Jessica L. Biamonte

April 2, 2007

I. Background

Global warming is an international problem deserving national attention, especially in highly industrialized (and highly polluting) countries like the United States. The Pew Center on Global Climate Change says, "Unaddressed, climate change will have significant impacts across the United States and around the world. For instance, sea-level rise will add to stresses coastal communities are already facing, including erosion, storms, and pressures from development."[1]

With only a twentieth of the world's population,[2] the United States is responsible for emitting nearly one quarter of the world's greenhouse gas emissions,[3] yet we decline to ratify the Kyoto Protocol and refuse to institute any sort of mandatory federal controls to reduce and control carbon emissions.

In response to the lack of federal regulation, states are taking it upon themselves to reduce national carbon emissions. As of March 2007, there are a number of regional agreements among states aimed at curbing greenhouse gas emissions: New England Governors: Climate Change Action Plan, Western Governors' Association: Clean and Diversified Energy Initiative, West Coast Governors' Global Warming Initiative, Southwest Climate Change Initiative, Powering the Plains, Carbon Sequestration Partnerships, and the Regional Greenhouse Gas Initiative (RGGI).[4]

The RGGI is the most interesting because it calls upon Northeastern states to pass laws mandating a reduction in carbon emissions. Many states have made progress in reducing their greenhouse gas emissions without involvement from the federal government. But to achieve any significant reduction, the United States will have to implement a national scheme mandating such reductions. The Regional Greenhouse Gas Initiative offers the federal government a model upon which to base a national power plant emissions regulation scheme.

II. Regional Greenhouse Gas Initiative

According to M. Granger Morgan, in the article Managing Carbon from the Bottom Up, "[i]f we act now to encourage initiatives by individual states and regions, the world can learn from these efforts and begin to move, in a progressively coordinated way, toward a more sustainable future."[5] On December 20, 2005, seven Northeastern states announced the beginning of RGGI. The Governors of Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont signed a Memorandum of Understanding agreeing to implement the first mandatory U.S. cap-and-trade program for carbon dioxide.[6] RGGI will begin by capping carbon emissions at current levels in 2009, and then reducing emissions 10% by 2019.[7] In Maryland, on April 6, 2006, Governor Robert L. Ehrlich Jr. signed the Healthy Air Act into law. The bill requires the Governor to include the state in RGGI by June 30, 2007.[8] Recently, on January 18, 2007, Massachusetts Governor Deval Patrick signed a Memorandum of Understanding committing his state to join RGGI.[9] On January 30, 2007, in his State of the State address, Governor Donald Carcieri announced that Rhode Island would also be joining RGGI.

Reduction: Cap and Trade

RGGI is based on a cap and trade emissions reduction program. For example, if carbon emissions in the power sector are currently totaled at 10 million tons and the government wanted to reduce those emissions by 10%, a cap would be set at 9 million tons and emissions credits would be allocated to emitters not to exceed 9 millions tons in total.[10] Emitters are allocated credits for only 90% of their emissions, effectively reducing their total emissions by 10%. If some emitters wanted to reduce emissions further, they could sell some of their credits to those who cannot afford the 10% emission reduction. In theory, the less you emit, the more credits you have to sell and the more money you have to pay for technology that helps you emit less and total sector emissions decline.

Emissions Budget Allocation

Each state will be allocated a set emissions budget for 2009-2014.[11] In determining the budget, RGGI took into consideration "2000-2004 emissions, electricity consumption, population, potential emissions leakage, and provisions for new sources."[12] The emissions element was calculated from the average emissions of each state out of the three years of highest emissions between 2000 and 2004. Next the program sets a goal of 10% reduction in carbon emissions by 2018.[13] Every year from 2015 to 2018, each state's emissions budget will decrease by 2.5% so that by 2018 each state's emission budget will be 10% below its 2015 budget.

This is a major advance for emissions trading programs because it encourages small alternative energy producers by giving fewer credits to high emission fossil fuel plants.[14] Under RGGI's allowance allocation program, even states like Vermont, that emit very little during power production compared to other New England states,[15] will receive emissions allowances based on energy consumption, population, potential emissions leakage (importing energy from another state-so the emissions are not calculated for Vermont), and provisions for new (renewable) sources. The result is that collective emissions among the states are reduced (because of the cap) and Vermont plants have the ability to sell (trade) their allowances to plants in other states for who it is more economical to pay to pollute rather reduce emissions. Vermont can then use that profit to increase its energy efficiency or invest in renewable energy.

Offsets

Offsets are "project-based reductions outside the capped sector."[16] Under RGGI, states will be issued offset credits for qualified projects such as "landfill gas, sulfurhexaflouride, afforestation and natural gas/home heating oil/propane end-use energy efficiency projects" with room for expansion of qualifying projects over time.[17] However, each state within each compliance period can offset only 3.3% of its reported emissions with these allowances.[18]

25 Percent to Public Benefit

RGGI also provides for the emissions budget allowance to be allocated at the state's discretion with one exception. All participating states must agree to implement legislation or regulations that require 25% of the allowance to be used for the public benefit or strategic energy purpose, which includes the use of the allowances to promote energy efficiency, to directly mitigate electricity ratepayer impacts, to promote renewable or non-carbon-emitting energy technologies, and similar initiatives.[19]

III. States' Authority to Regulate Carbon Emissions

Under the U.S. Constitution a state cannot impose regulations in areas that have already been regulated by the federal government. If a federal law governs an area established to be within federal power to govern, a state cannot lawfully regulate that area. There are some concerns that a state carbon regulation regime will conflict with U.S. foreign policy on carbon emissions, which promotes voluntary efforts. This is neither a widely discussed concern nor a strong argument against state regulation of power plant carbon emissions. The United States has a policy of voluntary reductions. That is hardly a policy against mandatory regulation of emissions.

There is nothing in the Clean Air Act that prohibits states from enacting more stringent regulations of carbon emissions from power plants. In fact, in 2003, the EPA announced that carbon dioxide is not a pollutant as defined by the Clean Air Act, effectively granting states the power to regulate it.[20] Even if the EPA had designated carbon dioxide as a pollutant under the Clean Air Act, nothing in the statute would prohibit states from adopting more stringent standards.[21]

Several states are acting on their legal authority to mitigate climate change. It is unlikely that the current federal government could come to a consensus on controls as rigid as some state standards. As more states regulate mandatory carbon emissions, however, industry will begin to lobby for federal regulations to avoid having to comply with 50 different state standards.[22] That could hamper the U.S.'s potential to substantially decrease its carbon emissions. In the meantime, state action on climate change is a step forward and will act as a sort of experiment that can influence and help develop a stringent federal regulation program develop.

IV. Conclusion

Global warming is a real problem at the global, national, and subnational level. It is to our benefit to create a regulatory scheme that will mitigate damage to our economy and our way of life. This is a problem that requires international cooperation to solve. The United Nations Environment Programme Arctic Climate Impact Assessment program represents the impact of global warming in this powerful visual depicting the loss of sea ice at the North Pole between 1979-2003:

Image 1. A model of sea ice changes from 1979-2003. [23]

Despite the lack of federal concern, global warming is affecting our people, our resources, and our children's future. Staggering visuals like this aside, the most convincing evidence that this is a global concern is the Kyoto Protocol.[24] More than 171 countries have signed the agreement, committing to reduce emissions below 1990 levels.[25] These countries realize that if we want to reduce the impacts of climate change, we must make a global commitment.

RGGI is an example of how states are attempting to mitigate global climate change through practical results and as a teaching model for other states and possibly, in the future, the federal government. Programs like RGGI are critical to instigate a shift in the current dialogue at the federal level on global warming. A regulatory scheme in which the federal government sets a minimum standard for emissions but allows states to regulate more stringently within some federally mandated limit, if they choose, would reduce national carbon emissions in total and provide some uniformity in emissions standards for industry. The point is that states are beginning to pick up the slack on carbon emission regulation in this country, and they are on track to produce many options from which the federal government could choose to model its own program in the future. We should concern ourselves with ensuring that when the federal government finally takes responsibility for our 25% of global climate change, the program is actually going to reduce emissions and not cancel out the productive efforts of states to date. In the meantime, states will continue to push the federal government in the right direction. As Justice Brandeis once wrote, "It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country."[26]

[1] Pew Center on Global Climate Change, What's at Stake, at http://www.pewclimate.org/about/stake.cfm (last visited Mar. 16, 2007).

[2] U.S. Census Bureau, U.S. & World Population Clocks, http://www.census.gov/main/www/popclock.html (last visited Mar. 16, 2007).

[3] Granger Morgan, Jay Apt, & Lester Lave, The U.S. Electric Power Sector and Climate Change Mitigation 1 (Pew Center on Global Climate Change 2005), available at http://www.pewclimate.org/docUploads/Electricity_Final.pdf.

[4] Pew Center on Global Climate Change, States Participating in Regional Climate Action, http://www.pewclimate.org/what_s_being_done/in_the_states/regional_initiatives.cfm?preview=1 (last visited Mar. 16, 2007).

[5] M. Granger Morgan, Managing Carbon from the Bottom Up, 289 Sci. 2285 (2000).

[6] Supra note 4.

[7] Id.

[8] Id.

[9] Id.

[10] Allowance Trading Basics, EPA, http://www.epa.gov/airmarkets/trading/basics.html (last visited Mar. 16, 2007).

[11] Regional Greenhouse Gas Initiative (RGGI), About RGGI, http://www.rggi.org/about.htm (last visited Mar. 16, 2007).

[12] Id.

[13] Id.

14 Beyond supporting renewables and limiting fossil fuel pollution, another effect of basing allowances on these alternative criteria is that value is potentially added to energy efficiency programs. Energy in kWh delivered could also include kWh of demand avoided and therefore bolster the tally of emissions saved.

[15] Allocation Workshop Summary, RGGI (Oct., 14, 2004), available at http://www.rggi.org/documents.htm.

[16] Christopher Sherry, Presentation at the Climate Workshop for Northeast Legislators (Mar. 27, 2005).

[17] Supra note 11.

[18] Id. at 5.

[19] Id. at 6.

[20] David Hodas, State Law Responses to Global Warming: Is it Constitutional to Think Globally and Act Locally?, 21 Pace Envtl. L. Rev. 53, 74 (2003).

[21] Id.

[22] Rachel Chanin, Note, California's Authority to Regulate Mobile Source Greenhouse Gas Emissions, 58 N.Y.U. Ann. Surv. Am. L. 699, 703 (2003).

[23] Impacts of a Warming Arctic, UNEP (2004), available at http://vitalgraphics.net/graphic.cfm?filename=arctic/large/fig22.jpg (last visited Mar. 16, 2007).

[24] United Nations, Kyoto Protocol to the United Nations Framework Convention on Climate Change (Dec. 11, 1997), available at http://unfccc.int/resource/docs/convkp/kpeng.html.

[25] Ann E. Carlson, Shaping the Future: What Our Decisions Today Mean For Tomorrow: Panel: Federalism, Preemption, and Greenhouse Gas Emissions, 37 U.C. Davis L. Rev. 281, 289 (2003).

[26] New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932).