The Enigma of State Climate Change Policy Innovation

Abstract

Starting in the 1990s, states began filling the gap left by the federal government’s failure to enact climate change legislation. Policies adopted by states, such as regional greenhouse gas cap and trade regimes and renewable portfolio standards, have been lauded as demonstrations of the continuing ingenuity of the states as “laboratories of democracy,” devising new and innovative solutions to the global problem of climate change. This view is in tension with the predictions of well-respected economists that states will innovate at sub-optimal levels due to the risk-averse nature of politicians and the ability of one state to free-ride off the innovative ideas of other states. This chapter concludes the truth lies somewhere in the middle. While state governments are the original source of only a few of the most touted climate policy initiatives, they are frequently the first to adapt a policy previously adopted only on the national level. As opposed to “policy innovators,” state and local governments might more accurately be described as “scale innovators.” Given the overarching necessity of cutting back on greenhouse gas emissions, policy adoption on multiple scales is arguably of greater social value than developing new and original policy tools.

Keywords: climate change, state and local government, policy innovation, cap and trade, renewable portfolio standard, climate initiative, free-riding, federalism