Are States Shifting Away from Regional Cap-and-Trade Policies?

Arizona Pulls Out of Western Cap-and-Trade Plan; Utah May Be Next

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The economy is quickly becoming everyone’s favorite excuse for not regulating carbon emissions.

First, California started hemming and hawing about implementing AB32, a statewide law that would regulate greenhouse gas emissions, citing concerns that any additional regulations on businesses could crush those that are barely hanging on in the down economy.

Now, Arizona has pulled out of the Western Climate Initiative’s cap-and-trade program, and Utah may follow suit.

The WCI includes seven western states and four Canadian provinces that agreed to work together to reduce greenhouse gas emissions and participate in a regional cap-and-trade program that would launch in 2012 and be fully implemented by 2015.

The former governors of Arizona and Utah, Democrat Janet Napolitano and Republican Jon Huntsman, Jr., had signed on to the WCI, but both were appointed to higher office by President Obama last year, Napolitano as secretary of Homeland Security and Huntsman as ambassador to China. Their successors in the two states are now second-guessing their decisions.

In an executive order last week, Arizona’s new governor, Republican Jan Brewer, announced that Arizona would not implement the cap-and-trade proposal advanced by the WCI, though it would remain part of the group. Her argument: Implementing cap-and-trade at this point would put her state at a competitive disadvantage nationally and internationally and hurt its economy.

Utah legislators are urging their new governor, Republican Gary Herbert, to drop out of the WCI entirely. They, too, cite economic concerns, as well as general doubts about the existence of climate change (the sponsor of the resolution, Rep. Mike Noel, believes climate-change policies are a conspiracy to control world population). The Utah House’s Public Utilities and Technology Committee this morning passed his resolution, which now goes to the full House, where it is expected to pass.

But while some state officials are talking about climate science as a controversy to stir up their constituents, the real reasons may have more to do with what’s happening in the federal government.

In her executive order, Brewer cited the EPA’s regulation of greenhouse gases and potential federal regulations governing GHG emissions as additional reasons to pull out of the WCI.

Interestingly, Arizona plans to continue its involvement in the Arizona-Sonora Regional Climate Change Initiative, which Brewer says will help the state “further cooperation with its important neighbor on developing a regional inventory of GHG emissions and identifying emissions reduction and energy efficiency opportunities.”

The governor is also intent on supporting the state’s growing renewable energy economy. In her executive order, she writes:

“Together with Arizona citizens, businesses and communities, we strive for pragmatic, pro-active approaches to climate change mitigation and adaptation by advancing clean and renewable energy, including solar power, nuclear energy, smart growth, fuel efficient transportation and energy efficiency polices and practices that make sense for Arizona.”

Given that renewable energy and clean technology have become an important part of Arizona’s economy, it’s not likely that the state will move away from renewable energy.

The Utah legislature’s objections to climate action could be far more detrimental to that state’s clean energy sector. In the last few years, Utah’s geothermal energy sector in particular has been growing, but with state representatives who don’t believe the science behind global warming and a governor who openly questions it, things aren’t looking good for green business in Utah.

It remains to be seen what will happen in California, although Attorney General Jerry Brown’s move to rename the bill that would kill AB32 is likely to steal some votes away from the initiative. Republicans Ted Logue and Dan Costa drafted the euphemistically named California Jobs Initiative for the state’s November ballot. The measure needs $600,000 and 433,000 signatures by April 16 to make it onto the ballot, and that appeared to be an easy ride until Brown moved yesterday to invoke his right as state Attorney General to clarify ballot measures by precisely naming them. He changed the name to: “Suspends Air Pollution Control Laws Requiring Major Polluters to Report and Reduce Greenhouse Gas Emissions That Cause Global Warming Until Unemployment Drops Below Specified Level for Full Year.”

Irrespective of what happens in California, the general trend seems to be that, with the federal government stepping up its efforts to regulate greenhouse gas emissions, state policies governing emissions can be put on hold.

According to a recent report by the Lincoln Institute for Land Policy, however, leaving climate change policy up to the federal government alone is not a great idea.

Report authors Rebecca Carter and Susan Culp argue that in order to be effective, climate change policy needs to be adapted to local contexts. Not only do local planners know what will and won’t work in their regions, they also know how to couch climate change policy in terms that work in the local context, Carter and Culp write. In other words, if the bulk of your constituents don’t believe that global warming is happening, don’t try to pass global warming regulation; instead focus on smart growth and emphasize the benefits for all.

“Western planners are emphasizing sustainability or economic efficiency, rather than climate change, in their decisions to manage water supplies, reduce energy consumption, increase transportation efficiency, and protect open space,” says Culp, the report co-author and project manager of Western Lands and Communities, a joint venture of the Sonoran Institute and the Lincoln Institute.

Although Western states seem to be struggling to make their regional cap-and-trade plans a reality, the Northeast’s utility-only Regional Greenhouse Gas Initiative (RGGI) is moving full-steam ahead. RGGI’s focus on utilities is a different approach than the broader federal cap-and-trade policy passed by the U.S. House and supported by the president. In fact, the Economic Report of the President, released yesterday, includes paragraphs suggesting that a utility-only cap-and-trade system (of the kind implemented in RGGI), would cost more money than a more broadly implemented cap-and-trade system.

“Costs are also affected by the number of industries covered by the cap, with the general principle being that greater coverage lowers the marginal cost of emissions reductions,” the report states. “A recent study comparing alternative ways to achieve a 5 percent reduction in emissions found that the cap-and-trade program’s costs to the economy were twice as large when manufacturing was excluded as they were under an economy-wide approach (Pizer et al. 2006).”

With climate policy seemingly trapped forever in Senate politics, however, state regulations are more important than ever. Perhaps the administration should have thought of that before moving two progressive governors out of office.


See also:

Economic Fears Put Pressure on Western Climate Initiative

Cap and Trade in Perspective: Carbon Trading in the Northeast

Utah House Passes Resolution Implying Climate Change Conspiracy

Cap-and-Trade, California Style: Who Gets the Money?

(Photo: mendelsohn/CC BY-NC-ND 2.0)