It’s time for states to step up on climate change, but leave carbon markets out of it

As the federal government moves backwards on climate action, including pulling the U.S. out of the Paris Agreement, there are new opportunities for states to take the lead. A new report from IATP -- “Don’t Believe the Carbon Market Hype: Why States Should Not Pursue Carbon Markets and What They Can Do Instead” -- highlights this timely opportunity for states to step up on climate change, and decries carbon markets as an effective strategy.

If pulling the U.S. out of the Paris Agreement weren’t signal enough, one look at President Trump’s proposed budget for fiscal year 2018 shows that the federal government does not care about climate change. The budget ends programs to lower domestic greenhouse gas emissions, cuts climate change research programs, and eliminates involvement in international climate change efforts. The budget also recommends cutting the Environmental Protection Agency’s funding by over 30 percent and closing the Environmental Protection Agency’s Office of Environmental Justice, which is instrumental in ensuring equitable environmental policy.

Despite (or perhaps because of) the lack of federal action, states have already begun announcing their own climate change strategies. New York Governor Andrew Cuomo announced in May an initiative to curb the state’s methane emissions, and Virginia Governor Terry McAuliffe issued an Executive Order in the same month directing the state to begin creating a carbon market. While state-based action is desperately needed right now, carbon markets are not the way to go.

Enthusiasm for carbon markets is surprising given the approach’s poor track record in the past. Existing U.S. carbon markets in California and in the northeastern states have not led to meaningful greenhouse gas reductions, and have disproportionately harmed rural communities, low-income communities, and communities of color. Other examples from around the world, including the European Union’s Emissions Trading Scheme (EU ETS), have suffered from massive amounts of fraud and market speculation. IATP’s new paper details the common pitfalls of carbon markets and how they have manifested in several carbon markets in the U.S. and globally.

Instead of using the lack of federal climate change policy as a catalyst to create more carbon markets, states should consider policies that combine effective, predictable regulation with investment in climate friendly energy and infrastructure. For instance, Renewable Portfolio Standards exist in 29 states to specify the amount of renewable electricity utilities must sell. 60 percent of new renewable generation in the U.S. since 2000 has been driven by Renewable Portfolio Standards, proving the effectiveness of these policies at driving energy innovation. In addition, increasing renewable energy also creates jobs; according to the U.S. Department of Energy, over 3.3 million Americans were directly employed by the clean energy industry in the first quarter of 2016. There is plenty of room for Renewable Portfolio Standards to be implemented and/or strengthened across the country as one way of addressing climate change at the state level.

As states create their climate change plans, they should strive for deep community engagement and inclusive processes that address local concerns so that communities can remain resilient as they adapt to climate change. Rural, low-income, and minority communities can benefit greatly from investments in renewable energy and energy efficiency, from increased jobs in the clean energy sector, and from local ownership that retains wealth in the community. Crafting these approaches must involve deep engagement with rural and minority voices throughout the policymaking process.

Fighting climate change in the U.S. has never been solely dependent on the federal government. Congress has not passed any bills directly targeting climate change in the past decade, and yet greenhouse gas emissions have begun falling from their peak levels in the U.S. regardless. States, cities and counties must continue to lead this charge with localized policies that focus on equity and resilience. These new approaches can and should include rural and minority voices throughout the policymaking process. Past global and domestic experience with carbon markets shows that they have not worked from a greenhouse gas reduction or equity perspective, and states must keep this in mind as they design climate policy that works for all people and communities.

Read the full report here: