We can build on innovative power sector policies

This week’s National Journal Energy Insiders discussion posed the question, “Should the United States adopt the ambitious renewable-energy and climate-change policies that California is pursuing?”

My response is that while Congress has been inactive on climate change, California and other states have been leading the way in encouraging low-carbon energy sources. Now that the Environmental Protection Agency (EPA) is moving ahead to develop proposals to limit carbon emissions from new and existing power plants, these innovative state-level policies have the potential to be strengthened and expanded.

California took center stage when it rolled out its cap-and-trade program at the beginning of this year. The program is just one of a suite of policies – including the Renewable Portfolio Standard (RPS) and the Energy Efficiency Resource Standard (EERS) – California is employing to reduce greenhouse gas emissions, support renewable energy and efficiency, and grow its clean energy economy. Meanwhile, many other states are using similar policy tools to curb greenhouse gas emissions: nine Northeast and Mid-Atlantic states employ cap and trade via the Regional Greenhouse Gas Initiative (RGGI), 30 states and the District of Columbia have a renewable portfolio standard, and 22 states have energy efficiency standards.

Despite existing state efforts, we are not yet on a path to meet our greenhouse gas reduction goals. Without Congressional action, EPA is primarily responsible for driving additional reductions. In crafting rules to reduce greenhouse gas emissions from new and existing power plants, EPA has to balance two critical goals: Develop standards that drive real greenhouse gas reductions throughout the nation, and account for the unique circumstances in each state in terms of natural resources, policy baseline, and economics.

States are taking a variety of approaches to reduce greenhouse gases and support clean energy. A one-size-fits-all approach from EPA would stifle the innovation that has led to this diverse landscape of policies. Instead, EPA’s rules should empower states to pursue the required emission cuts as each sees fit.

This flexible approach could lead to the expansion of interstate, market-based programs. Such programs, exemplified by cap and trade in California and RGGI, and by renewable energy requirements with tradable credits in several other states, should draw the interest of additional states as a means to target least-cost reduction measures. States may choose to join one of these existing programs, thereby expanding the market for cuts without having to build a system from scratch. In the long-term, the state experience may encourage support of a national market-based program to meet our energy and climate goals.