Climate Change Measures Using the Carrot and the Stick

As is the case in most policies, the state governments’ climate change measures make use of both “the carrot and the stick.” The “carrot” consists of incentives such as subsidies and tax deductions, and the “stick” is a variety of obligations and regulations. Looking at the “stick” policies, 14 states, or nearly one-third of the 50 states, have set reduction goals for greenhouse gases in an attempt over the next 10 to 20 years to reduce emissions to the 1990 level (or the 2000 level in some states), which is the standard set by the Kyoto Protocol. Moreover, 23 states, or nearly half of the total, have imposed a “portfolio requirement” which provides that in-state energy producers must produce a certain portion of electric power using renewable resources, such as hydroelectric power or wind power. There are 23 states that allocate some of the electricity fees to a fund for climate change measures, and there are 9 states that prescribed that a portion of the electric power procured for state and local government facilities must be renewable energy.

Because “carrot” policies require financial resources, there are not so many of those, but one common “carrot” policy is bio-fuel incentives. Fifteen states have already introduced incentive programs for ethanol producers, and 11 states offer an incentive program for sellers of gasoline mixed with ethanol. Also, it is not a policy, but 38 states have already created a “list of sources of greenhouse gas emission” on their own and have gathered information on the amount of emissions in each sector in their state.

These policies have been implemented based on a Climate Change Action Plan legislated in each state. The states of Alaska and North Caroline have no action plan, but they have set up the Alaska Climate Impact Assessment Commission and the North Carolina Legislative Commission on Global Climate Change, respectively, which are working on the climate change problem. Including these two states, already 31 states, or more than half the states, have legislated some sort of climate change measures. Considering that the US Congress is still at the stage of submitting a bill, the states took fast action indeed.

From “Governator” to “Conservation-ator”

The state that stands out among the 50 states for its positive action is California. The state governor, Arnold Schwarzenegger, has been referred to as the “governator,” a word created by combining the name of the movie “Terminator” and the word “governor.” Initially, environmental groups were concerned that, being a Republican, he would adopt policies favoring large corporations. However, contrary to expectations, he has taken the lead in the US and has been introducing global warming prevention measures one after the other in his state, thereby earning himself the new nickname of “conservation-ator” (“conservation” plus “terminator”) at a recent conference.

Looking back on the past year, much action has been seen, including (1) approval of the first bill in the US to comprehensively reduce greenhouse gases (AB32), which is to reduce greenhouse gases to their 1990 level by 2020, (2) signing of an agreement for joint research on development of alternative fuels with Sweden, a country that is advanced in bio-gas vehicles, (3) signing of collaborative agreements for multifaceted research on climate change, including exchanges of scientists with Great Britain and joint research, etc., (4) approval of a law to expand subsidies for solar panels to $3.2 billion, and (5) the start of study on trading of emission rights.

California accounts for 10% of the US’s GDP, and the size of the state economy is on par with that of France. The state is second nationwide after Texas in its amount of greenhouse gas emissions, accounting for 6.7% of emissions in the US, and so the state’s green policies will have a large impact on the entire US.

Global Initiatives

In addition to these efforts by individual states, multiple states are joining together to create regional initiatives to reduce greenhouse gases. In December 2005, seven states in the northeastern US established the Regional Greenhouse Gas Initiative (RGGI). This initiative aims to reduce emissions through a cap-and-trade program, and current membership has increased to nine states. In February this year, five states in the northwestern US launched the Western Region Climate Action Initiative, and this initiative also aims to reduce emissions using a cap-and-trade program.

Why are State Governments Taking the Lead?

Why are state governments adopting climate change measures ahead of the federal government? Because the US is geographically large, conditions vary significantly from region to region. For example, for corn-producing states, there is considerable merit in state promotion of ethanol, for which the federal government already pays subsidies. The states probably also wish to put measures in place that are most suited to their own situation before the rules decided at the federal level become obligatory.

However, the overriding reason is concern over the impact of warming. Even if various regulations are introduced, getting them implemented is difficult without the support of the people of the state. For example, in California, which was hit with electric power crises in 2000 and 2001, supply of electric power at a fair price is a life-or-death issue. Recently, with the cost of natural gas shooting up and the cost of electric power also rising, increasing the percentage of alternative energy sources is an important issue from the standpoint of energy security as well. Moreover, part of the reason why the two regional initiatives were started by coastal states is due to the direct impact that the rising ocean level will have on those states. There is a sense of crisis among the states that, if federal government measures come too late and warming progresses, it is the people in the states who will suffer, and this is what makes climate change measures with more “stick” than “carrot” possible.