Balancing Politics and Policy to Solve Climate Change

Climate change is a substantial and increasingly present threat, but there remains significant disagreement about the best policies to address it. Economists generally argue that the most efficient approach is to put a price on carbon. Many policymakers counter that such policies are politically unrealistic. They favor more politically popular policies like clean energy standards and technology mandates—even if they tend to be economically inefficient.

There is perhaps no government entity in the world that is grappling with this tension more ambitiously than the state of California. While operating one of the few cap-and-trade programs in the country, the state also requires solar panels on all new homes, mandates the sale of zero emissions vehicles, and recently voted to accelerate its renewable portfolio standard to achieve 100 percent carbon-free energy by 2045. What can policymakers learn from California’s experience? How can policymakers balance the ‘art of the possible’ with the need to achieve rapid, deep cuts in carbon emissions?

Severin Borenstein, E.T. Grether Professor of Business Administration and Public Policy at the University of California, Berkeley; Michael Brune, executive director of the Sierra Club; Trevor Houser, partner at Rhodium Group; and Kim Wolske, research associate and assistant professor at the Harris School of Public Policy tackled these questions and more in an October 2 seminar, “The Climate in California: Balancing Policy and Politics to Solve the Climate Challenge.” The event, part one of a two-part series drawing lessons for global policymakers from California’s efforts to confront climate change, was moderated by Emily Holden, environment reporter for the Guardian US.

Rhodium Group’s Trevor Houser kicked off the event by giving an overview of U.S emissions trends. Houser noted that the United States reduced emissions 13 to 14 percent below 2005 levels, but, under current federal policy, would miss its Paris agreement goal of a 26 to 28 percent reduction by 2025.

While policy shifts under the Trump administration have slowed the decline of emissions in the United States, Houser noted that “those regulatory rollbacks have not yet been enough to completely offset the gains we’ve made in clean energy technology and policy at the state level.”

Enter California. Severin Borenstein, of the University of California at Berkeley, noted that the state accounts for just 1 percent of global carbon emissions. Because most of the growth in emissions is coming from the developing world, he argued, California’s main impact on solving the climate challenge will not come from its emissions reductions.

“Where California…will really make a difference is going to be by inventing technology, processes and markets that can be used and adopted elsewhere,” he said. “This isn’t just some sort of a general theory, this is a practice – we have visitors every week from China, [the European Union] and all over the world coming to look at what California is doing, and in many cases just adopting what we’re doing whole cloth…California, I think, really needs to be less focused on reducing its greenhouse gas emissions—though that’s certainly going to help along the way—and more focused on creating the technologies and the processes.”

The theme of California being a laboratory for change ran throughout the event.

California recently passed a mandate to achieve 100 percent carbon-free electricity by 2045. It follows a similar commitment made by Hawaii, but carries far greater implications given the much larger size of California’s population and economy. Holden asked the panel if the mandate is real or aspirational.

“It’s aspirationally real,” said Michael Brune, from the Sierra Club. “Every renewable portfolio standard that California has instituted so far has been met on an earlier timeline than what was originally proposed, which is typically true of most clean-energy standards that most states adopt, most of the time,” he said, adding that state clean-energy standards are also often achieved more cheaply than originally thought.

Many economists, however, argue California’s policies may be delivered more cheaply than planned, but they don’t deliver results as cheaply as possible. They argue that, though well-intentioned, policies like renewable portfolio standards are costlier than more economically-efficient alternatives such as carbon markets—which California also has.

But Borenstein granted that there was a positive role for the mandate, saying that the 100-percent aspect was less important than the commitment it makes to improving energy storage technology and accelerating “smart” electrification.

“That commitment is really going to push on those fronts…and that’s how we’re going to make a huge contribution to the world on reducing greenhouse gasses,” he said.

California’s clean electricity mandate is just one piece of the overall emissions puzzle—and the part of the puzzle that also happens to be the easiest sector to decarbonize. After that comes the hard part: agriculture, industry and, most of all, transportation. The latter accounts for 41 percent of the Golden State’s greenhouse gas emissions. That trend applies to the nation, too: the transportation sector in recent years has passed the electricity sector as the largest carbon emitter in the United States.

“It’s about to get a lot tougher for California,” said Houser. “The state picked all of the low-hanging fruit, particularly in the power sector. How California does in the next five to six years in accelerating electric vehicles and hydrogen vehicles, tackling diesel emissions from trucks… will do a lot to teach the rest of the country how to tackle that side of the economy.”

On that front, Borenstein supports California’s electric vehicle incentive even though it is not cost-effective because it “creates learning in technology, pushes forward industries and has huge spillover effects, particularly in the developing world.”

Outside of California, Kim Wolske said that how climate policies are framed make a tangible difference in their popularity, particularly in red states.

“When you talk about climate change and frame things around that, it has the effect of making conservatives more defensive because it violates core values,” Wolske said. “When you frame around technology or pollution control, then people are less defensive.”

Brune said he’s experienced this in his work at Sierra Club. There has been a bipartisan push to increase wind power capacity in the Midwest, he noted, and Republican lawmakers have proven willing to promote clean energy at the local level.  “Mayors have to deliver services, so they are more pragmatic in how they govern.”

While other panelists focused on the technological demonstration effect of California’s efforts, Wolske cited a different type of positive spillover effect to the rest of the country.

“The average American is not aware of what the U.S. is doing to address [climate change], but 85 percent want to see the U.S. take action,” said Wolske, whose research melds environmental, social and cognitive psychology research to examine consumers’ behavior and attitudes. “If we don’t see any sign of progress, it becomes all the easier to truly disengage. California is boosting morale a little bit in that somebody is taking action.”