How California, Texas, and State Policy Are Driving National Policy on Energy

Federal inaction on climate change has thrust the states, as well as cities, into the spotlight as the engines of innovation in energy policy.  Some states are boldly moving forward with innovative policy designs while others are backing away from regional agreements or renewable standards.  If gridlock continues at a Federal level, as Garten Rothkopf expects in the near term, much of national policy will be driven at the state of local level; the directions taken by key states in coming months/years will be critical.  Unsurprisingly, the most important states to watch are California and Texas.  In addition to comprising over 20% of the US economy, they have been at the forefront of innovative energy policies for more than a decade.  They will also be bellwethers for national sentiment in the mid-term elections.   In this Garten Rothkopf Energy and Climate Brief, we examine trends in state energy policy, with a particular focus on Texas and California, and how the results of their upcoming elections will help drive the future the course of national policy.

States as Drivers of Energy Innovation

During the last decade, many observers noted that while the federal government was largely ignoring the problem of climate change, states were moving forward on their own.  Regional coalitions in the Northeast, the Midwest, and the West set up efforts to reduce carbon emissions, one of which, the Regional Greenhouse Gas Initiative (RGGI), has already created a functioning cap-and-trade system.  A majority of states (32), meanwhile, have either a renewable portfolio standard (RPS) or an alternative energy portfolio standard, which mandates that a certain percentage of the electricity produced in the state come from renewables or other alternative energy sources, such as nuclear or fossil fuels equipped with carbon capture and storage. With the election of Barack Obama to the presidency, many observers thought that these state-level efforts would translate into a federal climate change policy, complete with a cap-and-trade system, a national RPS, and other measures. 

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