Climate and Clean Energy Policy

State Institutions and Economic Implications

Benjamin H. Deitchman

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9781138368149
• eBook ISBN:
  9781317288305
• Topic: Politics & International Relations
• Subtopic: American Government
• Index: Politics & International Relations

State climate and clean energy policy will play a critical role in the future of the political dialogue and economic development. Policymakers from around the world already recognize the leadership of American states in this domain.

Rooted in public policy theory, and employing a mixed-methods approach that includes advanced economic analysis and qualitative research, Benjamin H. Deitchman explores the policy tools that address the politics and economics of clean energy development and deployment across all 50 states. Deitchman includes in his analysis international case studies of this policy context in Canada, Germany, and Australia to reveal different state-level policy tools, the politics behind the tools, and the economic implications of alternative approaches.

The rigorous analysis of the politics of state level institutions and economic implications of subnational climate and clean energy actions offers researchers, students, and policymakers with practical information to advance their understanding of these options in the policy process.

1 Introduction

As distinguished from problems in the natural sciences, which are definable and separable and may have solutions that are findable, the problems of governmental planning-and especially those of social or policy planning-are ill-defined; and they rely upon elusive political judgment for resolution.

Horst Rittel and Melvin Webber (1973)

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair.

Charles Dickens (1859, p.1)

Climate, energy, and government influence every aspect of modern life. We have collectively harnessed power and reshaped our planet. In the future, however, our climate, energy, and government will change. International agreements and individual actions will impact those changes. While state governments may be the middlemen of the federalist system, it is these institutions that may play a critical—if not determinant—role in the success or failure of a governance system that deploys a cleaner, greener energy portfolio to protect the future of the climate. Understanding the politics and economics of the policy tools available to states in this domain is indispensable for understanding the challenges and opportunities ahead.

The politics and economics of climate change and clean energy governance are at a crossroads. The scientific consensus around the dangers of the emissions greenhouse gases into the atmosphere continues to solidify as the planet reacts to impacts of industrialization. The politics, however, are sharply divided. From denial of the impacts of climate change to utilitarian arguments that the cost of policy actions outweighs the benefit, there are organized interests opposed to regulations and other free market interventions in this domain. From an economic perspective, the social, financial, and environmental costs of climate change may justify the research, demonstration, and deployment of advanced clean energy technologies that reduce fossil fuel consumption and grow the usage of other resources. Beyond just climate change, the economic development opportunities of these products and services can support both new and old industries and maintain a secure supply to run the engines of the postindustrial economy. Although there are still technical problems to solve in the creation of a low carbon future, the political and economic dynamics represent a vexing challenge to exploit these potential opportunities.

The need to implement policies in this domain from an international and national framework down to the state and local levels of governance requires a complex system for public management. In the United States and other developed nations, the energy system is embedded into daily life. The energy infrastructure allows us to easily run our homes or drive long distances with easy access to gasoline along the way. Environmental degradation and resource depletion, along with technological breakthroughs, will require and allow for new systems to generate the power of tomorrow. Market forces will play a role, but a transformation to the energy economy will require directions from global leaders and actions at every jurisdictional juncture in the public and private sectors. Defining the means and methods of change, however, are one of the most difficult challenges human society has ever faced.

The changes have thus far been gradual, but there has been significant progress in the green energy policy domain. From California’s widely heralded climate change programs, to smaller scale and less publicized efficiency programs in the southeast, all states in the United States have adjusted their energy profile in response to the economy, the environment, political pressures or a combination of factors. The last decade and a half of policy experience can help scholars, academics, students, and citizens to understand the directions and options for the future of climate and clean energy policy at the subnational level.

In the United States, the contemporary policy subsystem of climate and clean energy exists in the context of fraught political arena that the ideologically divergent political parties are shaping. In the United States and around the world there are also a multitude of barriers beyond politics toward developing clean energy policies and addressing climate change. Solutions to climate change and global energy security are particularly confounding with the contemporary governance structures. Researchers, policymakers, firms, and consumers, however, continue to research, develop, and deploy mechanisms to advance new technologies and actions and overcome the market failures. The policy tools to overcome barriers to deployment are central to the analysis in this book.

State governments have a variety of policy tools available within the context of contemporary federalism to address climate and clean energy. Salamon and Lund (1989) write, “A [policy] tool resembles an individual program in that it is a concrete mechanism for achieving a policy goal normally specified in legislation or manifested in identifiable organizations.” Using a mixed-methods research approach, this book will investigate policy outcomes as measured via data and cases from all 50 states including detailed documentation of state policies, gubernatorial speeches, and results of the American Recovery and Reinvestment Act’s State Energy Program (ARRA SEP) funding, as well as advanced macroeconomic analysis tools. An international comparison will include case studies of Canada, Germany, Australia, and the United Kingdom. Ultimately, this book will provide background and analysis to students, scholars, practitioners, and the interested public on the past, present, and future of a multidimensional, multi-layered approach to contemporary climate and energy policy. Rooted in theory, the chapters will provide practical and applicable primary and secondary research from a unique and straightforward perspective.

A History of States and Energy

Environmental challenges and natural resource scarcity are not new in capitalist societies. In his classic history of political economy, The Great Transformation, Karl Polanyi (1944) argues that “[economic] production is the interaction of man and nature,” but warns that “[t]he economic function is but one of many vital functions of the land.” He offers historical examples of small-scale regulation of the environmental commons, but his work does not consider a worldwide market challenge. William Nordhaus (2005), one of the most prominent scholars in the economics of climate change, declares, “The greenhouse effect is the granddaddy of all public goods problems” (p. 454). Protecting the environment, correcting externalities, understanding the trade-offs and maintaining or improving the standard of living requires the adoption and implementation of public policies within the political system and institutions of governance. An understanding of the history of addressing these issues can inform future action with regards to climate change and natural resource management.

A cabinet-level Department of Energy (DOE) at the federal level traces its history to the oil crises of the 1970s and the administration of President Jimmy Carter. While many of the key components of DOE, such as the national laboratories, predate the formation of the department in 1977, the programs in energy efficiency and renewable energy found increased attention in the new agency. In his “Crisis of Confidence” speech of July 15, 1979, President Jimmy Carter (1979) outlined policies to reduce dependency on foreign oil and declared to the American people, “Just as the search for solutions to our energy shortages has now led us to a new awareness of our Nation’s deeper problems, so our willingness to work for those solutions in energy can strengthen us to attack those deeper problems.” The development of state energy offices (SEOs) occurred within a similar time frame. The SEOs opened their official interstate information sharing and advocacy network, the National Association of State Energy Officials, in 1986.

States began to receive significant federal resources toward energy efficiency and conservation efforts starting in the middle of the 1970s. The federal Emergency Petroleum Allocation Act of 1973 placed controls on oil and gas prices in the United States through January 1981. Due to violations in compliance with these regulations states received $3.3 billion toward energy and conservation resources through violation collections and settlements. This further supplemented federal appropriations to the State Energy Conservation Program (SECP), established in 1975 and the precursor to the today’s State Energy Program, and the Weatherization Assistance Program (WAP), which also still exists to support energy reduction efforts in low-income residences. Further, early federal–state efforts facilitated information dissemination and energy efficiency improvements in schools and hospitals (GAO 1988). Since their creation, SEOs and other state-level agencies have responded to energy prices, environmental concerns, calls for utility deregulation, challenges of utility deregulation, new technologies in energy efficiency and renewable energy, and other citizen concerns. In its “History of Energy Efficiency,” the Alliance to Save Energy (Alliance Commission on National Energy Efficiency Policy 2013), an advocacy group of leading politicians, organizations, and businesses in this policy domain notes significant progress in these policies and programs across the nation since 1975.

University of Michigan scholar Barry Rabe (2011) highlights the history of climate change federalism. From 1975 to 1997 both federal and state policies for mitigating greenhouse gas emissions were largely “symbolic,” lacking in useful action toward handling this problem. For the decade afterwards, however, there was state domination in this subsystem with regional compacts and other policy mechanisms. With the Supreme Court decision about greenhouse gas regulation in 2007 and changes in Congress and the White House, the current situation in Rabe’s typology is “contested federalism,” as the different units of government explore different governing mechanisms.

After the Senate rejected the international climate regime of the Kyoto Protocol in 1997, the 21st century brought new opportunities and challenges in climate, energy, and environmental matters in the United States. Section 701(a)(2) of the American Clean Energy and Security Act (ACES) of 2009 (also known as the Waxman-Markey Bill), which passed the House of Representatives during the 111th Congress, a key moment for the relevant policy debate during this era, summarized the science:

Reviews of scientific studies, including by the Intergovernmental Panel on Climate Change and the National Academy of Sciences, demonstrate that global warming is the result of the combined anthropogenic greenhouse gas emissions from numerous sources of all types and sizes. Each increment of emission, when combined with other emissions, causes or contributes materially to the acceleration and extent of global warming and its adverse effects for the lifetime of such gas in the atmosphere. Accordingly, controlling emissions in small as well as large amounts is essential to prevent, slow the pace of, reduce the threats from, and mitigate global warming and its adverse effects.

(p. 678)

While this bill failed to advance in the United States Senate and climate skepticism still exists throughout American political discourse, climate scientists strengthened their consensus-based argument on the dangers of anthropogenic climate change and the imperative of greenhouse gas mitigation. The Academy Award winning 2006 documentary An Inconvenient Truth from former Vice President Al Gore and other popular media led futurist Bruce Sterling (2007) to opine, “Green will never get any sexier than it is in 2007,” as climate change issues went mainstream.

Climate change, however, was not the only energy policy challenge. With the attacks of September 11, 2001, the “War on Terror,” and unstable regimes in energy-rich countries, energy security remains an imperative (Brown & Sovacool 2011). While the nation did not experience the gas rationing of the 1970s, there was a sharp increase in the average price of gasoline, from $1.46 per gallon in 2001 to $3.68 per gallon in 2012 with increases in oil prices and fluctuations in the global economy (EIA 2015). In addition, electric reliability became a concern with deregulation-related brownouts in California in 2001 and the Northeast blackout of 2003. At all levels of governance, the fuels that power the economy and society remained a key consideration for policymakers.

At the federal level, two comprehensive energy bills became law during the Bush Administration, the Energy Policy Act of 2005 (EPAct 2005) and the Energy Independence and Security Act of 2007 (EISA) after the Democratic Party took control of Congress. In his memoirs on his presidency, George W. Bush (2010), the oilman turned Commander-in-Chief, wrote “In my 2006 State of the Union Address I said that America was ‘addicted to oil’—a line that didn’t go over so well with my friends back in Texas.” He describes the Kyoto Protocol as “flawed” with regards to its minimal requirements for China and India and the economic consequences of the international climate regime the United States was one of the few nations not to ratify, but argues that he had been willing to be constructive with German Chancellor Angela Merkel at the 2007 Group of Eight (G8) summit on these issues.

President Bush had arrived in Washington, DC, in early 2001, having created an effective policy environment for the deployment of clean energy technologies as governor of oil-rich Texas, particularly wind power (Burke & Ferguson 2010). He nominated Governor Christine Todd Whitman of New Jersey—a state that had pioneered carbon mitigation policies throughout the 1990s—to be the cabinet-level Administrator of the Environmental Protection Agency (Rabe 2004). His 2002 target of an 18 percent reduction in carbon intensity, however, was mostly feasible without policy intervention (Metcalf 2008) and the Administration’s most notable move on climate change was the complete withdrawal from the Kyoto Protocol on March 13, 2001 (Gulliver & Wheeler 2008), less than 2 months after the inauguration.

Energy efficiency and renewable energy issues had been part of the policy agenda since the oil crises of the 1970s with some notable successful policy outcomes, but there is plenty of opportunity for expansion (Hakes 2008). Advocates of clean energy policy note that the United States lost an opportunity to lead on climate change from 2001 to 2009. Although President Bush encouraged voluntary programs, improved research and development, tax incentives for renewable energy and cogeneration, various automotive efforts, and carbon sequestration, his White House attacked the science of climate change and strongly supported increased fossil fuels development (Rosencranz & Conklin 2010). Congress also attacked climate change-related efforts. The Byrd-Hagel Resolution (S. Res. 98 of the 105th Congress) passed the Senate in 1997 by a 95–0 vote expressing the se...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of figures
• List of tables
• Acknowledgments
• 1 Introduction
• 2 The Role of Federalism and Polycentric Governance of Energy Policy Issues
• 3 Political Dimensions of Energy Policy
• 4 Traditional and Innovative Financing Policies
• 5 Buildings: Codes, Standards, and Incentives
• 6 Regulatory Policies: RPS, EERS, and a Price on Carbon
• 7 Smarter Rates for Electricity
• 8 Promoting Green Jobs and the Green Economy
• 9 The International Experience
• 10 Conclusions
• Index