Will California’s cap-and-trade experiment catch on?
As the old Louis Brandeis quip goes, states can serve as laboratories of democracy if they so choose. And California has just volunteered itself as a guinea pig for a particularly high-stakes experiment. The California Air Resources Board is putting the finishing touches on a statewide cap-and-trade system for greenhouse-gas emissions. You can bone up on the details in the Los Angeles Times. But here’s a broader question: Will California’s adventure have any effect on climate policy in the rest of the country?
Harvard economist Robert Stavins has explained how single states can sometimes push the federal government to adopt stricter environmental rules. And California, in particular, has been a fertile breeding ground for green policies. The Clean Air Act can trace its roots back to a small air-pollution agency founded in Los Angeles in 1947. The state’s motor-vehicle efficiency rules in 2009 helped prod the federal government to adopt stricter fuel-economy standards for cars and light trucks. What’s more, other states still have the option of linking up with California’s cap-and-trade system via the Western Climate Initiative. But a few things need to happen for California’s carbon fever to spread.
For one, other states will be watching to see whether California suffers from trying to reduce its carbon-dioxide emissions 25 percent below 1990 levels by 2020. Will cement plants flee the state? Will electricity bills go through the roof? MIT economist Christopher Knittel has found that most economic models predict “a relatively small [negative] impact on the California economy.” We’ll get to see whether the green optimists or industry pessimists are right. There’s that famous McKinsey study that found a battalion of cheap — and often profitable — energy-efficiency opportunities we’re not yet adopting. California can show the rest of the country whether it really is easy to go green.
But what about Congress? UCLA’s Matthew Kahn has done a study finding that House members who voted for the 2009 Waxman-Markey climate bill were more likely to come from liberal, wealthier, low-carbon districts. It’s hard to see how even a California success with cap-and-trade could alter this dynamic and win over lawmakers in coal-heavy states like Indiana or West Virginia. But Kahn remains optimistic, arguing that California’s experiment could help foster new clean-energy companies and interest groups who will act as a counterweight to fossil-fuel interests in the broader political debate. New lobbyists to fight the old lobbyists. It’s a little seedy, sure, but as theories of political change go, it’s not totally unrealistic.