It is clear that the Earth is getting warmer. It is also clear that this warming is attributable to greenhouse gas emissions from electricity generation and vehicles. Rather than taking action to reduce or, at the very least, slow greenhouse gas emissions, the federal government has sought to block and stymie any action that changes the status quo. In the face of such federal inaction, states have taken the initiative to fight climate change.
Fortunately, many states have a well-established commitment to reducing greenhouse gases, and they are taking a variety of actions to slow and reduce greenhouse gas emissions.
For instance, the Kansas Department of Health and Environment used its permitting authority to deny Sunflower Electric Power’s air permit request to build two new 700-megawatt coal-fired generation plants in southwest Kansas.
A second example is the Regional Greenhouse Gas Initiative. RGGI is an agreement between nine Northeastern states to work on a regional level to create a cap-and-trade program for greenhouse gases.
Another great example is Vermont’s establishment of an energy-efficiency utility, which saved the state 207 million kilowatt-hours between 2000 and 2006.
Beyond these noteworthy actions, however, states are also taking less-obvious measures to slow greenhouse gases. Recent evidence suggests that states that have included a general obligation for the public service board (PSB) to consider environmental matters when issuing a regulatory ruling may be slowing greenhouse gas emissions. Statutory environmental obligations for state PSBs take various forms.
For example, Connecticut’s Public Utility Environmental Standards Act ranks environmental matters as an important part of the state’s regulatory mandate. Vermont provides a stronger commitment, putting environmental costs before even economic ones. To date, 16 states have adopted a general obligation for the PSB to consider environmental matters when issuing a regulatory ruling.
While such mandates leave a great deal of discretion to the PSB, there are many ways an environmentally conscious PSB can take steps to limit the amount of carbon dioxide that a state’s electric industry emits into the atmosphere. For example, PSBs can mandate using energy efficiently, fuels that emit low levels of carbon dioxide, or renewable energy, each of which currently costs more than coal.
Again, Vermont is a great example. The state became a national leader in energy efficiency by establishing the first-ever efficiency utility in 1999. Efficiency Vermont took over individual utility efficiency programs and established one corporation focused on statewide energy-efficiency goals. According to Efficiency Vermont, from 2000 to 2006 it saved Vermont 207 million kilowatt-hours — enough to power about 30,000 North American homes.
There is strong evidence that such statutes are working. Between 2002 and 2005, the mean annual percentage change of carbon emissions for states without such environmental obligations (non-enviro states) increased by 5.45 percent. However, states with such environmental obligations (enviro states) only increased their carbon dioxide emissions at a mean annual rate of 0.74 percent. This indicates that from 2002 to 2005, non-enviro states increased their carbon dioxide emissions at a rate seven times higher than that by which enviro states increased their carbon dioxide emissions.
The significant difference in carbon emissions between enviro states and non-enviro states suggests that enviro states have begun to internalize the environmental costs of electricity production.
Carbon dioxide is a classic case of an externality. The electric industry emits carbon dioxide as a byproduct of burning fossil fuels, such as coal, natural gas or oil, at power plants to produce electricity. Aside from the dangers of global warming, carbon dioxide emitted from power plants poses only mild consequences to the environment or public health. Therefore, in the past it has been very easy for power generators (and PSBs) to continually ignore the amount of carbon dioxide emitted into the atmosphere.
What is more, the cost of creating energy from a non-fossil-fuel source historically has been, and presently still is, much higher. Thus, there has been a financial incentive to continually externalize the costs of emitting carbon dioxide instead of internalizing costs. Indeed, advanced carbon-capture technology that cleans coal emissions of carbon dioxide will likely increase from 60 to 70 percent the price of electricity from coal.
The point is that the energy world is shifting to a legal and regulatory regime that implicitly internalizes the costs of carbon dioxide emissions. As time goes forward, the correlation between carbon dioxide emissions and electricity costs is likely going to strengthen. Though the U.S. has no federal cap-and-trade carbon system, no carbon tax scheme, and no international agreement to limit carbon dioxide emissions, it seems that state governments are cobbling together their own response to climate change — and it is working.
Christina Switzer graduated cum laude from Austin College with a B.A. in history. John A. Sautter graduated cum laude from New York University and received his M.A. and Ph.D. from the University of Nebraska. The authors both attend Vermont Law School in South Royalton and are research associates at the Vermont Institute for Energy and the Environment. The authors may be contacted at jsautter@vermontlaw.edu.
