A growing number of states have begun to develop policies, policy tools, and policy instruments that are either expressly or in part intended to stabilize or reduce their own greenhouse gas emissions. In some ways I realize that this is counterintuitive. When I first time I gave a talk on this, about four years ago, at another big ten university, after I got about three or four minutes into my talk - talking about states reducing greenhouse gases, I was cut off by a good friend and colleague, an established economist, who said that no state government acting rationally would ever unilaterally take steps to reduce greenhouse gases unless they were forced to through international action; it simply would not happen end of story. And the clear reality is, for better or worse, depending on your view of American federalism, we are seeing states taking a very active, engaging role in this area. It changes almost everyday. In fact, my book has been out for four or five months, and I probably shouldn’t say this because it will deter you from purchasing a copy of it, but it’s probably already out of date. There was an article in yesterday’s Wall Street Journal talking about two additional states that are moving in this direction, have enacted new policies in the area of renewable energy, which I’ll talk a little bit about.

But in essence, by my calculations, there are about sixteen or seventeen states, representing about forty percent of the America population, about forty percent of the greenhouse gas emissions generated in the United States that have a cluster of policies, multiple policies in different sectors that are designed to reduce or stabilize green house gas emissions. And a significant number of the remaining states that have begun some degree of experimentation. One of the things that I find so intriguing, but hard to get your hands around in climate change, is this is not just a traditional issue of air population where you can target the electricity industry, or a particular manufacturing firm, or the auto industry, put in a particular reglatorized strategy and solve the problem. Greenhouse gas is basically generated by every sphere and sector of public policy: agriculture, natural resources, forestry, transportation, certainly energy, which is hugely important, as well as more conventional things such as air quality and the like.

So part of my challenge has been to simply chronicle and describe these policies because when I began there really wasn’t much of a literature to describe them and then ask why would states do that. What I’d like to do is walk into some of the reasons or rationales for why states seem to be moving into this area pretty aggressively. Here are the things that really struck me as I sort of crisscrossed the country visiting state capitols asking “What have you done?” and “Why have you done this?” kind of question. For the most part, states were not or had not acted exclusively because of concerns about climate change but seeing the linkages between taking steps that would have the impact of reducing greenhouse gases, but other benefits, in economic terms, so called co-benefits effect, multiple advantages and benefits.

In renewable energy, for example, or in electricity generation, the desire to not only move toward renewable sources in hydro, solar, geothermal, and the like, but also perhaps develop those sources to have greater reliability of electricity supply in coming years and in coming decades. In the area of air emissions, we’re seeing a number of states actively negotiating with their utilities, their largest utilities and saying, you know, “You have a bet you can make here”. If you’re the CEO of a coal-burning power facility, “Do you want to bet that there’s nothing to global warming or the elevated levels of Co2 that emanate from the burning of coal or other fossil fuels?” Or, “Do you want to look at this as a package, and look at all types of flexible arrangements to be, in effect, ahead of the curve?” It’s a fundamental choice that electric utilities have to make when they put on air emissions control equipment. And some of the techniques and technologies that they would actually use to scrub out more traditional pollutants like sulfur dioxide actually involve more generation or more use of energy than simply burning the stuff for the power. The irony being, if you don’t put these things together, you’re going to achieve a reduction of certain kinds of pollutants like sulfur dioxide, nitrous oxide and the like, but actually increase your emissions of carbon dioxide. So in states like New Hampshire, Massachusetts, Oregon, and Washington, states have begun negotiating with their utilities and looking at flexible ways to put carbon dioxide into the larger basket of emissions. In other states, we see the agricultural communities, seeing droughts and unusual weather episodes and events that may or may not be related to climate change, but saying, “We know we need to make changes in how we do agricultural practice anyway in terms of use of fertilizers, and energy, and tilling practices, and if we do it right, we could do better agriculture for less money and literally sequester carbon; pulling carbon back down from the atmosphere and maintaining it and growing plant material and possibly treating agricultural products not only as crop that could be sold on various markets, but actually a cash crop of carbon because of storage capacity.

So in each case, it’s a little more complicated linked issue, which I think makes the policy aspects of this particularly intriguing; it also applies to transportation, waste management, and other areas. And some the other drivers behind this have not only been I think economic development opportunities, but individual states beginning to see things in their own backyards, their own ecosystems that are disruptive and are concerning. Proving a cause and effect between elevated levels of CO2 or greenhouse gases in the atmosphere and the outcome is tricky. And there are scientific chases on all sides of this issue trying to prove causal relationships; they’re difficult to prove. Hurricanes in Florida, climate change or not – we can debate that one long into the night. I have no idea. But you can see these kinds of linkages and what’s especially interesting at the state level is often there are particularized kinds of concerns. In New Hampshire, the possible loss of maple trees over the next twenty-five years. In some parts of the Mid-West, changed routes of the disease migration because of the changing migration patterns of insects, birds, and the disease transmission; West Nile virus, and the like. In areas that having large skiing industries or winter recreation facilities seeing shorter tourism cycles than all the rest. In British Columbia, where I have been working lately, a possible evisceration of Old Growth Forest, not through logging, but because British Columbia winters are shorter than they used to be. There are pests that are just pervasive, which would never survive a British Columbia summer, which are literally eating up the forests of British Columbia.

It differs case by case. But rather than conventional thinking that climate changes are like sort of gradually elevating the thermostat in this room, we see different impacts. And again, my point is not to say, “Ah, ha – this is proof of climate change”, but states are beginning to see these impacts and it has a significant power. In turn, while in deed many of the powers for here is relevant to climate and certainly negotiating international agreements are held federally, states have extraordinary regulatory powers including many of the powers relating to energy in some of the various areas I mentioned. So in short, you have states that begin to see issues and problems, not dramatic, triggering events; it’s not the day after tomorrow. It’s not Kevin Costner in Underworld if you remember the popular films on Climate Change. But somewhat more subtle, nuance effects that trigger action and pulling together interesting kinds of coalitions. In turn, another factor that has triggered a lot of state action are states realizing that they’re fairly large sources or generators of greenhouse gas emissions. All familiar with the tables that show the U.S. generates about one quarter of the world’s greenhouse gas emissions. So no government on Earth, whether it is the U.S. or any other acting unilaterally, can solve this problem; it truly is a collective action problem. But it is interesting to think of where they would rank if states fir onto the ranking of greenhouse gas sources. You see the U.S. is at the top (referring to chart), but note that Texas is basically dead even with the United Kingdom. Note California, which has a population substantially greater than Texas, falls into the seventeenth position, in large part because of fairly substantial energy efficiency efforts that took place throughout the eighties and nineties. California is remarkably well positioned to address the issues of the Kyoto Protocol. In affect states are sitting on a lot of greenhouse gases and if we ever moved to an international regime or system where a fair amount of this was going to be taken seriously, states could have some interesting challenges on their hands and I think this is clearly one of the factors that has motivated states to respond.

One other feature that I wanted to talk about before getting into some of the particulars of climate policy is the policy-making process at state capitols, as I have been able to discern them. The part of, “Why would states do this?” question. With familiar in much of environmental policy-making, especially at the federal level where you have highly contentious, highly partisan, highly adversarial relations, that often block the enactment of policy. It has now been almost fifteen years since the Congress and the President have authorized major, new environmental legislation or extended legislation that is badly in need of update. If you think of that from 1990 when former President Bush and a Democratic Congress agreed to the Clean Air Act Amendment, we’ve have every kind of partisan configuration of control of the American government imaginable at the federal level. Nothing has happened at the federal policy, creating some room for the states.

What I found at the state level is that the politics of enacting these climate policies has been remarkably calm and quiet, perhaps too calm, but fairly consensual. Very much ideas generated particularly within state agencies or advisors to the state legislatures and what have you. A very quiet process of negotiating with industry, with advocacy groups. Not terribly controversial. And so much so that I have not been able to discern any partisan preference. There is no predictability whether a Democrat or Republican is in office. Divided versus unified government. These tend to be fairly non-controversial, non-partisan steps, in part because of the coalition building process although that may be in the process of changing.

Perhaps the state policy that is best known as the California Vehicle Admissions Initiative passed only by Democrats votes in the legislature in 2002; signed into law by former Governor Davis, which could have great impacts on the how vehicle admissions are regulated, a purely partisan activity. Although interestingly, Governor Arnold Schwarzenegger, a Republican, has been more aggressive in implementation than his Democratic predecessor. I think we are beginning to see that has become more of a partisan issue. One of the areas where we are beginning to see states move in a partisan direction is going into the courts. Particularly, state attorneys general trying to gather together Democratic elected attorney’s general to find different legal loopholes to either embarrass the American government or Bush administration to try to force action. So those are some of the driving elements and components of this.

Let me just take a few minutes and talk about what these policies are. Two case studies. We’ve talked before about Texas, the seventh ranking power in the world in terms of greenhouse gas emissions. Absolutely massive volumes of fossil fuel combustions that take place in Texas. In 1999, Texas was looking at significant concerns about its electricity system. It consumes prodigious amounts of electricity and given the unique nature of the North American electricity grid, it is very difficult for Texas to import or export electricity; it’s not so much a public policy issue, but the simply the way marketing around electricity emerged. In the late 1970s, Texas began to look at a series of issues about electricity and electricity supply. They held what was called a Deliberative Opinion Poll, borrowing actually from the work of James Fischen at the University of Texas in political theory; deliberative opinion polling to survey what an informed citizenry would want and one of the surprising outcomes was commitment to renewable energy. In 1999, with overwhelming support of Republican and Democrats in the Texas legislature, former Governor Bush signed into law about four pages in a 99-page electricity restructuring bill called a Renewable Portfolio Standard. Basically what it does is count up each year the amount of electricity that is generated in Texas that must come from renewable energy sources. What has happened in Texas thus far is Texas has gone from literally dead last in the United States in terms of the amount of renewable energy that it generates to projections where it’ll be about three percent by the end of this decade. And because of the export, import issue that’s a direct replacement of fossil burning fuels, much of it coming from wind energy generated in west Texas. In fact, the sense in Texas is that they set the bar too low and they’re actively looking at raising it much higher. Interesting, sixteen states now have identical versions of this policy. In New York, Public Utility Commission endorsed a policy like this for the state of New York. If that and a few other policies like it pass which are pending in state legislatures, in about a year’s time, more than half of the United States’ population will be governed by renewable portfolio standards. This is a central component by the way to European Union policies for dealing with greenhouse gases; it’s exactly the same policy.

Wisconsin. Another interesting case: in 1993, before anyone uttered the term Kyoto protocol, there was active movement on greenhouse gases in Wisconsin, in part reflecting that state’s tradition of acting early on air quality issues, trying to achieve early reductions, and take those early reductions and their expertise into negotiations with federal policy. If you recall the debates in the 1980’s on acid rain. Culminating in the 1990, the Clean Air Act Amendment. That’s a variation of a law that was passed in Wisconsin in 1984. When he was governor, Tommy Thompson approved a whole series of climate initiative. One of them was in 1993 that made Wisconsin the first government on earth, that I’m aware of, that mandated carbon dioxide emissions disclosure as part of doing business in the state of Wisconsin, not just for large utilities, but for a large number of firms. What that means is that Wisconsin is sitting on an extraordinary database. Ten years of data on how CO2 emissions have changed. And it’s a relatively easy calculation to make. It doesn’t require a lot of effort to add to that to other emission reporting requirements. And what the state has done is weave that into a number of policies and programs; negotiating with their utilities, negotiating with large manufacturers and looking in effect for the low hanging fruit to reduce emissions, but combine it with other kinds of activities.

New Jersey. I know there is always a chuckle in the room whenever I talk about New Jersey as being sort of an environmental pioneer or environmental leader. But New Jersey has a really remarkable environmental cleanup record over a succession of governors. None of them could really stand each other, but all of them have basically reached a certain accord. This goes back to the Kaine administration, former Governor Kaine, best known now perhaps because of his role with the 9/11 Commission. Back in 1998, three years before she became the administrator of the Environmental Protection Agency, former Governor Whitman signed the equivalent of an executive order, power that most governors have, to in effect, pledge that New Jersey would unilaterally try to implement the Kyoto Protocol or halfway to it. Kyoto set for the United States a baseline of what the emissions were in 1990 and promised to get seven percent below that by 2012. Well that’s not going to happen. But New Jersey pledged to get three and a half percent below by 2005 and through a series of actions, they’re actually ahead of that target. New Jersey found that almost twenty percent of their greenhouse gas emissions were coming from unkempt landfills. Pretty straightforward process. Huge rationing down of emissions.

Finally the last case I want to share with you cuts across national borders and is an interesting one. And I think begins to enter into the realm of how far can and should states go constitutionally and politically. There is a longstanding tradition of multiple states working together. There’s also a fairly large amount of collaboration and cooperation between American states and neighboring Canadian provinces. For nearly thirty years, the six governors of the New England states and the five premiers, equivalents of governors, of the five Eastern Canadian provinces (Quebec and the four Atlantic provinces) have met annually and come up with annual agreements. In some cases, annual agreements that they would then take back to their state governments to try and set common points of policy, common laws, common issues. You can see the kinds of pledges that have been made here. What has happened now on the U.S. side is that at least four of those states’ pretty aggressive efforts to reach and to realize those targets with accountability mechanisms set in place. In New York, Governor Pataki has proposed an 11-state emission trading zone, which will basically go from Maine down through Pennsylvania, south into Maryland, I don’t think Virginia is a part of these negotiations, but the idea of states on their own setting certain common standards for conventional pollutants and carbon dioxide and beginning to trade according to market principles and in a flexible way of along these lines. Those are just a few cases.

Looking ahead, let me just make a couple of observations. What I do not meant to suggest is that the movement toward climate policy is somehow universally sweeping the nations. That all sort of states are locking arms and trying to reduce greenhouse gases. Some states, it’s hard to find much of a pulse on this issue. In a few states, it is still illegal or virtually illegal for a state official to spend much time doing anything to reduce greenhouse gases. Then there are issues of the staying power of state governments and all the rest. Which we all know, certainly in Michigan, certainly in Virginia, these have been rough years fiscally for states. Budgets and staffs have been cut. Who’s the first person to go in an agency that’s experiencing two, five, or twenty percent cutbacks? Does that institutional capacity remain? In turn, we are entering a period where many of the people who were the champions, governors and legislatures, of some of the policies that I’ve talked about, which are not terribly old policies, are no longer in office. In 2002, twenty-four new governors were elected. Twenty-five percent of the legislatures serving in state legislatures now are in their first term. With term limitations, we are seeing in many states, Michigan being a good example of this, people being actively ported for Speaker of the House or Senate Presidency positions in their first terms. Raises very interesting questions of institutional memory, commitment, and capacity to pursue this. And then I think some just very, very interesting Federalist questions. What does is mean to move from a system of national regulation to a bit of a patchwork quilt? And are there areas in which states exceed their constitutional authority or exceed the authority of what might make for good public policy, however one would choose to develop that.

In the case of Minnesota, Minnesota for ten years has been trying to look at ways to price the environmental impact of burning different kinds of substances for electricity as part of their decision-making process for weighing coal versus natural gas versus nuclear. The state of North Dakota is challenging that, because North Dakota provides a lot of the coal that is burned in Minnesota, as a violation of the Commerce Clause of U.S. Constitution, basically acting in a discriminatory way against one fossil fuel as opposed to natural gas or other items. Then you get into some very, very interesting cross boundary issues. One of the biggest challenges for generating wind is opposition to citing towers and new power lines that may cross state lines. Wisconsin has a very robust renewable portfolio standard. And in the last gubernatorial election, the Republican and Democrats tripped all over themselves saying, “I’m going to raise it to four percent”, “No, I’m going to go to five percent”, “I’m going to go to six percent”. The biggest thing to impediment to Wisconsin realizing its goals, are simply running transmission lines from the Dakotas in Manitoba where there is a lot of wind power across the lands of Wisconsin. It’s something the environmental community is nervous about. Utilities are nervous about. And raises all kinds of cross jurisdictional, cross boundary issues and concerns.

And then finally there is a question of how far realistically can states go. The California vehicle cases are an intriguing one because under federal law, California has always had this unique opportunity to opt out from federal air emissions standards, in part because California was acting on air emissions vehicles and others well before the legislation of the 1970s. But it doesn’t have power under federal law to set cooperate fuel economy for vehicles, motor vehicles. California has passed a law endorsed by Greg Davis and Arnold Schwarzenegger that calls in all vehicles that would be manufactured in the 2009 fleet year to achieve a certain level of emission reduction for carbon dioxide. Actually quite a substantial reduction, 25 or 30 percent. California argues that’s our power under air regulations that have been granted to us by the federal government. There are others who argue - certainly Michigan and the auto industry - this is fuel economy. This is an encroachment on federal power and federal terrain. And you see some intriguing flip-flops in terms of who favors in a normative sense to centralization and who favors centralization from varying kinds of parties. There are some organizations that clearly view all of the state activity as an encroachment on the powers of the federal government, perhaps for federalism grounds, perhaps because they don’t like the policies. There are some intriguing policy and federalism questions ahead. And I think it is fair to say that the Bush administration has been dropping some non-trivial hints that while on the one hand, former Governor Bush very mush liked the idea of a renewable portfolio standard and talked about it in the 2000 campaign. In fact, that was a focal point of a speech he gave in September 2000 when he began to talk about his ability; he claimed that he reduced greenhouse gases through legislation that he enacted and Al Gore ever had, which is actually a verifiable statement event though Bush was only representing one state at the time. Now the Bush administration is saying now we may have to look at federal pre-emptive issues. That some of these areas of state policy, even renewable portfolio standards, may be pushing too far. So very, very interesting issues ahead.

And finally if I might in concluding, I think the next steps in this are intriguing. One is just simply watch the battles take place and see what shapes does take place. But I think what stares have provided us is an intriguing laboratory, a term that is often used in discussion of federalism, to see what does and does not work in terms of reducing or stabilizing greenhouse gas emissions. Going back to the point earlier in my talk, in terms of searching for the optimum or the quest for the one best system of emissions trading. What we really don’t know very much is how can you reduce greenhouse gases and achieve other environmental goals in a cost effective way, or can you? Is a renewable portfolio standard a good way to go? Is a carbon tax a better way to go? Are voluntary initiatives a better way to go? I would argue that we really don’t know. We have, for quite some time now, talked about different decentralized bottom-up approaches of giving states more authority, but with accountability. Is it possible to do that in the area of climate change? Really seeing similar issues emerging in other federated or multi-level systems that on the one hand, pose huge challenges forever bringing all of us together, but at the same time, I find kind of hopeful and intriguing that they may provide models or lessons for dealing with these issues in decades to come.