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Voluntary programs don’t provide enough incentive for utilities to reduce their emissions

Legally binding targets and penalties can help U.S. states reduce greenhouse gas emissions from electricity generation. But voluntary policies with no mechanism for enforcement do not lead to reduced emissions.
November 21, 2017

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In the United States, states are often said to be the laboratories of democracy, testing out the feasibility and effectiveness of policies that, if successful, might later be adopted at the national level. They are also laboratories of climate change action, researchers from Emory University reported in Nature Climate Change on November 6.

Their analysis shows that legally binding targets and penalties can help U.S. states reduce greenhouse gas emissions from electricity generation. But voluntary policies with no mechanism for enforcement do not lead to reduced emissions.

The researchers evaluated 17 different climate-related policies and their effect on carbon emissions between 1990 and 2014. They used data from the U.S. Environmental Protection Agency and the Energy Information Administration to compare the emissions from a state’s power sector before and after each policy was adopted.

Using a mathematical model, the researchers controlled for population growth, technology changes, and other factors that can also affect emission levels. This enabled them to isolate the effects of the policies themselves.

When it comes to reducing emissions, the electric power sector is an important target because it is responsible for the largest share of emissions nationwide – 29% of all U.S. emissions in 2015.

The researchers evaluated 11 mandatory policies and 6 voluntary policies. All but one of the mandatory policies are associated with reduced emissions, but none of the voluntary programs is.

“Our results indicate that voluntary programmes do not provide enough incentive for utilities or energy providers to reduce their emissions,” the researchers write.

The mandatory policies reduce emissions from the power sector by between 1.12 and 10.3 million metric tons of carbon dioxide per year, or 2.7-25% of average state-level emissions from electricity generation.

The researchers evaluated 8 climate policies, which are specifically aimed at controlling greenhouse gas emissions, and 9 energy policies, which promote energy efficiency and increasing electricity generation from non-fossil fuel sources.

Energy policies can be easier to pass because they are not explicitly about the political hot-button issue of climate change – but they might not necessarily lower emissions. (Theoretically, a state could increase renewable electricity generation without reducing fossil-fuel power.)

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The study is reassuring on this point. It suggests that energy policies and climate policies can both work, as long as they include enforceable targets.

But just because a policy is popular doesn’t mean it’s effective at reducing emissions. Thirty-four states have adopted a Climate Action Plan, the most common policy evaluated in the study. Climate Action Plans are not associated with reduced emissions from the power sector, the researchers found. However, they note that these plans, which can contain both voluntary and mandatory components, often focus on climate change adaptation – so reducing emissions may not be their primary purpose.

California’s cap-and-trade system, adopted in 2006, is the policy with the largest impact on power-system emissions. However, it is difficult to evaluate because no other state has a cap-and-trade program, and California implemented it as part of a suite of half a dozen climate and energy policies around 2006.

The researchers also analyzed various combinations of policies, since many states have adopted multiple strategies to reduce carbon emissions.

Overall, the most effective policies to reduce carbon emissions from electricity generation are payments to utilities that compensate them for selling less electricity; requirements that all power plants disclose their emissions; and providing public money to support renewable energy and energy efficiency research and development.

The latter two strategies reduce not just overall carbon emissions but also carbon intensity, meaning emissions per megawatt hour of power generated.

For states that have implemented such policies, the findings indicate that they’re on the right track, the researchers say. And for those that haven’t, the study suggests which emissions-cutting strategies they should pursue in the future. “Finally, if and when the federal government takes leadership in climate mitigation efforts, it can learn from the successes of state-level actions analysed here,” they write.

Source: Martin G. and E. Saikawa “Effectiveness of state climate and energy policies in reducing power-sector CO2 emissions.” Nature Climate Change2017.
Image: Mike Fleming via Flickr

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