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A growing number of states are deciding that if Washington won't lead on the matter of global climate change, they will.

In late September the governors of California, Oregon, and Washington announced that their states were joining forces to cut greenhouse gas emissions on a regional basis. On the Eastern seaboard a few weeks earlier, New York Gov. George E. Pataki announced that the governors of nine other states in his region (Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Rhode Island, and Vermont) had accepted his invitation to hold talks on possibly requiring the region's power plants to cut carbon dioxide emissions and creating a regional market for trade in permits to emit the gas. In contrast, in late October the U.S. Senate defeated bipartisan legislation by Sens. Joseph I. Lieberman (D-Conn.) and John McCain (R-Ariz.) to lay the groundwork for a similar national "cap and trade" system.

And just a week before the Senate vote, 12 states (California, Connecticut, Illinois, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington), three major U.S. cities (Baltimore, the District of Columbia, and New York City), and the island of American Samoa filed lawsuits in federal circuit court in Washington challenging the Environmental Protection Agency's (EPA) recent decision that it lacks authority under the Clean Air Act to regulate greenhouse gases, a reversal of the agency's previous policy under the Clinton administration.

The flurry of state activity represents a sharp rebuke of the Bush administration and Congress for their passivity about climate change. It also marks a major shift in policymaking initiative from the national to the state level and the emergence of newfound will among the states to tackle the problem collectively.

"The governors of the West Coast states have concluded that in the absence of meaningful federal action, we must act individually and regionally to address the sources of global warming," Washington Gov. Gary Locke noted in announcing his state's joint initiative with California and Oregon. "Global warming is a real phenomenon that affects us in many ways, from increasingly costly forest fires to encroaching seas upon our coastlines," added Oregon Gov. Ted Kulongoski. "This is a matter of economic necessity."

Individual states have a strong record of adopting policies within their borders to combat climate change. Only recently have they begun joining together to address the problem on a regional basis.

There are a number of reasons for the trend. For example, states in a region share many of the same concerns about and vulnerabilities to climate change and they can reduce the costs of cutting greenhouse gas emissions by pooling their resources and expertise. In addition, carbon dioxide emissions from power plants -- a major emissions source -- don't respect state borders. Neither do emissions from cars and trucks that cross state lines, another significant source. Such cross-border "leakage" limits an individual state's ability to control greenhouse gases effectively. By acting regionally, states can address common problems and more accurately and fairly.

The emission reduction efforts on both coasts anticipate the eventual creation of a national cap and trade system of the type outlined in the recently defeated Lieberman-McCain bill. Under such systems, government caps emissions below current or historic levels and creates commodities markets for the buying and selling of permits to emit the regulated gases. Companies that cut their emissions efficiently can sell their excess permits to firms unable to meet their emission limits. The market approach gives businesses a powerful financial incentive to develop cost-effective ways to cut emissions and has proven quite effective in reducing emissions that cause acid rain. Observers on both sides of the cap and trade debate agree that if states create multiple regional greenhouse gas trading systems, the private sector will eventually pressure Washington to enact a national system for the sake of uniformity.

Despite the Bush Administration's rejection of the international Kyoto Protocol on climate change, U.S. companies and multinationals with operations here have a strong incentive to participate in even voluntary regional cap and trade systems. They would win public relations points for good corporate citizenship. Their emissions reductions now would almost certainly be counted in any future national system. And if the state systems and their standards for verifying emissions are sufficiently rigorous, companies might be able to count their domestic reductions toward cap obligations in other nations. In other words, because global climate change is indeed "global," foreign nations or confederations like the European Union could conceivably recognize companies' greenhouse gas reductions in the United States under their own cap and trade systems.

Greenhouse gas registries -- databases in which companies, municipalities, and other emitters can have their releases recorded and verified -- are thus a major part of the foundation of a cap and trade system. States involved in both of the new regional consortia have already made impressive strides on this front.

In 2001, California created the nonprofit California Climate Action Registry (CCAR) to accept voluntary reports of greenhouse gas emissions from a broad spectrum of participants, including utilities, businesses, government agencies, educational institutions, and nonprofit organizations. It began operations in late October. Participants will get credit for their voluntary early emission reductions if cuts are ordered at some future date. Roughly 30 companies and municipalities had signed on as of May 2003.

CCAR uses a reporting protocol developed by the World Resources Institute and the World Business Council for Sustainable Development and requires third-party certification of emissions. One of CCAR's most creative aspects is its proprietary Climate Action Registry Reporting Online Tool (CARROT). California officials hope that CARROT will become a national standard.

CCAR is expected to figure prominently in California, Oregon, and Washington's joint emission reduction effort. The states said they will undertake a regional inventory of greenhouse gas emissions by sector and promote voluntary emissions reduction policies focused on increasing energy efficiency and reducing emissions from the transportation-sector. Big-rig trucks plying Interstate 5, which runs through Washington's Puget Sound region, Oregon's Willamette Valley, and California's Central Valley are a likely target for controls, as are ships -- a major source of smog and haze in Southern California. The three states have invited other states in the region and Canadian and Mexican provinces to join their efforts.

The California model will also figure prominently in regional efforts in the East. Several weeks before New York Governor's Pataki's July announcement of the 10-state Eastern seaboard effort, eight of those states (Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, and New Jersey) independently announced they were jointly creating a greenhouse gas registry patterned heavily upon CCAR. "We wanted to design the registry to be as reciprocal to California as possible, making it easier for other states to join in if and when they see fit," explained Ken Colburn, executive director of the Northeast States for Coordinated Air Use Management (NESCAUM), in an interview with the newsletter Greenwire.

The registry's creation is occurring parallel to talks among the larger group of Eastern states to possibly create the nation's first regional greenhouse gas trading program, by the target date of April 2005. As described by Pataki, the initiative would entail capping carbon dioxide emissions by the region's power plants and creating a market for trade in CO2 emission permits. NESCAUM officials expect their registry would form the basis for regional permit trading.

The Pataki-led initiative has hit a few early potholes, however. Officials in Pennsylvania and Delaware, which rely more heavily on coal for power production than the other states, say talk of a cap and trade system is premature. Coal-fired plants emit significantly more carbon dioxide than nuclear, natural gas, and hydroelectric plants. There are also questions about at what level to set the carbon dioxide cap; whether to include methane and other greenhouse gases under the cap; and whether power plants will be able to offset their emissions through carbon sequestration and other activities.

Delaware, Pennsylvania, and Maryland have indicated they will limit their participation in the registry effort to observer status, as will the Midwest states Wisconsin and Illinois. Maryland, Pennsylvania, and the Northeast Canadian provinces will similarly limit their participation in the emissions trading market.

For policymakers, regional strategies, while potentially strong, are still a second-best alternative to federal action. Climate change is a global challenge and much more progress could be made with a rigorous nationwide cap and trade system. In the absence of federal leadership, the multi-state efforts now underway could prove to be significant "laboratories" that pave the way for aggressive federal action in the future.

Resources for Action

Progressive Policy Institute's State Clean Air Exchange: www.ppionline.org/ppi_ci.cfm?contentid=251290
&knlgareaid=116&subsecid=900039

Northeast States for Coordinated Air Use Management:
www.nescaum.org

California Climate Action Registry:
www.climateregistry.org

Center for Clean Air Policy:
www.ccap.org

World Resources Institute:
www.wri.org

Additional Reading

"Recommendations to Governor Pataki for Reducing New York State Greenhouse Gas Emissions,"
Center for Clean Air Policy in collaboration with the New York Greenhouse Gas Task Force, April 2003:
www.ccap.org/pdf/04-2003-Executive-Summary
--NYGHG-Report.pdf

"State Climate Change Initiatives: Creation of the California Climate Action Registry,"
By David Olsen, Institute for Policy Research & Implementation, University of Colorado at Denver, April 2003:
http://thunder1.cudenver.edu/wirthchair/olsenpaper.PDF

Press releases announcing California, Oregon, and Washington's tri-state strategy to reduce global warming.

California:
http://www.governor.ca.gov/state/govsite/gov_htmlprint.jsp?
sFilePath=%2fgovsite%2fpress_release%2f2003_09%2f20030922_
PR03437_TRI_STATE_GLOBAL_WARMING.html&iOID=52414

Oregon:
http://www.governor.state.or.us/press_092203b.htm

Washington:
http://www.governor.wa.gov/press/press-view.asp?
pressRelease=1430&newsType=1

New York Gov. George Pataki's press release announcing Northeast states' clean air initiative:
http://www.state.ny.us/governor/press/
year03/july24_03.htm

Press release announcing multi-state lawsuit against Bush Administration on greenhouse gas regulation:
http://www.ag.state.il.us/pressrelease/bushrelease.htm

"Senate Rejects Mandatory Cap on Greenhouse Gas Emissions,"
By Eric Pianin, The Washington Post, October 31, 2003:
www.washingtonpost.com/wp-dyn/articles/
A43988-2003Oct30.html