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West Coast pact to cut, price carbon could have wider influence -- analysts

When California Gov. Jerry Brown (D) announced a sweeping agreement last week among three West Coast states and a Canadian province on actions to fight climate change, he described the pact as likely to trigger a wave of similar activity.

"Next year, and the year after, and the year after that, this will spread until finally we get a real handle and grasp on what is the world's greatest existential challenge," Brown said.

He called the alliance among California, Oregon, Washington and British Columbia a "small but powerful first step."

It could take years to know whether the West Coast compact and any subsequent actions prove influential, said analysts familiar with the evolution of climate policies. Governments in the partnership pledged to attach a cost to carbon emissions, but Oregon and Washington must decide what approach they'll take. Any new rules must survive state legislatures. Economic and political ripples, if they happen, will take longer to manifest.

But some analysts, economists and political veterans said there are reasons to view the pact as significant.

"The most promising path forward on international climate change policy at present is bottom-up development of regional, national and subnational policies that become linked," said Robert Stavins, director of Harvard University's Environmental Economics Program. "Therefore, this [California, Washington, Oregon and British Columbia] announcement is potentially important because it could lead to further such linkage."

California has a history of enacting policies that have spread nationally, several noted. Those include the decision to regulate vehicle tailpipe emissions, a rule that spawned a need for automakers to improve vehicle fuel efficiency. That increased mileage rate eventually became the federal standard, said former Calif. Gov. Arnold Schwarzenegger (R).

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"States, as we have seen in California, have tremendous power," said Schwarzenegger, who headed the state when it passed its climate law, A.B. 32, in 2006. Working at the state level to address global warming can be effective, he said.

"Instead of having the approach where there's one big agreement, I think that we can do a bottom-up approach," Schwarzenegger added. "Hopefully, the top also happens. So you have the bottom-up and the top-down approach. Eventually, you have those two meet, and then you create critical mass."

'A thunderclap' for EPA

The West Coast pact is important because of its timing, said Dallas Burtraw, a senior fellow at Resources for the Future. It comes as U.S. EPA drafts rules to regulate greenhouse gas emissions from existing power plants. States by 2016 will have to write plans on how they will satisfy those federal guidelines. Some are likely to want to use their existing state rules, he said.

"From the EPA's perspective, this is a thunderclap," Burtraw said. He added that it signals to EPA "that there are a couple more states that are interested in using a pricing approach to address greenhouse gases in their jurisdiction."

EPA will need to design a federal approach "that in some way rationalizes the efforts that are being taken by the individual states," Burtraw said.

Under the new agreement Brown unveiled, the governments of the West Coast states and British Columbia have committed to pricing carbon dioxide emissions, creating or maintaining mandates for lower-carbon transportation fuels, and coordinating long-term goals for shrinking greenhouse gas pollution (ClimateWire, Oct. 29).

The pact provides for the governments to link carbon pricing programs "where possible," in order to create "consistency and predictability and to expand opportunities to grow the region's low-carbon economy."

The accord also has the goals of boosting electric vehicle sales, deploying high-speed rail across the region, harmonizing appliance energy efficiency standards, streamlining permitting for renewable energy generation and providing joint input on EPA's power plants regulation plan.

The compact does not include financial commitments or binding emissions targets beyond existing laws, however. A provision at the end cautions that it "shall have no legal effect; impose no legally binding obligation enforceable in any court of law or other tribunal of any sort, nor create any funding expectation."

That lack of a mandate is noteworthy, said Ethan Elkind, a climate research fellow at the University of California, Berkeley's School of Law.

"This agreement doesn't have much effect by itself, unless it serves to motivate Washington and Oregon to develop a cap or price on carbon (and if that is the outcome, that would be a huge victory)," Elkind wrote in an email. "The rest of it seems largely to signal intent to take concerted action on various issues like renewables and infrastructure financing."

"However, it's a precursor potentially to more effective and binding policies that link the states in this effort," Elkind said.

Some past agreements flopped

Others see the West Coast pact as having limited weight.

BP PLC's senior director of government and public affairs, Ralph Moran, noted past experiences with the Western Climate Initiative. That alliance was started in 2007 by California, Oregon, Washington, Arizona and New Mexico and later expanded to include Manitoba, Utah, British Columbia, Quebec, Ontario and Montana. The group targeted emissions cuts of 15 percent below 2005 levels by 2020. But the recession hit, governors left office, politics changed and several states left the group.

"We know not to get too excited about these things until we actually see something happen," Moran said.

The alliance could help California implement its carbon cap-and-trade emissions program but might not spread beyond the region, said Andre Templeman, managing director of Houston-based energy consulting firm Alpha Inception.

If Washington, Oregon and other bordering states cap their emissions, he said, it would help California solve its issues with potentially sending businesses or emissions to state without carbon pollution penalties.

"I don't think [the pact] does anything nationwide," Templeman said. "Those states have always been very green, and they backed away during the recession. Now that they're not suffering, they're going to ramp up their mandates again."

Others disagreed. Even without binding agreements, the pact is important, said University of California, Los Angeles, environmental economist Matthew Kahn. In fact, it might have been a politically savvy move not to include mandates in the agreement, he said.

"These guys are politically wise," Kahn said. "They knew there would be blowback if they said tomorrow every car has to run on carrots and can't run on gasoline." Lawmakers who want to implement green policies often face challenges from people who say it will be too expensive, he said.

The West Coast states and British Columbia appear to be "achieving the goal, but at the lowest possible cost without stepping on any political minefield," Kahn added.

More pressure on Washington, D.C.?

Even if it creates ripples outside the state, the agreement is unlikely to trigger action in Washington, D.C., several said, citing political polarization in Congress.

"Eventually, the hope is that the national conversation will change and there will be political support for federal initiatives," said Elkind at UC Berkeley's School of Law. "But my guess is it will take many more extreme weather events to motivate the rural, coal-dependent states to follow the West Coast lead. Public opinion in those states on this kind of polarizing, ideologically infused issue is hard to turn rapidly."

Rep. Henry Waxman (D-Calif.), whose federal climate legislation passed the House but died in the Senate in 2010, believes the West Coast pact will prove influential over the long term.

"This historic agreement among the Pacific Coast states and province of British Columbia follows in a long history of states, particularly California, taking big steps forward on air pollution and climate change," Waxman said in an email. "These state actions show it can be done, start to move markets, push down costs, and stimulate citizen and industry calls for uniform nationwide action. This then drives federal action to apply similar requirements on a national basis."

As more states are acting on carbon, he said, "and even joining forces with subnational governments in other countries, there is no question that the pressure is mounting on Washington to act."

"This announcement alone won't change the votes in Congress tomorrow, but the precedent and what it sets in motion will be immensely influential in supporting administration action and eventually driving national legislative action," Waxman added.

There are likely to be more governments taking steps to address climate change, said Stavins of Harvard University. He doesn't see that coming directly as a result of West Coast influence, but the new pact will serve as an example, for good or for bad.

Reporters Debra Kahn and Tiffany Stecker contributed.

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