California Champions Cross-Border Climate Innovations

AP Photo/Richard Vogel

California Governor Jerry Brown, seated, signs SB 32 while joined by Senate President pro tempore Kevin de Leon, second from left, and state Senator Fran Pavley, Thursday, September 8, 2016, in Los Angeles.

                                  

In late August, a robust environmental coalition advocating sweeping climate change legislation in California scored an 11th-hour victory. With only a week left in the legislative session, the Assembly defied expectations by approving a bill that would build on California’s existing short-term goals to reduce the state’s greenhouse gas emissions by 40 percent below 1990 levels by the year 2030.

The response from the bill’s backers has bordered on the ecstatic, and advocacy groups, media outlets, and political pundits have cast the passage of the law, known as SB32, as a triumphant moment in California’s unstoppable progress as a go-it-alone global climate leader. However, the law’s actual climate impacts will be subtler. While positive, SB32’s passage comes amid deep uncertainty over whether California can realize its domestic climate ambitions. Having rejected a stronger version of SB32 in 2015, the legislature only narrowly passed the law this year by leaving many of the contentious details of implementation unaddressed.

Moreover, California’s cap-and-trade program, the state’s central mechanism for achieving greenhouse gas reductions, has begun to falter in the face of legal challenges and regulatory uncertainties. Business and oil interests that vigorously lobbied against SB32, though eventually unsuccessful in their fight to defeat the bill, gained surprisingly widespread sympathy for their argument that California should not risk pulling too far ahead of its neighboring states.

But California’s response to these obstacles has, if anything, only cemented the state’s global role in combating climate change. Instead of retrenching or retreating, California is taking the fight against greenhouse gases beyond its own borders. In doing so, state officials have placed California in the vanguard of a nascent global movement to coordinate regional climate action across state and even international borders.

These cooperative regional efforts have the potential to far outstrip any national agreements on the table, including last December’s much-lauded Paris Agreement. Amid warnings that existing national climate goals are not strong enough to keep global climate change below catastrophic levels, California has joined a handful of leading states and regions—so-called subnational governments—from around the globe that have taken matters into their own hands. It’s a strategy that could help climate leaders like California overcome local resistance while creating economic and political rewards for other, less forward subnationals to broaden the scope of their own climate ambitions.

It’s not an easy path. In California and elsewhere, climate-minded government officials are testing their constitutional boundaries and face a variety of legal, organizational, and financial obstacles. In some states, constitutional barriers have already blocked officials from taking climate action. Nevertheless, California and its allies are pioneering a collaborative program that offers other subnationals diverse incentives to match their ambitious emissions goals. Their success—or failure—will have dramatic implications for the global climate.

“We’re all talking about the California Effect,” explains Briana Swette, a research associate at the Earth Innovation Institute, a nonprofit which helps Amazonian states coordinate their climate efforts. “California has made this sexy,” she said, discussing the growing trend of subnational climate coordination. Being California in the context of regional climate regulation, adds Swette, “is kind of like being like a nation.”

 

MORE SO THAN their national governments, subnational state, local, and municipal authorities sit on the front lines of climate change. City and state policies regulate housing, construction, energy, and transportation—many of the largest and most readily addressed sources of greenhouse gases worldwide. Regional governments will also bear the brunt of climate change’s impacts, as rising sea levels and shifting weather patterns increasingly overtax public services. According to The Climate Group, a leading subnational organization whose initiatives include the groundbreaking Compact of States and Regions, three-quarters of all government policies that impact greenhouse gas emissions are set by subnational governments.

At the same time, though, states and regions typically depend on their national governments to coordinate a climate response. Subnationals lack the sovereign power to negotiate with foreign governments, for example—this is almost invariably the constitutional right of the nation-state. Lacking the ability to sign treaties or alter their relationships with other governments, subnational governments struggle to extend their interests beyond their own borders.

In California, which got its start as an independent republic, state officials have been challenging the limits of the federal government’s environmental policies for decades. In 1966, California won the only state exemption from federal auto emissions standards under the brand-new Clean Air Act, allowing the state to continue regulating dangerous automotive pollutants more strictly than the federal government. By leveraging its share of the auto market in tandem with these regulations, California has consistently driven automakers to exceed national pollution standards, cutting auto emissions in every state and much of the world.

In 2002, a California state legislator named Fran Pavley pushed this model even further, proposing that greenhouse gases should be classified as airborne pollutants under the Clean Air Act and authoring the first American standards for automotive emissions to address climate change. Two Supreme Court cases later, these state vehicle standards provided the model for the first major national restrictions on greenhouse gas emissions.

The Supreme Court’s rulings in those early greenhouse gas cases acknowledged for the first time that states have a “quasi-sovereign” interest in reaching beyond their own borders to confront climate change. Beyond the helpful reminder that “Massachusetts cannot invade Rhode Island to force reductions in greenhouse gas emissions,” though, the Supreme Court did not clearly define the constitutional limits of subnational climate action. Since then, California and its peers have seized this momentum and pushed further.

California and other state and provincial governments have employed a variety of tools to encourage cross-border climate collaboration. Perhaps the most powerful to date is The Global Climate Leadership Memorandum of Understanding—better known as the Under 2 MOU. Founded by California and the south German state of Baden-Württemberg, the Under 2 MOU is a pledge by participating subnational governments to dramatically reduce their greenhouse gas emissions. By 2050, its signatories have agreed to reduce their emissions either to 85-90 percent below 1990 levels, or to less than two tons of CO2-equivalent—hence the “Under 2” reference—for every resident of the state or province.

This commitment is orders of magnitude larger than that of any major nation. Indeed, as more and more states sign on, it has the potential to be large enough to keep global temperature rise below two degrees Celsius, the internationally-recognized target of last resort for preventing global catastrophe. By contrast, the commitment announced by the U.S. in the lead-up last year’s represented a 26-28 percent reduction below 2005 levels by 2025—equivalent to only a 14-16 percent reduction below 1990 levels. This was typical of the commitments forwarded by major developed nations at the Paris conference. Compared to the Under 2 MOU’s 85-90 percent target, the difference in ambition is stark.

Just two years ago, the sort of commitment entailed by membership in the Under 2 MOU was widely assumed to be nearly impossible and likely economically devastating. Yet the pact’s membership has soared since its first signatories joined in May of 2015. In part, the reason is simple, says Ken Alex, the tall, forceful strategist behind many of California’s international climate initiatives.

“California is 1.3 percent of emissions,” Alex explained in an interview last December. No matter how stringently California restricts emissions domestically, says Alex, director of California’s Office of Planning and Research and a senior policy advisor to Governor Jerry Brown, “we can’t do it alone.” Such sentiments, echoed by subnational government officials from Germany to Brazil, reflect their longstanding perception that national efforts are falling short and international efforts are stalled. “Frustration,” as Alex puts it, is the key that has driven subnational leaders into action beyond their own borders. “We see this, as the [California] governor has said often, as an existential crisis, and we’re looking for partners in pushing forward a more ambitious agenda than what is apparent at the international level.”

Participation in the Under 2 MOU is only one piece of California’s strategic effort to move beyond state boundaries into an intergovernmental arena ripe with major climate and economic prizes. In recent years, California has invited other players to participate in or adopt such domestic programs as its Zero Emissions Vehicle mandate, finding enthusiastic allies in other American states from New York to Oregon, as well as in regional governments in Mexico, Canada, China, and the EU. This has turned technocrats at California’s Air Resources Board into international climate advisors—and has given climate-savvy California industries, state officials hope, a major competitive advantage.

These agreements offer a broad variety of benefits to participants, some of which range far beyond simple interest in reigning in the impacts of climate change. Regions with separatist sentiments, like Catalonia in Spain, Wales in the U.K., and Quebec in Canada have flocked to sign the Under 2 MOU as a gesture of defiant independence. In another case, states such as Loreto, the largest and most rural region of Peru, have gravitated to the Governor’s Climate and Forestry Task Force, an intergovernmental body cofounded by California to help confront land-use contributions to climate change, as a path to sustainable development in opposition to national governments which prioritize foreign-owned extractive industries.

Likewise, California’s efforts to make its carbon market extendable provided the province of Quebec with an established regulatory framework, something it could not maintain for itself during Canada’s Harper years, when conservative politics shriveled budgets for climate priorities. The benefits for both sides were clear: though nominally the resultant market has been jointly administered, in reality California has dictated its structure and administration. This has allowed California to create a market in which its industries, which have already acclimated to carbon credits and emissions controls, have an advantage over their competitors in newer participating jurisdictions.

By adding new partners to the unified system, California can ensure that its recently-passed climate law achieves its emissions targets without placing too much of a financial burden on companies inside the state. For its part, Quebec gained a pre-assembled set of climate policies which have jumpstarted the province’s emission reductions—and pleased key political constituencies. Under this model of coordinated action and mutual benefit, California’s climate programs are luring subnational governments of all stripes into reducing emissions.

California has invested heavily in its role as a coordinator of cross-border climate action, recently installing a Deputy Secretary for Border and Intergovernmental Relations to the California Environmental Protection Agency to administer the growing number of international environmental agreements California has been signing in recent years. As one begrudging climate policy expert observed: “California’s building its own State Department.”

Not everyone is cheering. Skeptics charge that nonbinding agreements such as the Under 2 MOU are more show than substance, doing little to actually impact emissions despite their grand language. While collaborative pacts produce excellent public relations moments for state politicians, subnational governments have few direct tools to ensure that glamorous pledges translate into long-term emissions reductions. Federal courts have consistently prevented California from taking a harder line than the federal government in international affairs—using “an iron fist where the president has consistently chosen kid gloves,” as Justice Souter put it in a 2003 rebuke. The practical effect of this is that California’s cross-border climate initiatives must take the form of non-binding agreements, and the state must rely on complex and tenuous webs of incentives to ensure that fellow signatories follow through on their commitments.

Though California and its fellow leading subnationals have refined this constitutional balancing act to an art, legislators, academics, and observers continue to question whether internationalism is worth the effort. The emissions reductions achieved by these coordinated programs can be hard to verify, especially in developing partner states with few administrative resources to dedicate to complicated carbon accounting.

Swette, of the Earth Innovation Institute, concedes that many signatories to the Under 2 MOU lack the political power and logistical wherewithal to meet their commitments. Corruption, competing interests, public indifference, and changing political fortunes are already felling some subnationals’ attempts at ambitious emissions reductions.

Given this litany of challenges, more traditional policy options such as California’s cap-and-trade program offer more concrete and reliable pathways to emissions reductions. However, as the California’s two-year battle over SB 32 clearly demonstrated, such in-state reductions are becoming more politically contentious. For California, working collaboratively with other states and subnational governments around the world offers the chance to achieve emissions reductions more cheaply and efficiently than the state could acting alone. Having pioneered a whole host of successful climate policies already, California and other leading subnationals have taken many of the most meaningful—and palatable—steps to reduce their own emissions.

By expanding their reach to other jurisdictions, they are again targeting the low-hanging fruit. The more states join these agreements, the more ambitious their goals have become. At the end of the first week of last year’s Paris climate summit, says Swette, of the Earth Innovation Institute, the Under 2 MOU had garnered enough signatories to reduce carbon and carbon-equivalent emissions by more than 50 gigatons before 2050. This number constitutes a significant fraction of the planet’s remaining “carbon budget” before global temperature rises by 2 degrees Celsius. And the actual emissions reductions, Swette predicts, “will probably be much higher.”

By the close of COP21, the Under 2 MOU had garnered the signatures of over 120 subnational governments. Their combined GDP, at $19.9 trillion, represents a quarter of the world economy, far outstripping that of the U.S. They are home to some 720 million people on every inhabited continent. Around the world, a growing tide of subnational governments have begun to band together, dedicating resources and sacrificing policy autonomy in coordinated efforts to make a global impact on the climate.

They are leveraging the unique power of their subnational position, which frequently makes them both the first to bear the brunt of climate change’s impacts and the most capable of reducing greenhouse gas emissions on a daily basis. As the presidential race places America’s future climate policy in limbo, and international negotiations have mostly fallen short of their own ambitions, these quiet subnational efforts have the potential to succeed where more traditional approaches have fallen short.

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