Carbon Pricing in the US: Examining State-Level Policy Support and Federal Resistance

Abstract

Carbon pricing is a key policy instrument used to steer markets towards the adoption of low-carbon technologies. In the last two decades, several carbon pricing policies have been implemented or debated at the state and federal levels in the US. The Regional Greenhouse Gas Initiative and the California cap-and-trade policy are the two regional policies operational today. While there is no federal policy operational today, several carbon pricing proposals have been introduced in Congress in the last decade. Using the literature on interest group politics and policy entrepreneurship, this article examines the carbon pricing policies at the subnational and federal levels in the US.

First, the article explores the evolution of two main regional carbon pricing policies, the Regional Greenhouse Gas Initiative and California cap-and-trade, to identify how interest groups and policy entrepreneurs shaped the design and implementation of the respective policies.

Second, the article details the federal carbon pricing policy proposals and bills discussed in the last decade.

Third, it examines the factors that limit the prospects of realizing an ambitious federal carbon price for pursuing deep decarbonization of the US economy.

The article finds that federal carbon pricing in the US suffers from the lack of any natural and/or consistent constituency to support it through policy development, legislation, and implementation. While interest group politics have been mitigated by good policy entrepreneurship at the subnational level, the lack of policy entrepreneurship and the changing positions of competing interest groups have kept a federal carbon pricing policy from becoming a reality.

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National climate institutions complement targets and policies

Introduction

National climate institutions are a missing element in climate mitigation discussions. Yet institutions translate ambition to current action, guide policy development and implementation, and mediate political interests that can obstruct mitigation efforts. The landscape of relevant institutions is usefully categorized around ‘purpose-built’ institutions, ‘layering’ of responsibilities on existing institutions, and unintentional effects of ‘latent’ institutions. Institutions are relevant for solving three climate governance challenges: coordination across policy domains and interests, mediating conflict and building consensus, and strategy development. However, countries do not have a free hand in designing climate institutions; institutions are shaped by national context into four distinct varieties of climate governance. We suggest how countries can sequence the formation of climate institutions given the constraints of national politics and existing national political institutions.

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Climate change research and the search for solutions: rethinking interdisciplinarity

Introduction

Growing political pressure to find solutions to climate change is leading to increasing calls for multiple disciplines, in particular those that are not traditionally part of climate change research, to contribute new knowledge systems that can offer deeper and broader insights to address the problem. Recognition of the complexity of climate change compels researchers to draw on interdisciplinary knowledge that marries natural sciences with social sciences and humanities. Yet most interdisciplinary approaches fail to adequately merge the framings of the disparate disciplines, resulting in reductionist messages that are largely devoid of context, and hence provide incomplete and misleading analysis for decision-making. For different knowledge systems to work better together toward climate solutions, we need to reframe the way questions are asked and research pursued, in order to inform action without slipping into reductionism. We suggest that interdisciplinarity needs to be rethought. This will require accepting a plurality of narratives, embracing multiple disciplinary perspectives, and shifting expectations of public messaging, and above all looking to integrate the appropriate disciplines that can help understand human systems in order to better mediate action.

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Varieties of climate governance: the emergence and functioning of climate institutions

Introduction

How do states respond to the challenge of climate governance? The Paris Agreement has led to heightened interest in domestic climate policies, but attention to underlying national climate institutional architectures has lagged behind. This literature gap deserves to be addressed, because climate change brings considerable governance challenges. Drawing on a collection of country studies, this paper outlines a framework to explain the path-dependent emergence of climate institutions, based on the interplay of national political institutions,international drivers, and bureaucratic structures. The resultant institutional forms suggest four varieties of climate governance, based on the extent of political polarisation and the narrative around climate politics in the country. The functioning of existing climate institutions indicates they have so far played a modest role in addressing climate governance challenges, but also illustrates their importance in structuring climate politics and outcomes, suggesting a substantial agenda for future research.

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Special Issue on ‘Varieties of Climate Governance’ in Environmental Politics (all articles)

Introduction

Discussions in climate governance have focused on national targets and climate policies. But a critical ingredient is relatively absent: climate institutions. Yet, formal institutions are essential if countries are to devise realistic low-carbon strategies, manage the complex politics of transitions, and coordinate across diverse ministries and actors. Drawing on cases spanning eight countries – four developed and four
developing – with an analytical overview, we examine the conditions under which climate institutions emerge, the forms they take, and the governance functions they serve.

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Utilitarian benchmarks for emissions and pledges promote equity, climate and development

Introduction

Tools are needed to benchmark carbon emissions and pledges against criteria of equity and fairness. However, standard economic approaches, which use a transparent optimization framework, ignore equity. Models that do include equity benchmarks exist, but often use opaque methodologies. Here we propose a utilitarian benchmark computed in a transparent optimization framework, which could usefully inform the equity benchmark debate. Implementing the utilitarian benchmark, which we see as ethically minimal and conceptually parsimonious, in two leading climate–economy models allows for calculation of the optimal allocation of future emissions. We compare this optimum with historical emissions and initial nationally determined contributions. Compared with cost minimization, utilitarian optimization features better outcomes for human development, equity and the climate. Peak temperature is lower under utilitarianism because it reduces the human development cost of global mitigation. Utilitarianism therefore is a promising inclusion to a set of benchmarks for future explorations of climate equity.

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From fossil to low carbon: The evolution of global public energy innovation

Abstract

A review of global and national energy research, development, and demonstration (RD&D) investments between 2000 and 2018 reveals that global public energy RD&D and cleaner energy RD&D investments dramatically increased, but then plateaued after 2009. In absolute values, nuclear energy has held steady, fossil energy contracted, and clean energy RD&D quadrupled. As a percentage of overall investments, both fossil fuel and nuclear investments contracted during the period. This review compares the energy innovation priorities of the world’s largest economies using the metric of public expenditures on energy RD&D. China and India have become important global public investors in energy innovation, now among the top five globally. Priorities set by the Chinese and Indian governments will thus influence new energy technology breakthroughs in the coming years. The US and Chinese governments are now competing for first place in clean energy RD&D, depending on whether or not nuclear and cross-cutting technologies are included. India has dedicated substantial funding to indigenizing nuclear power technologies. Energy RD&D by state-owned enterprises (SOEs) in major emerging economies remains skewed toward fossil fuels and nuclear. Reforming SOE expenditures to move away from fossil fuels could have a major impact on global energy technology trajectories, making a material difference in the quest to decarbonize the energy system.

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