of
Understanding, Section G(1), signed by participating state governors December 20, 2005,
both available at [http://www.rggi.org/modelrule.htm].
53 For more discussion regarding these issues, see CRS Report RL33799, Climate Change:
Design Approaches for a Greenhouse Gas Reduction Program, by Larry Parker.

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CRS-14
can occur when an emissions reduction program does not include all sources
contributing to the environmental problem. For example, if a RGGI state lowers its
emissions by importing more power from a non-RGGI state, the emissions reductions
in the RGGI state may be offset by an emission increase in the exporting state.
Individual State Efforts. Two states have already established emission
reduction requirements at existing power plants:
! Massachusetts: In 2001, Massachusetts became the first state to take
formal action on carbon dioxide emissions at operational power
plants. As part of a multi-pollutant strategy, which went into effect
in 2006, the state’s six largest power plants must reduce carbon
dioxide to levels consistent with those produced in the late 1990s.
In 2008, this cap is lowered further.54 The program allows the plants
to either make the reductions, demonstrate offsite reductions, or
purchase emissions credits from other verifiable sources.
! New Hampshire: In 2002, the state enacted multi-pollutant
legislation55 requiring its three fossil fuel power plants to reduce
carbon dioxide to 1990 levels by the end of 2006. In order the meet
the cap, the law allows sources to bank early reductions or buy
credits through other programs deemed acceptable by state officials.
Both Oregon and Washington have programs that require new power plants to
reduce carbon dioxide emissions or purchase offsets. In 1997, Oregon became the
first state to regulate carbon dioxide emissions by passing legislation56 requiring new
power plants to equal or exceed carbon dioxide levels that are 17% below the best
natural gas-fired plant in the nation. Plants can either reduce emissions directly or
purchase offsets from a nonprofit organization (the Oregon Climate Trust) that was
established with the 1997 law. This organization helps develop various projects that
will reduce or sequester greenhouse gases. These projects generate the pool of
offsets available (by purchase) to the power plants. So far, all of the new facilities
have chosen to purchase offsets instead of reducing onsite emissions.57 Washington
passed similar legislation in 2004, requiring new power plants to offset 20% of their
carbon dioxide emissions.58
54 310 Massachusetts Code of Regulations 7.29.
55 New Hampshire Clean Power Act (May 9, 2002), codified in New Hampshire Statute,
Title X, Chapter 125-O (Multiple Pollutant Reduction Program).
56 HB 3283, codified in Oregon Administrative Rules, Chapter 345, Division 24.
57 Point Carbon, 2006, “Carbon Trading in the US: The Hibernating Giant,” Carbon Market
Analyst, September 13, 2006.
58 HB 3141 (signed into law on March 31, 2004).

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CRS-15
Emission Reductions from Motor Vehicles. The U.S. transportation
sector accounts for a substantial percentage — 28% in 200459 — of the nation’s
greenhouse gas emissions. Automobiles and light-duty trucks (fueled by gasoline or
diesel) generate the majority — 63% in 2004 — of the nation’s transportation-related
greenhouse gas emissions.60 The transportation sector is the single largest source of
the primary greenhouse gas, carbon dioxide, in 14 states.
California’s transportation sector, in particular, generates almost 41% of the
state’s annual greenhouse emissions.61 California is in a unique position regarding
the regulation of air emissions from motor vehicles. It is the only state with
conditional authority (i.e., the state needs a waiver from EPA) to develop motor
vehicle pollution standards that are more stringent than federal requirements.62 The
law permits other states to choose to follow California’s more stringent provisions,63
and states have adopted California standards in the past.
In 2002, California enacted the first state law (AB 1493) requiring greenhouse
gas limits from motor vehicles.64 As directed by the statute, the California Air
Resources Board (CARB) issued regulations in September 2004, limiting the “fleet
average greenhouse gas exhaust mass emission values from passenger cars, light-duty
trucks, and medium-duty passenger vehicles.”65 The fleet average caps first apply to
model year 2009 vehicles. The caps become more stringent annually, so that by
2016, the fleet average would be 30% below the 2009 level.
At least 12 states have formally adopted or announced plans to follow the
California regulation. In order for the states to implement this standard, California
must receive a waiver from the EPA. California requested a waiver (as required by
Section 209 of the Clean Air Act) in December 2005, but the EPA has yet to respond.
Although the EPA has approved every California waiver request since 1975, it has
displayed a reluctance to use the Clean Air Act to control greenhouse gases, arguing
in federal court that the Clean Air Act does not authorize the EPA to regulate
greenhouse gases for the purpose of addressing climate change.
59 EPA, 2006, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2004,
Executive Summary, p. ES-13, at [http://epa.gov/climatechange/emissions/usinventoryreport.
html].
60 The transportation sector also includes emissions (in descending order) from heavy-duty
trucks, aircraft, boats, and trains. EPA, 2006, Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2004, pp. 3-8, at [http://epa.gov/climatechange/emissions/usinventory
report.html].
61 California Energy Commission, 2006, Inventory of California Greenhouse Gas Emissions
and Sinks: 1990 to 2004, p. 8.
62 See Clean Air Act Section § 209, codified at 42 U.S.C. § 7543.
63 Clean Air Act § 177, codified at 42 U.S.C. § 7507.
64 AB 1493 (or the California Vehicle Global Warming Law) was signed into law by
Governor Gray Davis on July 22, 2002.
65 Title 13, California Code of Regulations § 1961.1.

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CRS-16
However, an April 2, 2007, Supreme Court decision (Massachusetts v. EPA)66
provided clarification on this issue. The Court found no doubt that the Clean Air Act
gives EPA the authority to regulate greenhouse gases (in this case, from new motor
vehicles). Although the specifics of such regulation might be subject to agency
discretion, the decision should at least improve the possibility that the EPA will grant
a waiver to California. Some observers have suggested that the Clean Air Act waiver
may be the most direct impact of the decision.
There are already several lawsuits against state actions that seek to regulate
greenhouse gas emissions from motor vehicles. Car dealers and trade associations
have filed suits in California, Vermont, and Rhode Island seeking to halt the
regulations on various grounds. For example, the plaintiffs contend that California’s
regulations are preempted by the Energy Policy and Conservation Act (P.L. 94-163),
which directs states not to regulate fuel economy standards. It is uncertain what role
the Massachusetts decision may play in these proceedings, because some of the
arguments in these cases (e.g., the relationship between conflicting federal and state
policing concerning climate change) were not addressed in the Massachusetts case.67
California’s Statewide Emission Reductions Law. In September 2006,
California enacted landmark legislation that would establish a comprehensive
greenhouse gas reduction regime. The legislation — AB 32 or the Global Warming
Solutions Act68 — directs the California Air Resources Board (CARB) to develop
and implement a statewide program that would reduce the state’s greenhouse gas
emissions to 1990 levels by 2020.
The statute grants considerable authority to CARB, which is charged with
determining critical details concerning the framework and applicability of the
program. For example, the law does not specifically require the use of a market-
based system, such as a cap-and-trade program, to reduce greenhouse gases. Instead,
AB 32 authorizes CARB to develop regulations to “achieve the maximum
technologically feasible and cost-effective greenhouse gas emission reductions....”
Moreover, the statute does not include a list of regulated emission sources or
categories,69 but instructs CARB to determine which sources are necessary to meet
the statewide target.70
The law establishes a schedule for various agency deadlines. By June 30, 2007,
AB 32 instructs CARB to identify the early reduction options, which can be
implemented prior to the mandatory program, and for which a facility will receive
66 The ruling is available at [http://www.supremecourtus.gov/opinions/06pdf/05-1120.pdf].
67 For further discussion of these legal issues, see CRS Report RL32764, Climate Change
Litigation: A Growing Phenomenon, by Robert Meltz.
68 California Governor Schwarzenegger signed the legislation September 27, 2006.
69 Earlier drafts of the legislation specifically cited the electric power, oil/gas, and cement
industries, and landfills as significant emitters.
70 The statute instructs CARB to regulate mobile sources if the 2004 mobile sources
regulatory program (described above) does not remain in effect (presumably due to legal
challenges).

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CRS-17
emissions credit. The law requires CARB to set up a mandatory reporting scheme
by January 1, 2008. Data from the reporting program will be used to establish
baselines for emissions sources, which will be subject to emission reductions starting
in 2012.
The statute requires the program to account for greenhouse gas emissions from
all electricity consumed in California. The agency will need to count emissions
connected with electricity that is generated from outside the state. This provision is
significant, because it addresses the “leakage” issue. Without this provision,
California utilities might have a financial incentive to import more electricity from
out-of-state generators, who are not subject to the cap. In such a scenario, California
emissions would decrease, but the benefit would be negated by increased emissions
in neighboring states.
Potential Linkage with RGGI or Emissions Trading in the European
Union. When developing the emission reduction program in California, AB 32
instructs CARB to consider other greenhouse gas reduction regimes, including the
Regional Greenhouse Gas Initiative and the European Union’s emission trading
program. This instruction might open the door for future emissions trading between
California and other states. To catalyze this trading relationship, California Governor
Schwarzenegger issued an executive order71 just a few weeks after signing AB 32,
calling for CARB and other state agencies to create a “market-based compliance
program with the goal of creating a program that permits trading with the European
Union, the Regional Greenhouse Gas Initiative and other jurisdictions.”72
Potential Emissions Trading with Neighboring States and Canada.
Governor Schwarzenegger signed an initiative February 26, 2007, with the governors
of Oregon, Washington, Arizona, and New Mexico. The premier of British
Columbia committed his province to the initiative April 20, 2007.73 The Western
Regional Climate Action Initiative directs the participating state/province agencies
to develop a “market-based multi-sector mechanism, such as a load-based cap and
trade program” that will seek to reduce greenhouse gases in the region.74 The
initiative calls for the participants to develop a mechanism (within 18 months), but
it is uncertain how a mechanism would be implemented and how many states (or
provinces) might participate. Without further action, it is perhaps too early to assess
the significance of this partnership.
71 Executive Order S-17-06 (signed October 16, 2006).
72 The proposed trading relationships may raise constitutional issues. For example, the U.S.
Constitution states that “No State shall, without the Consent of Congress, ... enter into any
Agreement or Compact with another State, or with a foreign Power.... (Article I, Section 10,
Clause 3).
73 Press Release from the Office of the Premier of British Columbia (April 24, 2007), at
[http://www.mediaroom.gov.bc.ca/].
74 The text of the agreement is available through the California Climate Change Portal at
[http://www.climatechange.ca.gov/documents/2007-02-26_WesternClimateAgreement
Final.pdf].

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CRS-18
Other Mandatory Programs. Although they do not require emission
reductions or offsets from specific facilities or sources, other mandatory programs
may have an impact on greenhouse gas emissions. A few states, California in
particular, have recently developed requirements that aim to influence investment in
long-term power generation. These state actions may impact greenhouse gas levels
by influencing which energy sources — coal, oil, natural gas, etc. — are used to
generate electricity for consumers.
California’s Greenhouse Gas Emissions Performance Standard.
The most significant state action in this regard is California’s greenhouse gas
performance standard. In September 2006, the state passed legislation (SB 1368)75
that will forbid “load-serving entities”76 from entering into new “long-term financial
commitments”77 with power plants unless the plant’s greenhouse gas emissions are
as low or lower than those of a new, combined-cycle natural gas facility. This
emissions performance standard will apply to both in-state power plants and out-of-
state facilities that seek to export electricity to California.
The new performance standards complement California’s statewide greenhouse
gas reduction program. The implementation of AB 32 is several years away
(irrespective of legal challenges). The performance standards act as a stop-gap
measure, preventing further utility investment in carbon-intensive fuels while the
state is crafting an economy-wide reduction regime.
The law directs the California Public Utilities Commission (PUC) to issue
standards for investor-owned facilities, which in 2003 accounted for 68% of the
electricity consumed in California.78 The PUC issued interim performance standards
January 25, 2007. To address the electricity consumption from publicly owned
utilities,79 the statute directs the California Energy Commission to issue comparable
regulations by June 30, 2007.
Once the new performance standards are applicable (and previous commitments
expire), they will effectively prohibit California consumers from using electricity
generated by conventional coal-fired power plants. Compared with a combined-cycle
natural gas plant, a conventional coal-fired power plant emits more than twice the
75 SB 1368 was signed by the Governor on September 29, 2006.
76 Defined as “every electrical corporation, electric service provider, or community choice
aggregator serving end-use customers in the state.” SB 1368 (codified in Public Utilities
Code, Section 8340(h)).
77 Defined as a “new ownership investment in baseload generation or a new or renewed
contract with a term of five or more years, which includes procurement of baseload
generation.” SB 1368 (codified in Public Utilities Code, Section 8340(j)).
78 See California Energy Commission, Electricity Consumption by Utility Type, at
[http://www.energy.ca.gov/electricity].
79 Publicly owned utilities accounted for 27% of California’s electricity consumption in
2003. Self-generation units made up the remaining percentage (about 5%). See California
Energy Commission, Electricity Consumption by Utility Type.

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CRS-19
amount of carbon dioxide. Using current technologies, coal-fired generators would
fail to meet the new emissions standard.80
From 2002 through 2005, approximately 20% of California’s electricity was
generated from coal.81 As the law takes effect, California will likely need to
reduce/conserve a comparable amount of energy or replace the coal-generated
electricity with alternative sources of power.
The new emissions standards will impact not only California, but also other
states in the West. Although California’s electricity imports generally fall between
22% and 32% of the state’s total electricity consumption, its imports are responsible
for 39% to 57% of the total greenhouse gas emissions linked with electricity.82 This
is due to the fact that most of California’s in-state electricity is produced from
sources other than coal, while most of the state’s imported electricity is generated
through coal combustion. Once the standard takes effect, the coal-fired plants in
neighboring states, which previously provided electricity to California, will need to
look elsewhere for customers. The same goes for coal-fired power plants still in
development in western states, which may have been designed, at least in part, to
serve California consumers.83
Arguably, the greenhouse gas performance standards disproportionately affect
the neighboring states that have historically exported coal-generated electricity to
California consumers. This possible consequence may raise legal issues, such as a
state’s general inability to regulate interstate commerce.
California’s Low Carbon Fuel Standard. To complement California’s
statewide greenhouse gas reduction program, the governor issued an executive order
(signed January 18, 2007) establishing a low carbon fuel standard (LCFS). The
LCFS aims to reduce the carbon intensity of California’s transportation fuels by 10%
by 2020. California currently relies on petroleum-based fuels for 96% of its
transportation needs.84 Achieving the carbon intensity reduction is expected to
80 As technology advances, coal-fired plants might be able to reduce greenhouse gas
emissions through carbon capture and sequestration (CCS). However, “there is relatively
little experience in combining CO2 capture, transport and storage into a fully integrated
CCS system. The utilization of CCS for large-scale power plants (the potential application
of major interest) still remains to be implemented.” Intergovernmental Panel on Climate
Change (IPCC), 2005, IPCC Special Report Carbon Dioxide Capture and Storage,
Summary for Policymakers, p. 8.
81 The percentage of California’s electricity generated from coal should decrease, because
a large coal-fired plant (Mohave facility) was shut down at the end of 2005. California
Energy Commission, Gross System Electricity Production, at [http://www.energy.ca.gov/
electricity].
82 California Energy Commission, 2006, Inventory of California Greenhouse Gas Emissions
and Sinks: 1990 to 2004, Draft Staff Report, p. 12.
83 See Holly, Chris, “California PUC Issues IOU Greenhouse Rules; Muni Nixes Coal Deal,”
The Energy Daily, December 15, 2006.
84 Executive Order S-01-07, signed January 18, 2007.

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CRS-20
replace 20% of the state’s gasoline consumption with less carbon-intensive fuels.85
The LCFS would apply to all refiners, blenders, producers, and importers of transport
fuels.
The order states that transportation fuels shall be measured on a full fuel cycle
basis. Thus, regulators must factor in all of the energy used and potential greenhouse
gases emitted during the fuel’s development (extraction or production), delivery (via
vehicle or pipeline), and final use (combustion). Corn-based ethanol, for example,
is expected to play a role in meeting California’s LCFS. To comply with the full fuel
cycle assessment, regulators must consider the energy needed to produce fertilizers,
operate farm equipment, transport corn, convert corn to ethanol, and distribute the
final product. For more information on these issues, see CRS Report RL33290, Fuel
Ethanol: Background and Public Policy Issues, by Brent Yacobucci.
The LCFS executive order enhances alternative fuel legislation (AB 1007) that
California passed in 2005.86 AB 1007 requires the California Energy Commission
(CEC), in partnership with other agencies, including CARB, to develop and adopt a
State Alternative Fuels Plan by June 20, 2007. The executive order directs CEC to
supplement this plan with a compliance schedule for meeting the 2020 LCFS target.
Greenhouse Gas “Adders.” Another state action that may affect a state’s
sources of electricity generation is the adoption of a greenhouse gas (or carbon)
adder. In general, adders require utilities to weigh the future costs of greenhouse gas
emissions when considering different energy investment options (e.g., fossil fuels,
renewable energy supplies). For example, California’s Public Utilities Commission
requires investor-owned-utilities to include a value of $8/ton of carbon dioxide
emissions when conducting long-term planning or procurement activities.87 The
agency stated that this requirement “will serve to internalize the significant and
under-recognized cost of [greenhouse gas] emissions, [and] help protect customers
from the financial risk of future climate regulation....”88 Only a few other states89
require some type of greenhouse gas adder, and California’s adder may be rendered
less relevant due to its new emission performance standard (discussed above). At
this stage, the adders have not been credited with changing any procurement
decisions.90
85 California Office of the Governor, The Role of a Low Carbon Fuel Standard in Reducing
Greenhouse Gas Emissions and Protecting Our Economy, January 18, 2007.
86 The governor signed AB 1007 September 29, 2005.
87 California Public Utilities Commission, Decision 05-04-024, April 7, 2005.
88 California Public Utilities Commission, Decision 04-12-048, December 16, 2004.
89 Oregon and Colorado. See Pew Center on Global Climate Change website, at
[http://www.pewclimate.org/states.cfm].
90 Pew Center on Global Climate Change, “California PUC Carbon Adder” (case-study).

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CRS-21
Issues for Congress
The climate change activity in the states raises several issues that may be of
interest to Congress. This section discusses some of the potential effects of state
action in lieu of federal legislation. This section also examines the limitations of
state actions, both from a climate change policy perspective and in the context of
legal challenges.
Potential Effects of State Actions
Many states generate significant emissions of greenhouse gases. If individual
U.S. states were classified as sovereign nations, 21 states would rank in the top 60
for nations that annually emit the most carbon dioxide.91 Compared with other
nations, Texas, the combined RGGI states, and California rank as top carbon dioxide
emitters (see Table 2).
Table 2. Top-Ranked Carbon Dioxide Emissions by Nation and
U.S. States (2001 data)
Country, State, or
CO Emissions
Country, State, or
CO Emissions
2
2
Group
(million metric tons)
Group
(million metric tons)
United States
5,728
RGGI states
606
European Union
3,928
United Kingdom
562
China
3,452
Canada
522
Russian Federation
1,544
South Korea
473
Japan
1,221
Italy
448
India
1,068
France
389
Germany
884
Mexico
388
Texas
768
California
386
Source: Prepared by CRS with data from World Resources Institute, Climate Analysis Indicators
Tool, at [http://cait.wri.org/] Note that the carbon dioxide data excludes land use changes.
Note: RGGI states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New
Hampshire, New Jersey, New York, and Vermont. Rhode Island is expected to soon join, and its
emissions are included above.
Although the states developing mandatory reduction programs — California and
the RGGI participants — account for an appreciable percentage of U.S. carbon
dioxide emissions (almost 20%), most of the states are pursuing considerably less
aggressive climate change policies. Unless the more aggressive state actions foster
greater participation or catalyze a federal program, the current state actions are
unlikely to impact global climate change. With this range of state activity, it is
91 This is based on 2001 data from the World Resources Institute, Climate Analysis
Indicators Tool, at [http://cait.wri.org/].

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CRS-22
difficult to predict the precise consequences of state-led climate change actions. This
section highlights possible effects from state actions.
States as Policy Laboratories. A central argument in support of state
climate change action is that states can serve as laboratories for policymaking. States
can test different ideas and policies on a smaller scale, and help determine which
climate change solutions are most effective. For example, there has been some
debate regarding how a cap-and-trade program might work on a national level.
Although the federal acid rain program, which involves sulfur dioxide emissions
trading, is generally considered a success, emissions trading programs for other
purposes have encountered problems during implementation.92 State programs offer
the opportunity to iron out logistical details that are crucial in a cap-and-trade system:
! How high to set the emissions cap.
! Which sources to regulate.
! How to allocate emissions allowances.
! When to allow offsets instead of actual reductions.
! Whether to include a safety valve and, if so, how high to set it.
State programs can inform federal policymakers in other ways. The political
process by which states create climate change policy can be enlightening and perhaps
adaptable on the federal level. For instance, by examining the development and
passage of state legislation, federal policymakers may better understand the
motivations of different stakeholders and learn how best to frame the issues.
Possible Economic Effects. Emission reduction programs in California
and RGGI will likely have economic effects on consumers, businesses and
manufacturers, and possibly interstate commerce.93 The most immediate effects of
the emissions programs (at least the ones furthest along in development) will be on
the automotive manufacturing and electricity generation sectors.
For automotive manufacturers, the California motor vehicle regulations —
which at least 12 states have indicated they plan to implement — will likely have the
effect of dividing the market, potentially requiring the manufacture of a different
class of cars to meet the new standards (scheduled to apply in 2009). For automotive
companies, this raises the issues of the technical means of meeting the standard,
marketing, ensuring compliance, and pricing. Depending on how the emission limits
are to be met, they may also influence fueling infrastructure. State governments will
92 For example, the Southern California’s Regional Clean Air Incentives Market
(RECLAIM), which was implemented in 1994 to reduce emissions of nitrogen oxides (NOx)
and sulfur dioxide (SO ), saw a 50-fold increase in NOx allowance prices during the
2
2000-2001 California energy crisis. The European Union’s greenhouse gas trading system
has also experienced drastic swings in allowance prices during its start-up years, making
planning and decision making difficult for participating entities. For additional information
on the EU trading system, see CRS Report RL33581, Climate Change: The European
Union’s Emissions Trading System (EU-ETS), by Larry Parker.
93 The question of whether and in what circumstances states can regulate interstate
commerce may raise legal questions, which are briefly discussed below.

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need resources to enforce the standards. Consumers in regulated states may face
higher prices for vehicles.
Regarding the electric power industry, the mandatory reduction requirements
will likely promote generation from low carbon-intensive fuels, while curtailing
generation from high carbon-intensive fuels, such as coal. California’s greenhouse
gas performance standards will reach into neighboring states as well, effectively
barring electricity imports generated by conventional coal-fired power plants.
Because coal-fired plants tend to produce lower-cost electricity, the result of these
requirements may be to increase electricity prices within the states that limit
emissions, and possibly lower prices in states without such emission standards.
If the greenhouse gas limitations on motor vehicles and electricity increase
prices in the regulated states, businesses and manufacturers may factor this cost into
location decisions. There is some concern that regulated industries will have a
financial incentive to move (and thus transfer jobs) to states (or nations, such as
Mexico or Canada) that do not limit greenhouse gas emissions.94 Others fear that
emission limits will raise the cost of living and doing business within those states,
although in theory such effects can be at least partially addressed through the design
of the emissions reduction program.95
Patchwork of Regulations. One concern shared by many observers,
particularly industry stakeholders, is that state climate change programs (in lieu of
a federal program) will create a patchwork of regulations across the nation. A
patchwork system of standards may hinder a company’s efficiency and possibly
create economic burdens for firms that operate in multiple states. The prospect of
regulations that vary from state to state is driving some companies to support a
federal climate change program with comparable requirements across the entire
United States.
Limitations of State Actions
Climate change has been described as the “ultimate global commons problem.”96
The global warming and climate impacts associated with increased greenhouse gases
in the atmosphere cannot be linked with specific emission sources. Unlike localized
reductions in other air pollutants (e.g., sulfur dioxide, particulate matter), when an
emissions source reduces its carbon dioxide emissions, it does not generate a
corresponding local climate change benefit unless there are similar widespread
reductions globally or at least in wide areas.
94 This is also a central argument against having federal emission limits without cooperation
with other large economies (e.g., China and India).
95 A cap-and-trade program with an auction system (as discussed above), for instance,
would generate revenues that could be funneled to parties who bear an unfair percentage of
the program’s costs. See, for example, National Commission on Energy Policy, 2007,
Allocating Allowances in a Greenhouse Gas Trading System.
96 Stavins, Robert, 2006, “A Utility Safety Valve for Cutting CO2,” The Environmental
Forum, Volume 23, Number 2, March/April, 2006, p. 14.

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From a practical standpoint, the actions of one or a group of states or nations
cannot by themselves reduce the global accumulation of greenhouse gases in the
atmosphere. However, as discussed above, actions now underway by many states in
the United States may create examples and/or models that will prove instructive in
more widespread applications. Moreover, when business and industry have
confronted a growing patchwork of state requirements, these sectors have historically
begun to favor a national policy — as has begun to happen in the case of state-level
actions on climate change. However, the lack of a national program or a truly global
approach to greenhouse gas emissions reductions does limit what individual states
can accomplish in actually reducing greenhouse gas emissions and accumulations.
Legal challenges may further limit the effectiveness of state action. The
possibility of legal challenges creates considerable uncertainty regarding the future
of state climate change actions, particularly the more aggressive programs. There are
already several lawsuits against state actions that seek to regulate greenhouse gas
emissions from motor vehicles. As discussed above, the April 2007 Supreme Court
decision (Massachusetts v. EPA) did not specifically address all of the plaintiffs’
arguments, so uncertainty remains as to the resolutions of these cases.
Further litigation confronting other types of state action is anticipated. For
example, many expect a legal challenge against the RGGI program when the first
state’s rule is officially issued.97 In addition, there is some question as to whether
California’s recently enacted greenhouse gas performance standards are
constitutional.98 Arguably, the standards disproportionately impact the neighboring
states that have historically exported coal-generated electricity to California
consumers. The legal arguments in these cases are beyond the scope of this report,
but many observers conclude that it is difficult to predict how the courts will interpret
and decide upon these issues. For a more in-depth analysis of various legal issues
regarding climate change, see CRS Report RL32764, Climate Change Litigation: A
Growing Phenomenon, by Robert Meltz.
97 New York state is expected to be the first state to issue its rule implementing RGGI,
according to statements made from state officials at a climate change workshop: Pew Center
on Climate Change, Innovative Approaches to Climate Change: A State and Regional
Workshop, Washington, DC, October 10-11, 2006.
98 See Potts, Brian, 2006, “Regulating Greenhouse Gas Leakage: How California Can Evade
the Impending Constitutional Attacks,” Electricity Journal, Vol. 19, Issue 5, June 2006.

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