April 2006 NCSL State Legislatures Magazine: Oh the Climate, It Is a Changin'

State Legislatures text graphic
April 2006

April 2006 Contents

Oh the Climate, It Is a Changin'

From city to state to nation, officials are trying to reduce the amount of pollutants that are contributing to global warming.

This is the third in a series on where America’s energy comes from and the policy efforts to make sure it remains plentiful, affordable and environmentally friendly. Next month’s story is on renewable energy.

By Jennifer DeCesaro

A Cause for Concern
One State At A Time
Maine Cleans Its Own House
Seven Are Better Than One
One City At A Time
One Company At A Time
Where Do We Go From Here?
Cap and Trade
States and the Chicago Climate Exchange

Austria's Pitztal Glacier is draped with blankets to slow unusually rapid summer melting. Ski resorts in the Pacific Northwest closed early last year because it rained instead of snowed. We just might be forced to start buying only "pure Canadian maple syrup" as rising temperatures and erratic weather patterns threaten New England's maple trees.

Fourteen years ago, 100 heads of state signed the U.N.'s Framework Convention on Climate Change--acknowledging that change in the Earth's climate and its adverse effects are a common concern of humankind. In January, six former heads of the Environmental Protection Agency and EPA's current chief, Stephen L. Johnson, agreed that global warming is a real problem and that humans bear significant blame (although there was not unanimity on how to proceed).

Today there is bipartisan leadership from Maine to California to reduce emissions with businesses working with one another--and state and local governments--to cleanup America's air.

"The debate is over," says California Governor Arnold Schwarzenegger who is pushing actions to limit greenhouse gases. "We know the science, we know the time for action is now. Global warming, pollution and the burning of fossil fuels that causes it are threats we see in California and everywhere around the world."

New York Governor George Pataki, who says "the environment is a vibrant, living resource that needs to be protected," is leading a coalition of Northeast states to reduce greenhouse gas. Kevin Burke, president and CEO of Con Edison, says his company has a commitment to "environmental excellence." He says the regional effort is "an important step in addressing climate change."

Although the president does not support mandatory controls on carbon dioxide, the principal culprit blamed for trapping heat in the atmosphere, he does support solutions to reducing the nation's greenhouse gas intensity by 18 percent over 10 years, says EPA's Johnson. EPA is "working hand-in-hand with business to voluntarily reduce their climate footprints in cost-effective ways."

Everyone--legislators, ratepayers, the environmental community, the health care community, business, and the electric power industry--has to get involved, says New Hampshire Governor John Lynch.

A CAUSE FOR CONCERN
The United States is responsible for more than 20 percent of global greenhouse gas emissions, which contribute to the earth's rising temperatures by trapping heat in the Earth's atmosphere. For the past 10 years, U.S. greenhouse gas emissions have risen by 1.5 percent a year. Global emissions of carbon dioxide, the most prevalent greenhouse gas, are expected to increase 1.9 percent annually between 2001 and 2025, while emissions in developing countries are expected to increase at a rate of 2.7 percent per year during the same time frame.

Carbon dioxide, which comes from burning fuel, is the major culprit. Other emissions contributing to the problem include methane, much of which comes from agriculture and waste dumps, and nitrous oxide, mostly a result of fertilizer use. Three industrial gases used in refrigerants, heat conductors and insulators also contribute--hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

But dirty air isn't just about our climate changing. It exacerbates asthma attacks and other health problems and is responsible for permanently changing fragile ecosystems. The golden toad, accustomed to a perpetually wet climate, is now thought to be extinct and one of the first victims of warmer weather.

Clean air helps people with lung problems breath better and all living things enjoy a healthier environment. Solutions for cleaner air involve incorporating technologies such as energy efficiency, alternative energy and advanced fossil fuel technologies along with policies that support the use of those technologies. The national energy market is large enough to sustain both existing and emerging energy technologies.

ONE STATE AT A TIME
The most effective emission reduction strategies are those applied at the national and international levels. Yet in this country, states and local governments are leading the charge in the fight against global warming.

When ranked globally, California is the 10th largest emitter of carbon dioxide in the world. At the same time, the state is a leader in developing cutting-edge policies to reduce emissions of greenhouse gas.

In 2002, the California Legislature passed a law requiring the state Air Resources Board to come up with a way to reduce greenhouse gas emissions from passenger vehicles and light-duty trucks. Close to 60 percent of California's greenhouse gas emissions come from these sources. The regulations were finalized last September, and pending the outcome of several court challenges, they are slated to phase in with the 2009 model year. Automakers must reduce tailpipe gases--carbon dioxide, methane, nitrous oxide and hydrofluorocarbons--by an average of 29 percent. Nine states--Connecticut, Maine, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Vermont and Washington--plan to follow these strict vehicle emission standards.

California regulators say technologies are available that can provide significant emissions reductions without enormous costs. They include improved multi-speed transmissions, turbocharging to boost power and reduce engine size, and better air conditioning systems.

California plans more. A bill currently moving through the Legislature, sponsored by Assemblywoman Fran Pavley and Senator Joe Simitian, includes goals that complement Governor Schwarzenegger's climate change initiative. If enacted, the California Climate Act of 2006 would place a cap on greenhouse gas emissions from electricity generation, industry and the commercial sector. "The more I found out about the implications of climate change on California, the more I wanted to work on these issues," Pavley says.

Pending enactment of the legislation, the California Environmental Protection Agency is looking for ways the state can participate in regional programs with other states, regions and countries.

MAINE CLEANS ITS OWN HOUSE
Maine is taking a "lead by example" approach to climate change. It is the first in the country to set emission reduction targets in statute with a 2003 law designed to reduce greenhouse gas emissions. The targets set by the law aim to reduce greenhouse gas emissions to 1990 levels by 2010 and to 10 percent below 1990 levels by 2020. Long-term reductions must be "sufficient to eliminate any dangerous threat to the climate," according to the law.

Cost is also an issue. But legislation from Representative Henry Joy passed last year takes that into account by requiring the state environment agency to consider affordability when recommending alternatives to reduce emissions.

"We need some accountability," Joy says. "People and businesses need to know exactly what the ramifications of the rules and regulations are going to be."

NorDx Medical Labs, one of the companies working with the state to reduce their emissions profile, is focused on greenhouse gas emissions from cars. With a fleet of 15 courier vehicles that travel an average 2,000 miles per week, the company saw an opportunity.

"We have already seen an 8 percent reduction in our greenhouse gas emissions as a result of purchasing efficient vehicles and eliminating unnecessary driving," says Crystal Sands of NorDx. "We looked at the types of vehicles, the number of stops and the routes being driven. The efficiency not only saves us money, but also reduces greenhouse gas emissions."

Malcolm Burson, coordinator of the state's Climate Action Plan developed by a 32-member Stakeholder Advisory Group, says Maine has some 54 options that will lead to cleaner air.

"We knew some of the options would be more costly, some would be less costly, and some would even provide cost savings," he says. "The department [of environmental protection] is encouraging the legislature to think of the broader context of the whole plan, rather than at each individual option," Burson says.

SEVEN ARE BETTER THAN ONE
Although some states have succeeded on their own to reduce greenhouse gas emissions, seven states in the Northeast decided that what works for one, might work even better for seven.

"Climate activity does not stop at state borders," Burson says, "it is important to incorporate a regional perspective in the approaches taken by states."

Maine is part of a seven-state coalition of chief executives that signed up in December to reduce greenhouse gas emissions in the region. Connecticut, Delaware, New Hampshire, New Jersey, New York and Vermont are the other six.

New York Governor George Pataki, the architect of the Regional Greenhouse Gas Initiative, says his goal was "to bring states together to tackle a significant environmental challenge that we all face, knowing that a collaborative effort is the most effective policy."

In the works for two years, the initiative will stabilize carbon dioxide emissions at current levels through 2015 and reduce those emissions by 10 percent by 2019. To achieve these targets, the initiative sets a mandatory emissions cap on the electric generators and establishes a market-based trading program.

Under the initiative's cap and trade model, each state is responsible for distributing its own emissions allowances. They can go to the sources or to the market. Proceeds from the sale of market allowances can be spent on development of energy efficiency, renewable energy and innovative energy technologies in the state.

Again, cost is an issue. So estimated prices have been developed for the "best case" and "worst case" scenarios of implementing the program. These show a potential for an annual $3 to $16 increase on a household electricity bill beginning in 2015.

Vermont is on track to be the first state in the region to create an emissions trading program with the goal to keep electricity costs down. House bill 860, which earmarks all revenues generated under the cap and trade program to benefit electricity customers, passed unanimously out of the House in February.

"We hope that over time our leadership will result in lower carbon emissions and lower electric generation costs throughout the region," says Vermont Representative Robert Dostis who chairs the House Natural Resources and Energy Committee. "This will result in additional increased air quality and lower electricity costs for Vermonters."

ONE CITY AT A TIME
Cities are concerned as well. Seattle Mayor Greg Nickels has challenged other mayors to join his city in taking action to combat global warming. "The reality of global climate change is urgent," he says. "The stakes are high--locally and globally--and we need to act."

Seattle has already cut its greenhouse gas emissions by more than 60 percent compared to 1990 levels, but Nickels says that's "not enough. We need to work together to set responsible limits on global warming pollution."

Today, more than 170 mayors have signed on to the U.S. Mayors Climate Protection Agreement. This bipartisan effort to reduce emissions of heat-trapping gases to 7 percent below 1990 levels by 2012 is surging ahead. Cities are looking to purchase power from low- to zero-emitting renewable energy technologies and stocking their municipal fleets with hybrid vehicles.

Some cities are looking at congestion fees, which were pioneered in Singapore, to encourage the use of public transportation, cleaner vehicles, bicycles and a commuter's own two feet. Drivers pay a fee to drive into the city center Monday through Friday. The fees, which are reinvested in public transportation, have reduced London traffic close to 20 percent.

ONE COMPANY AT A TIME
The New Belgium Brewing Co., in Fort Collins, Colo., has joined more than 100 other companies of the Chicago Climate Exchange. Members agree to cut greenhouse gas emissions by 1 percent a year. Those who make larger reductions can sell the excess credits on the climate exchange.

"We're not doing this for the financial gain," says New Belgium's chief operating officer, Jennifer Orgolini. "We believe it is the biggest environment issue of our generation."

Trading on the exchange began in 2003 but the direct benefits of the U.S. trades to the global greenhouse gas scene are still very small. It is estimated that climate exchange members kept 30 million tons of carbon dioxide out of the atmosphere last year; in comparison, an estimated 8 billion tons of greenhouse gases are emitted into the air every year.

WHERE DO WE GO FROM HERE?
As state and local governments continue their efforts, the United States has signed on to the Asia-Pacific Partnership for Clean Development and Climate. The six member states--Australia, China, India, Japan, South Korea and the United States--account for 45 percent of the world's population, 48 percent of global greenhouse gas emissions, and 48 percent of the world's energy consumption. The focus of the partnership is to deploy the latest electricity generation and emission control technologies to the countries that need them most, rather than set mandatory emission targets. At the same time, the 141 countries that ratified the Kyoto protocol (which went into effect on Feb. 16, 2005), are working to reduce their emissions by 5.2 percent below 1990 levels by 2012.

Efforts to reduce greenhouse gas emissions, from one company to one city to one state to one country, taken together add up. California's plan alone will bring in 20,000 jobs and increase the gross state product by $60 billion if the state meets just half of its 2020 target. In announcing his emission reduction goals, Governor Schwarzenegger emphasized that "by working together we can meet the needs of both our economy and environment."

CAP AND TRADE
In the simplest terms, cap and trade is a regulatory program under which the government sets a cap on the amount of pollutants that can be released into the atmosphere and distributes the rights to those emissions to the companies involved. Firms are free to buy and sell their emission rights, also known as allowances or credits. Generally speaking, one allowance is equal to one ton of pollutant.

Each source affected by the cap must have enough allowances to cover its projected emissions. Companies that fall short have three options: 1) reduce emissions; 2) purchase allowances on the market; or 3) generate credits through an emissions offset project, such as reforestation.

Firms with more allowances than they need can bank them for future use or sell them to other companies that know they will fall short.

The process of emissions trading ensures that the most cost-effective reductions are used at the plants.

STATES AND THE CHICAGO CLIMATE EXCHANGE
The Chicago Climate Exchange (CCX) is the world's first and North America's only voluntary, legally binding greenhouse gas emission reduction and trading program. The exchange provides participants from Canada, Mexico and the United States with a forum to quantify, reduce and trade greenhouse gas emissions.

How can a state participate? New Mexico was the first state to become a member. In order to join, a state must establish a baseline level of emissions from all of its sources. The baseline is measured by averaging emissions from facilities during the years 1998 to 2001 or by using just the year 2000. Direct emission sources for a state often include: government-owned buildings; state-run hospitals and prisons; state vehicle fleets; and water and waste treatment facilities. A state has the option of including indirect emissions associated with electricity purchases in its reduction commitment. Once a state establishes its baseline, it is issued greenhouse gas emission allowances by the climate exchange.

How does a state quantify emissions reductions? The next phase of participation is making reductions. Annual emission reduction requirements are 6 percent below the baseline in greenhouse gas emissions between 2005 and 2010. Emissions levels are quantified using methods consistent with U.S. air pollutant reporting requirements. In the most simple terms, emissions are quantified based on energy/fuel consumption and metering.

What if a state cannot meet its reduction goal? As a member of CCX, a state can either purchase the necessary number of carbon credits on the exchange, or it has the option of receiving carbon credits for offset projects. State members of the exchange may register eligible projects owned and operated by the state or its partners. Eligible projects include landfill and agricultural methane capture and elimination; specialized tilling practices; grass and tree planting; and renewable energy projects.

Jennifer DeCesaro covers climate change for NCSL.

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