Order Code RL33812
Climate Change: Action by States
To Address Greenhouse Gas Emissions
Updated August 29, 2007
Jonathan L. Ramseur
Environmental Policy Analyst
Resources, Science, and Industry Division
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 (GHGs). 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.
Three states — California, Hawaii, and New Jersey — have passed laws
establishing mandatory, statewide GHG emission limits. However, the critical
elements of these programs are still being developed. 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.
RGGI takes effect in 2009. Six western states (and two Canadian provinces) have
formed the Western Climate Initiative, and are in the early stages of developing a
regional GHG emission reduction program.
California has addressed GHG emissions on several fronts. To complement its
statewide emissions reduction regime, California established GHG performance
standards that would effectively limit the use of coal-generated electricity in
California (Washington passed similar legislation in 2007). In 2004, California
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 addition, 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.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Greenhouse Gas Registries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Mandatory Greenhouse Gas Reporting . . . . . . . . . . . . . . . . . . . . . . . . 10
Mandatory Programs to Reduce Greenhouse Gases . . . . . . . . . . . . . . . . . . 11
Statewide Greenhouse Gas Emissions Reduction Programs . . . . . . . . 12
Emission Reduction from Power Plants . . . . . . . . . . . . . . . . . . . . . . . 14
Emission Reduction from Motor Vehicles . . . . . . . . . . . . . . . . . . . . . 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 (Orange) and Under-Development
(Blue Lines) Climate Change Action Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 5
List of Tables
Table 1. Statewide Greenhouse Gas Targets Compared with
Emissions Data from 1990 and Recent Years
of Available Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 2. Top-Ranked Carbon Dioxide Emissions by Nation,
U.S. States, and U.S. Regional Partnerships
(2003 data) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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
(GHG) concentrations in the atmosphere.2 Second, human activities (e.g., fossil fuel
combustion, industrial processes, and deforestation) have contributed to the increased
concentration of GHG emissions in the earth’s atmosphere.
The link between GHG 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 GHG 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 GHG
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 GHG emissions, may have yielded emission reductions as a byproduct.4 In
the 110th Congress, Members have proposed multiple bills that would address climate
change issues in some fashion. For more details regarding this legislation, see CRS
Report RL34067, Climate Change Legislation in the 110th Congress, by Jonathan
L. Ramseur and Brent D. Yacobucci.
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 GHG, 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 GHGs
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 GHG emissions.
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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:
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.
Members in the 110th Congress have introduced several bills that would establish
some type of a mandatory emissions reductions program. None of these bills has
been reported out of committee. 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 GHG emissions, a number of states (and local
governments, whose activities are not covered in this report6) have taken action in
this arena. States’ efforts cover a wide spectrum, from developing climate action
plans to setting mandatory GHG emission standards. While state action is not a new
development — some states set GHG 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 GHG emissions 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 GHG policies
as economic opportunities. States want to position themselves for a “less-
carbonized” future,7 by promoting, for example, alternative energy supplies,
particularly sources available in-state. Other states champion GHG 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.
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).
6 A number of local governments are pursuing activities that may directly or indirectly
reduce GHG emissions. For example, numerous local governments (cities, counties) in at
least 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].
7 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 GHG
emissions. First, the report describes the different types of state actions, both
individual and cooperative efforts, that are either proposed or under way, 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 GHG emissions include laws, regulations, or
policies that are established explicitly to reduce GHG 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 GHG 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). Twenty-eight states have
implemented or are developing some type of RPS.8 Although GHG 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 GHG emissions.
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.9
! Appliance Standards: Twelve states have set energy efficiency
standards for appliances that are not covered under the federal
program.10
! Agricultural policies: Several states promote agricultural practices
that may indirectly reduce GHG emissions. For example, a “no-till”
8 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]. Additional
states identified by the Pew Center on Global Climate Change, Map: States with Renewable
Portfolio Standards, at [http://www.pewclimate.org].
9 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).
10 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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farming technique saves fuel and man hours, while keeping carbon
stored in the soil.11
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 GHG emissions.
States’ efforts have progressed recently in both quantity and substance. Arguably,
early state actions were largely symbolic. In the late 1980s, Vermont12 and Oregon13
were the first states to set GHG reductions goals, but during the subsequent decade
(1990-2001), both states increased their GHG emissions: Vermont by 18% and
Oregon by 30%.14 However, a majority of states have more recently begun to
develop their own climate change strategies or policies, with a smaller but increasing
number of states adopting or proposing more significant provisions, including
mandatory GHG 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 35 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 GHG
emissions, 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.
11 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].
12 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.
13 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.
14 See World Resources Institute, Climate Analysis Indicators Tool, at [http://cait.wri.org/].
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Figure 1. States with Completed (Orange) and
Under-Development (Blue Lines) 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 GHG emissions. 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 GHG emissions. 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 GHG emissions reduction. By themselves, state emissions targets do not
directly reduce GHG emissions. 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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Seventeen states have established statewide targets for GHG emissions (see
Table 1).15 Three of the state targets — California, Hawaii, and New Jersey — are
mandatory (discussed below). Considering the GHG limits and targets set on the
international stage in past years, the state targets are relatively modest.16 Nearly all
of the states with targets 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 2001.17 Of the 17 states in Table 1, New
Mexico and Illinois stand out because they have substantial coal production.18
Table 1 compares the states’ GHG emissions in 1990 with emissions from the
most recent years of available data.19 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 GHG targets after 2003, and state-level data after 2003 are not yet
available. Moreover, the emissions targets were typically created in conjunction with
GHG 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.
15 Several states have also developed more narrow targets, either for industry or electricity
generation or only for carbon dioxide emissions.
16 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.
17 New England Governors/Eastern Canadian Premiers, Climate Change Action Plan
2001, August 2001, at [http://www.negc.org].
18 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 GHG
than coal or oil when burned. See U.S. Department of Energy, Energy Information
Administration Statistics, at [http://www.eia.doe.gov/].
19 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
for a consistent comparison.
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Table 1. Statewide Greenhouse Gas Targets Compared with
Emissions Data from 1990 and Recent Years of Available Data
Greenhouse Gas Emissions
State
Greenhouse Gases Target(s)
(million metric tons of CO equivalent)
2
1990
2000
2001
2002
2003
AZ20
2000 levels by 2020; 50% below
70
93
95
94
96
2000 levels by 2050
CA21
2000 levels by 2010; 1990 levels
by 2020; 80% below 1990 levels
412
442
449
447
453
by 2050
CT22
1990 levels by 2010; 10% below
1990 levels by 2020
44
47
45
44
46
FL23
2000 levels by 2017; 1990 levels
by 2025; 80% below 1990 levels
208
264
263
267
271
by 2050
HI24
1990 levels by 2020
23
21
21
22
23
IL25
1990 levels by 2020; 60% below
231
277
266
268
269
1990 levels by 2050
MA26
1990 levels by 2010; 10% below
89
88
88
89
92
1990 levels by 2020
ME27
1990 levels by 2010; 10% below
21
25
25
26
26
1990 levels by 2020
MN28
15% below 2005 levels by 2015;
30% below 2005 levels by 2025;
99
118
114
117
120
80% below 2005 levels by 2050
20 Arizona Executive Order 2006-13 (September 7, 2006).
21 California Executive Order S-3-05 (June 1, 2005) set the 2010 and 2020 targets; AB 32
(discussed below) made the 2020 target mandatory.
22 Connecticut Public Act No. 04-252 (June 14, 2004).
23 Florida Executive Order 07-127 (July 13, 2007).
24 Hawaii Governor Lingle signed the Global Warming Solutions Act of 2007 (Act 234) into
law June 30, 2007. The act mandates statewide GHG emission reductions.
25 Announcement from Illinois Governor Blagojevich (February 13, 2007), related to
Executive Order 2006-11 (October 5, 2006).
26 Massachusetts Climate Protection Plan of 2004 (Spring 2004).
27 Maine LD 845 (HP 622) (effective September 13, 2003).
28 Minnesota Governor Pawlenty , signed into law the Next Generation Energy Act May 25,
2007.
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Greenhouse Gas Emissions
State
Greenhouse Gases Target(s)
(million metric tons of CO equivalent)
2
1990
2000
2001
2002
2003
NH29
1990 levels by 2010; 10% below
16
19
18
19
22
1990 levels by 2020
NJ30
1990 levels by 2020; 80% below
124
137
135
135
137
2006 levels by 2050
NM31
2000 levels by 2012; 10% below
2000 levels by 2020; 75% below
58
66
66
64
66
2000 levels by 2050
NY32
5% below 1990 by 2010; 10%
233
244
236
230
244
below 1990 levels by 2020
OR33
Stabilize by 2010; 10% below
1990 levels by 2020; 75% below
39
52
52
50
51
1990 levels by 2050
RI34
1990 levels by 2010; 10% below
10
13
14
13
13
1990 levels by 2020
VT35
1990 levels by 2010; 10% below
7
8
8
8
8
1990 levels by 2020
WA36
1990 levels by 2020; 25% below
1990 levels by 2035; 50% below
84
99
100
93
95
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]; GHG emissions data from World Resources
Institute, Climate Analysis Indicators Tool, at [http://cait.wri.org/] (GHG data excludes land use
changes).
In addition to the individual state targets, a group of six Western states —
Arizona, California, New Mexico, Oregon, Utah, and Washington — set a regional,
economy-wide target to reduce GHG emissions to15% below 2005 levels by 2020.
This initiative is discussed further below.
29 The Climate Change Challenge (December 2001).
30 New Jersey Governor Corzine signed into law the Global Warming Response Act (A3301)
July 6, 2007, which requires mandatory emission reductions.
31 New Mexico Executive Order 05-033 (June 9, 2005).
32 New York State Energy Plan (June 2002).
33 Oregon Governor Kulongoski signed HB 3543 into law August 6, 2007.
34 Rhode Island Greenhouse Gas Action Plan (July 2002).
35 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).
36 Washington Governor Gregoire signed SB 6001 into law May 3, 2007.
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Greenhouse Gas Emissions Tracking
Reliable GHG 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 GHG
emissions in their states. Precise monitoring is particularly vital for market-oriented
approaches to GHG 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 GHG 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.37
! The Department of Energy administers a voluntary GHG reduction
registry. This program started in 1994, pursuant to Section 1605(b)
of the Energy Policy Act of 1992 (P.L. 102-486).38
! The EPA prepares an annual inventory of the nation’s GHG
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 GHG 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 GHG
inventories. Inventories typically provide estimates of emissions for various
categories: economic sector (e.g., energy, agriculture), emissions source (e.g.,
automobiles, power plants), GHGs (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.
37 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.
38 For more information on this program, see [http://www.eia.doe.gov/oiaf/1605/
frntvrgg.html].
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Greenhouse Gas Registries. A state GHG registry is a further step in GHG
tracking. In general, state GHG registries are voluntary programs that allow facilities
to submit and officially record emissions data. 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. Five states have passed legislation to establish GHG registries, of which
three are now under way:39
! New Hampshire: The New Hampshire GHG 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.
! Wisconsin: The Wisconsin Voluntary Emission Reduction Registry,
a registry of voluntary reductions of GHG emissions, went online in
2003.
Other states are joining forces to establish a national registry, which may link
with regional registries that were previously created.40 In May 2007, 30 states formed
the Climate Registry, which aims to establish a standard system for GHG emissions
reporting. As of August 2007, 40 states have joined the Climate Registry, which
supports both voluntary and mandatory reporting schemes in the participating
states.41
Mandatory Greenhouse Gas Reporting. Mandatory reporting programs
allow states to monitor GHG 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’ GHG emissions
were made publicly-available and thus comparable, the companies might have an
39 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 GHG emissions, established a registry for counting the offsetting reductions in
GHG emissions obtained by carbon sequestration. Not counted as one of the five states,
New Jersey repealed a previously enacted registry program in 2004.
40 New England and Mid-Atlantic states are developing the Eastern Climate Registry. In
addition, the Lake Michigan Air Directors Consortium (LADCO) is working on a registry
for several states in the Midwest
41 For more information see [http://www.theclimateregistry.org].
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incentive to reduce emissions voluntarily.42 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.43
A few states already require, and others are in the process of developing, GHG
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:
! Wisconsin: In 1993, the state established a mandatory reporting
program that includes carbon dioxide reporting for facilities
generating over 100,000 tons annually.44
! 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 2003.45 New Jersey
is developing a mandatory reduction program (discussed below) that
will entail a more comprehensive reporting regime.
! Maine: Facilities in Maine that emit any criteria pollutant over a
specific reporting threshold must also report GHG emissions. This
provision went into effect July 2004.46
! Connecticut: Starting in 2006, facilities subject to federal reporting
under Title V of the Clean Air Act must submit GHG emissions data
on an annual basis.47
Mandatory Programs to Reduce Greenhouse Gases
Mandatory programs to require GHG reductions represent the most aggressive
end of the state action spectrum. As with state actions overall, these programs can
42 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.
43 This notion assumes that allowances would be allocated based upon past performance,
instead of sold through an auction process.
44 Wisconsin Chapter NR 438.03.
45 New Jersey Administrative Code 7:27-21.3.
46 Maine Department of Environmental Protection Rules, Chapter 137 (per 38 MRSA,
Section 575).
47 Connecticut Public Act No. 04-252 (June 14, 2004).
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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.
Statewide Greenhouse Gas Emissions Reduction Programs.
Statewide (often described as economy-wide) GHG emission reductions programs
seek to control and reduce emissions from multiple economic sectors. In general, a
statewide program covers sectors — e.g., electricity generation, industry, and
transportation — that account for the vast majority of a state’s emissions. Depending
on the design of the program, some sectors (e.g., agricultural or residential) may be
excluded. Three states — California, Hawaii, and New Jersey — have passed
legislation that would establish statewide reduction programs. However, each of the
three state statutes lacks critical details regarding the design of the reduction
program. Instead, the statutes direct state agencies to develop the logistical elements
that would implement the reduction requirements. In addition to individual state
action, several western states are developing a regional, economy-wide reduction
program. These programs are described below.
California. In September 2006, California enacted landmark legislation that
would establish a comprehensive GHG reduction regime. The legislation — AB 32
or the Global Warming Solutions Act48 — directs the California Air Resources Board
(CARB) to develop and implement a statewide program that would reduce the state’s
GHG 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 GHG emissions. Instead,
AB 32 authorizes CARB to develop regulations to “achieve the maximum
technologically feasible and cost-effective GHG emission reductions....” Moreover,
the statute does not include a list of regulated emission sources or categories,49 but
instructs CARB to determine which sources are necessary to meet the statewide
target.50
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
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.
48 California Governor Schwarzenegger signed the legislation September 27, 2006.
49 Earlier drafts of the legislation specifically cited the electric power, oil/gas, and cement
industries, and landfills as significant emitters.
50 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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For a more in-depth discussion of California’s program, see CRS Report
RL33962, Greenhouse Gas Reductions: California Action and the Regional
Greenhouse Gas Initiative, by Jonathan L. Ramseur.
Hawaii. In June 2007, Hawaii enacted the Global Warming Solutions Act of
2007, mandating statewide GHG emissions reduction to 1990 levels by 2020. The
statute establishes a GHG emissions reduction task force, which is directed to offer
policy recommendations by January 1, 2009. Before December 31, 2011, the
Department of Health is instructed to adopt implementing regulations that would take
effect January 1, 2012. Similar to California’s statute, Hawaii’s act does not specify
details, but gives considerable responsibility to the Department of Health. The act
does require the Department of Health “to endeavor to make the requirements
consistent with the requirements of international, federal, and other states’
greenhouse gas emission reporting programs, as necessary.”51
New Jersey. In July 2007, New Jersey enacted the Global Warming Response
Act, which states that GHG emissions shall be reduced to 1990 levels by 2020 and
to 80% below 2006 levels by 2050. The statute instructs the Department of
Environmental Protection (DEP) to develop a GHG emissions inventory for the
baseline years — 1990 and 2006 — and a system for monitoring and reporting GHG
emissions from specific sources (e.g., electricity generators), as well as entities
deemed to be significant emitters by the DEP. The law does not specify how the
reductions will be met, but directs the DEP, in coordination with other agencies, to
submit recommendations to the governor and state legislature by June 30, 2008.
Unlike the California and Hawaii statutes, the New Jersey act does not grant specific
authority to DEP to implement the reduction program through regulation. Although
not specifically stated, further legislative action would likely be required to
implement the reduction program.52
Western Climate Initiative. In 2007, the governors of six western states —
Arizona, California, Oregon, New Mexico, Utah, and Washington — formed the
Western Climate Initiative (WCI)53 to reduce GHG emissions in their region.54 In
addition, two Canadian provinces — Manitoba and British Columbia — have joined
the initiative.55 In August 2007, the states and provinces set a regional,
economy-wide target to reduce GHG emissions to15% below 2005 levels by 2020.
51 Section 8 of the act, revising Hawaii Revised Statute § 342B.
52 According to an official with the NJ DEP, existing statutory authorities may allow some
regulations to move forward without additional legislative action. However, subsequent
legislative action is most likely necessary to implement the reduction regime in full (per
telephone conversation, August 28, 2007).
53 For the text of the agreement see [http://www.westernclimateinitiative.org/].
54 Utah joined the initiative May 21, 2007; the five other states were charter members,
signing the agreement February 26, 2007.
55 British Columbia signed April 2007 and Manitoba signed June 2007. Press Release from
the Office of the Premier of British Columbia (April 24, 2007), at [http://www.mediaroom.
gov.bc.ca/]; Press Release from Manitoba Province (June 12, 2007), at [http://news.gov.mb.
ca/news/].
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In order to implement this target, the participants agreed to develop a market-based
program, such as a “load-based cap and trade program,” by August 2008.
Although the WCI is still in early development, there are several issues that may
hinder its implementation. As noted, the WCI is an agreement between the states’
governors. To implement the program, the states’ legislatures would need to enact
laws to carry out the initiative’s objectives. This may present an obstacle if a state’s
legislative branch finds fault with the reduction program developed by states’
executive branch officials.
The inclusion of British Columbia and Manitoba may raise legal issues,
particularly constitutional concerns. Article I, Section 10, Clause 3 of the U.S.
Constitution states that “[n]o State shall, without the Consent of Congress ... enter
into any Agreement or Compact with another State, or with a foreign Power....” It
is uncertain whether this clause (the “compact clause”) will create legal hurdles for
the WCI.
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 GHGs. 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.56 Many
of these facilities are already tracking their carbon dioxide emissions as required by
the 1990 Clean Air Act.
Regional Greenhouse Gas Initiative.57 One of the more significant
climate change developments at the state level is the Regional Greenhouse Gas
Initiative (RGGI). RGGI is a market-oriented effort of nine states — Connecticut,
Delaware, Maine, Maryland,58 Massachusetts,59 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.60
56 Based on 2001 data. Energy Information Administration, Emissions of Greenhouse Gases
in the United States 2004 (Table C2).
57 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.
58 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.
59 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.
60 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
(continued...)
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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, GHGs, or states could be included.
Rhode Island is expected to join RGGI in 2007.61
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.”62
Several states 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.63
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
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.
60 (...continued)
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].
61 Rhode Island Governor Donald Carcieri announced (January 30, 2007) that his state plans
to join the initiative.
62 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].
63 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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In 2008, this cap is lowered further.64 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
legislation65 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 legislation66 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 GHG emissions. 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.67 Washington
passed similar legislation in 2004, requiring new power plants to offset 20% of their
carbon dioxide emissions.68
Emission Reduction from Motor Vehicles. The U.S. transportation
sector accounts for a substantial percentage — 28% in 200469 — of the nation’s GHG
emissions. Automobiles and light-duty trucks (fueled by gasoline or diesel) generate
the majority — 63% in 2004 — of the nation’s transportation-related GHG
emissions.70 The transportation sector is the single largest source of the primary
GHG, carbon dioxide, in 14 states.
64 310 Massachusetts Code of Regulations 7.29.
65 New Hampshire Clean Power Act (May 9, 2002), codified in New Hampshire Statute,
Title X, Chapter 125-O (Multiple Pollutant Reduction Program).
66 HB 3283, codified in Oregon Administrative Rules, Chapter 345, Division 24.
67 Point Carbon, 2006, “Carbon Trading in the US: The Hibernating Giant,” Carbon Market
Analyst, September 13, 2006.
68 HB 3141 (signed into law on March 31, 2004).
69 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].
70 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].
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California’s transportation sector, in particular, generates almost 41% of the
state’s annual greenhouse emissions.71 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.72 The
law permits other states to choose to follow California’s more stringent provisions,73
and states have adopted California standards in the past.
In 2002, California enacted the first state law (AB 1493) requiring GHG limits
from motor vehicles.74 As directed by the statute, the California Air Resources Board
(CARB) issued regulations in September 2004, limiting the “fleet average GHG
exhaust mass emission values from passenger cars, light-duty trucks, and
medium-duty passenger vehicles.”75 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 14 states have formally adopted or announced plans to follow the
California regulation.76 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 GHG emissions, arguing
in federal court that the Clean Air Act does not authorize the EPA to regulate GHG
emissions for the purpose of addressing climate change.
However, an April 2, 2007, Supreme Court decision (Massachusetts v. EPA)77
provided clarification on this issue. The Court found no doubt that the Clean Air Act
gives EPA the authority to regulate GHG emissions (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. For more discussion regarding this
issue, see CRS Report RL34099, California’s Waiver Request to Control
Greenhouse Gases Under the Clean Air Act, by James E. McCarthy.
71 California Energy Commission, 2006, Inventory of California Greenhouse Gas Emissions
and Sinks: 1990 to 2004, p. 8.
72 See Clean Air Act Section § 209, codified at 42 U.S.C. § 7543.
73 Clean Air Act § 177, codified at 42 U.S.C. § 7507.
74 AB 1493 (or the California Vehicle Global Warming Law) was signed into law by
Governor Gray Davis on July 22, 2002.
75 Title 13, California Code of Regulations § 1961.1.
76 The 14 states are Arizona, Connecticut, Florida, Maine, Maryland, Massachusetts, New
Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and
Washington.
77 The ruling is available at [http://www.supremecourtus.gov/opinions/06pdf/05-1120.pdf].
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There are already several lawsuits against state actions that seek to regulate
GHG 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.78
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 GHG 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 GHG levels by influencing which energy
sources — coal, oil, natural gas, etc. — are used to generate electricity for consumers.
Greenhouse Gas Emissions Performance Standard. Two states —
California and Washington — have enacted laws requiring a GHG emissions
performance standard for applicable power plants. In September 2006, California
passed legislation (SB 1368)79 that will forbid “load-serving entities”80 from entering
into new “long-term financial commitments”81 with power plants unless a plant’s
GHG 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. Washington
passed similar legislation (SB 6001) in May 2007.
The new performance standards complement the emissions reductions programs
being developed in California and Washington. As discussed above, California is
developing a mandatory reduction program, and Washington has a statewide
emissions reduction target; both states are participants in a regional emissions
reduction program (WCI). The implementation of California’s emissions reduction
program and the WCI 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 states develop broader reduction
regimes.
78 For further discussion of these legal issues, see CRS Report RL32764, Climate Change
Litigation: A Growing Phenomenon, by Robert Meltz.
79 SB 1368 was signed by the governor on September 29, 2006.
80 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)).
81 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)).
CRS-19
Once the new performance standards are applicable (and previous commitments
expire), they will effectively prohibit California and Washington 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 amount of carbon dioxide. Using current technologies, coal-fired
generators would fail to meet the new emissions standards.82
From 2002 through 2005, approximately 20% of California’s electricity was
generated from coal;83 approximately 10% of Washington’s electricity came from
coal generation facilities over the same period.84 As the laws take effect, California
and Washington 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 and Washington,
but also other states in the West. For example, California’s electricity imports
generally fall between 22% and 32% of the state’s total electricity consumption, but
its imports are responsible for 39% to 57% of the total GHG emissions linked with
electricity.85 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.86
Arguably, the GHG performance standards disproportionately affect the
neighboring states that have historically exported coal-generated electricity to
California and Washington consumers. This possible consequence may raise legal
issues, such as a state’s general inability to regulate interstate commerce.
82 As technology advances, coal-fired plants might be able to reduce GHG emissions through
carbon capture and sequestration (CCS). However, “there is relatively little experience in
combining CO capture, transport and storage into a fully integrated CCS system. The
2
utilization of CCS for large-scale power plants (the 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.
83 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].
84 Washington State Department of Community, Trade and Economic Development, 2007,
2007 Biennial Energy Report: Issues and Analysis for the Washington State Legislature and
Governor, p. 7, at [http://www.cted.wa.gov/].
85 California Energy Commission, 2006, Inventory of California Greenhouse Gas Emissions
and Sinks: 1990 to 2004, Draft Staff Report, p. 12.
86 See Holly, Chris, “California PUC Issues IOU Greenhouse Rules; Muni Nixes Coal Deal,”
The Energy Daily, December 15, 2006.
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Low Carbon Fuel Standard. To complement California’s statewide GHG
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.87
Achieving the carbon intensity reduction is expected to replace 20% of the state’s
gasoline consumption with less carbon-intensive fuels.88 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 GHGs
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 2005.89 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 GHG (or carbon) adder. In
general, adders require utilities to weigh the future costs of GHG 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.90 The agency stated that
this requirement “will serve to internalize the significant and under-recognized cost
of [GHG] emissions, [and] help protect customers from the financial risk of future
climate regulation....”91 Only a few other states92 require some type of GHG adder,
and California’s adder may be rendered less relevant due to its new emission
87 Executive Order S-01-07, signed January 18, 2007.
88 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.
89 The governor signed AB 1007 September 29, 2005.
90 California Public Utilities Commission, Decision 05-04-024, April 7, 2005.
91 California Public Utilities Commission, Decision 04-12-048, December 16, 2004.
92 Oregon and Colorado. See Pew Center on Global Climate Change website, at
[http://www.pewclimate.org/states.cfm].
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performance standard (discussed above). At this stage, the adders have not been
credited with changing any procurement decisions.93
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 GHGs. If individual U.S. states
were classified as sovereign nations, 18 U.S. states would rank in the top 50 for
nations that annually emit the primary GHG: carbon dioxide.94 Compared with other
nations, Texas, the combined WCI and RGGI states, and California rank as top
carbon dioxide emitters (see Table 2).
Table 2. Top-Ranked Carbon Dioxide Emissions by Nation,
U.S. States, and U.S. Regional Partnerships (2003 data)
Country, State, or
CO Emissions
Country, State, or
CO Emissions
2
2
Group
(million metric tons)
Group
(million metric tons)
United States
5,778
Texas
719
China
4,497
RGGI states
606
European Union
4,003
United Kingdom
553
Russian Federation
1,581
Canada
544
Japan
1,258
South Korea
489
India
1,148
Italy
468
Germany
865
Mexico
400
WCI states
730
California
395
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: WCI states include Arizona, California, New Mexico, Oregon, Utah, and Washington. 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.
93 Pew Center on Global Climate Change, “California PUC Carbon Adder” (case-study).
94 This is based on 2003 data from the World Resources Institute, Climate Analysis
Indicators Tool, at [http://cait.wri.org/].
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Although the states developing mandatory reduction programs — WCI (which
includes California) and RGGI participants — account for an appreciable percentage
of U.S. carbon dioxide emissions (about 23%), 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 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.95 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 will likely have
economic effects on consumers, businesses and manufacturers, and possibly
interstate commerce.96 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.
95 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 GHG 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.
96 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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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
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. The GHG performance
standards in California and Washington 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 GHG 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) that do not limit GHG
emissions.97 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.98
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.”99
The global warming and climate impacts associated with increased GHG emissions
97 This is also a central argument against having federal emission limits without cooperation
with other large economies (e.g., China and India).
98 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.
99 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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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.
From a practical standpoint, the actions of one or a group of states or nations
cannot by themselves reduce the global accumulation of GHG emissions in the
atmosphere. However, as discussed above, actions now under way 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 GHG emissions reductions does limit what individual states can
accomplish in actually reducing GHG 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 GHG 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.100 In addition, there is some question as to whether
California’s recently enacted GHG performance standards are constitutional.101
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.
crsphpgw
100 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.
101 See Potts, Brian, 2006, “Regulating Greenhouse Gas Leakage: How California Can
Evade the Impending Constitutional Attacks,” Electricity Journal, Vol. 19, Issue 5, June
2006.