The Biden administration has committed to a historically ambitious climate agenda. We can expect a profound shift in U.S. federal climate policy — from one of continued domestic rollbacks and international disengagement, to one of forward progress and cooperation. This is critical, as it is not possible to address the climate challenge without federal leadership, and time is running out to avert catastrophic levels of global warming.
At the same time, state-level climate action will remain essential. History has shown that even an engaged U.S. federal government faces real obstacles to progressive regulatory and legislative action. In the face of federal gridlock and inaction, state and local governments have played a crucial role in advancing climate action, reducing greenhouse gas emissions, and supporting the continued maturation of key low-carbon technologies such as wind and solar generation as well as electric vehicles.
Rather than taking a backseat, state leadership must now continue alongside a more supportive federal government, allowing the United States to achieve deeper emissions reductions through a new climate federalism framework that leverages comparative strengths at different levels of governance.
Below we outline seven high-impact policies to watch in 2021, as well as federal programs and policies that can encourage and reinforce state-level climate action plans.
1. Progress Toward 100% Clean Electricity
Over the past several years, momentum toward a decarbonized power sector has grown rapidly. Seven states plus Washington, D.C. and Puerto Rico have legislatively committed to 100% clean electricity by 2050 or earlier, while another eight states have a non-binding 100% goal.
Moving forward, we'll watch how many more states adopt similar standards — and what lessons states can share to promote broader adoption of mandates to decarbonize electricity supplies fully. Many states have innovated in recent years to position their power sectors for more rapid decarbonization. For example, six states have set explicit targets for batteries and other forms of energy storage to complement renewables. Colorado has partnered with electric utilities to phase down fossil-based generation while limiting financial strain on impacted communities.
Rather than letting up, states can now expand these frameworks to speed up progress and broaden the adoption of 100% clean electricity across the United States.
Note: States with enacted targets by year adopted: Hawaii (2015); California (2018); Colorado, District of Columbia, Maine, Washington, Nevada, New Mexico, New York (2019); Virginia (2020). Additional states with proposed targets (through proposed legislation or executive orders): Connecticut, Illinois, Louisiana, Maryland, Massachusetts, Minnesota, Michigan, New Jersey, Oregon, Rhode Island, Wisconsin.
The federal government will now join states in pushing for this transition. The Biden campaign set a goal of 100% clean electricity nationwide by 2035, though it remains to be seen whether Congress will adopt that vision. Even without Congress adopting a 100% clean energy goal, the Biden administration will have a wide array of tools at its disposal, such as:
Using the Clean Air Act to push for an aggressive clean power standard;
upgrading transmission and distribution systems through infrastructure legislation;
increasing Department of Energy research & development support for renewable and other low-carbon technologies;
facilitating the development of renewable energy projects on federal lands and offshore;
reforming Federal Energy Regulatory Commission (FERC) orders to support renewables in organized electricity markets;
These federal levers can enable states to deploy more renewable resources on the grid and help the nation move closer to decarbonizing its power sector.
2. Drive the Sale of Zero-Emission Vehicles
Decarbonizing transportation means moving to zero-carbon vehicles. Increasingly, states are driving the shift to a 100% emissions-free transportation sector. Thirteen states and Washington, D.C. have adopted California's vehicle emissions standards under the Clean Air Act. The majority of these states have also adopted a Zero-Emission Vehicle (ZEV) program requiring automakers to sell a certain percentage of zero-emissions vehicles — such as battery electric, hydrogen fuel cell and plug-in hybrid vehicles.
California's decision to ban the sale of new gasoline-powered cars starting in 2035 has the potential to dramatically grow the electric vehicle market, and Massachusetts and New Jersey are considering similar bans. States are also moving beyond just light-duty vehicles; last year, a coalition of 15 states and the District of Columbia committed to a 30% zero-emission vehicle sales target for buses and trucks by 2030.
These actions can be complemented by additional states' measures including:
Procuring electric vehicles for public fleets (like buses and other public vehicles);
providing consumers, especially lower-income populations, with incentives that make purchasing electric vehicles and charging equipment more affordable;
reforming electricity rates — by ensuring that electric vehicles charge in a manner that minimizes costs to the grid, while providing customers with fuel savings — to support electric vehicle deployment;
and providing grants and loans for charging infrastructure to offset capital costs and attract private investment.
As more states adopt policies to support vehicle electrification, they can accelerate the move to zero-emission vehicles, reducing greenhouse gas emissions and improving local air quality, while also enabling the adoption of more ambitious federal standards over time.
Note: Policies and incentives can vary substantially in terms of scope and/or value from one state to the next. More details can be found at: https://afdc.energy.gov/laws/state
The state-level actions described above will send clear market signals for fleet owners and vehicle manufacturers. The federal government can be an important partner as well, by sustaining federal tax credits to incentivize electric vehicle purchases, and to more quickly and equitably deploy charging infrastructure. Equally important would be federal policies to spur manufacturers to invest in producing electric vehicles, batteries and charging equipment domestically.
Finally, tighter tailpipe emission standards, combined with a long-term strategy for electrification, will push automakers to increase electric vehicle sales. Here the Biden administration could model federal efficiency rules after the agreement between the California Air Resources Board and five automakers for model years 2022 through 2026, while developing more stringent standards requiring 100% zero-emissions vehicles for new car sales in the 2030-2035 timeframe.
3. Support the Deep Decarbonization of Buildings
States can drive significant decarbonization of buildings by expanding their highly successful energy efficiency resource standards, which regularly provide two to five dollars in economic benefits for every dollar invested. Carbon-neutral buildings, however, ultimately require more than improved efficiency. They require appliances than run on zero-carbon sources of energy, like electricity generated from solar and wind, rather than on-site gas or oil.
Recent technological advancements make air source heat pumps and electric water heaters economically compelling options throughout much of the country. States can support their rollout through a combination of incentives and regulations, and by limiting the installation of gas appliances in new buildings.
Some states have begun to set heat pump installation targets and incentives to provide market signals. Maine, for instance, passed legislation to install 20,000 heat pumps in the state annually (up from 7,500). Both California and New York have allocated funding to advance building electrification and deploy heat pumps, with a focus on low-income residents' homes.
With multiple cities in California requiring or encouraging all-electric new construction, California also has an opportunity to adopt similar rules at the state level in its upcoming 2022 building energy code cycle. An analysis by the Rocky Mountain Institute shows that going all-electric in new buildings would avoid $1 billion in spending on new gas connection infrastructure, which could become obsolete in the face of California's target to eliminate statewide greenhouse gas emissions by 2045. As 2021 begins, other states will likely include building electrification strategies in their climate and energy plans.
To enable the widespread adoption of zero-emissions buildings, federal funding should be dedicated to efficiency efforts proven to reduce energy consumption, save taxpayer dollars and create jobs — including the State Energy Program, Weatherization Assistance Program, and tax incentives for efficiency improvements in residential and commercial buildings. Federal funding, including those two programs, has significantly helped states scale up their energy efficiency work.
As states navigate the coronavirus pandemic's economic fallout, federal efficiency programs can play a vital role in supplementing state efforts to save energy and reduce energy costs, especially for low-income residents. The federal government can also step up research and development for building electrification, provide incentives for electrification in addition to efficiency, establish national building performance standards, and provide financial and technical assistance to states that implement building performance standards.
4. Include Natural and Working Lands in Climate Change Strategies
Fighting climate change isn't only about reducing fossil fuel use. Natural and working lands like forests, farms and wetlands collectively remove 11% of annual U.S. greenhouse gas emissions from the atmosphere already. They have the potential to remove up to 1 billion tons of additional carbon dioxide per year with smart measures to promote conservation, restoration and sustainable land management. States can advance these measures through incentives for carbon removal practiceson private lands, smart growth policies for urban areas, and climate-smart management of state forests, among other policy opportunities.
In 2018, 17 states joined together through the US Climate Alliance to accept the Natural and Working Lands Challenge, which includes a commitment to integrate land-based carbon removal — through practices like restoring forests, planting cover crops and protecting wetlands — into state climate plans.
California Governor Gavin Newsom has emerged as a leader by releasing an Executive Order that calls on state agencies to develop a Climate Smart Strategy for Natural and Working Lands. The Order also sets a target to protect 30% of the state's lands and waters by 2030.
We're now watching whether other states follow California's lead in recognizing the value of land in removing carbon from the atmosphere. Washington and Wisconsin are among the states positioning themselves for strong action in the year ahead, with recommendations issued in the final weeks of 2020 for new state policies to support carbon removal in natural and working lands.
The federal government can support these efforts with targeted policies to expand U.S. Department of Agriculture incentive programs for private lands, enhance carbon sequestration on federal lands, and improve measurement of carbon storage in forests and soils. During his first week in office, President Biden has already followed California's lead by enacting a national 30% target for land and water protection. The federal government can also support state efforts by investing in research and technical assistance to landowners through land grant universities, agricultural extension offices and regional Climate Hubs.
5. Adopt or Expand Carbon Pricing Programs
Carbon pricing programs can help reduce emissions by putting an immediate financial price on carbon emissions across regulated sectors and establishing a clear and consistent financial signal to investors that low-carbon technologies will pay off now and in the future. Most economists agree that such programs are a critical tool for decarbonizing the U.S. economy. Where they have been adopted, these programs have reduced emissions, improved air quality, and supported investments in an equitable and just transition.
The adoption of carbon pricing can be an arduous process, due to numerous political and administrative barriers. However, states have historically demonstrated the political will and creativity to get effective mandates across the finish line. Established programs include California's economywide cap-and-trade mandate, California's Low Carbon Fuel Standard and Oregon's Clean Fuels Program in the transportation sector, and the Regional Greenhouse Gas Initiative (RGGI) covering power sector emissions in the Northeast.
These programs are poised to expand and provide frameworks for new policies in other states and regions. Last year, Virginia and Pennsylvania moved to become the 11th and 12th states to join RGGI. In addition, three Northeastern states and Washington, D.C. have agreed to a cap-and-invest program for the transportation sector through the Transportation and Climate Initiative. The program would begin in 2022, with potential for additional states involved in the initiative to officially sign on by that time.
Given the barriers facing carbon pricing, federal adoption is unlikely in the near term. However, the federal government can play an important supporting role through research and development funding for the next generation of low-carbon technologies required to meet states' ambitious emissions reduction targets.
The federal government can also play a key role in establishing common metrics and rules to enable more robust state implementation. The Biden administration is already taking steps to update the Social Cost of Carbon, which can serve as a key underlying benchmark for not just federal but state-level regulations and programs. In addition, FERC may use its authority to encourage regional electric market operators to work with states on market rules that incorporate a state-determined carbon price. Though several technical and markets challenges to implementing carbon pricing in wholesale electricity markets still need to be resolved, last year FERC issued a policy statement opening the door for these rules to be developed.
6. Leverage Purchasing Power to Support Low-Carbon Technologies
States can play a critical role in supporting emerging clean technologies through preferential purchasing programs. This includes purchasing 100% clean electricity. It can also include deploying zero-emission public vehicles, as well as supporting advanced low-carbon industrial products, such as concrete and steel. Some innovative concrete products on the market already offer emissions reductions of up to 40%, and continued advancements could produce carbon-negative concrete.
States including Oregon, Minnesota and Washington are considering policies similar to California's Buy Clean standard, which requires state agencies to consider the embedded carbon emissions of four construction materials when contracting for public infrastructure projects.
A bill in California is seeking to expand the list of products to include cement, while a legislative proposal in New York focuses only on concrete procurement by state agencies. 2021 is likely to see progress in some of these states adopting their own Buy Clean policies.
At the federal level, President Biden's latest executive orders on climate change direct federal agencies to leverage their vast purchasing power to procure renewables, electric vehicles and batteries. A federal Buy Clean program would spur the development of environmental performance metrics for different materials that could be used by states.
7. Promote Equity and Address Air Pollution Hot Spots
2020 highlighted the stark need to address climate change in a way that advances racial, economic and environmental justice. A growing number of states have begun to address environmental and economic disparities by identifying communities most impacted by pollution and other environmental hazards, and directing investments in climate solutions to these areas.
Virginia's Clean Economy Act, for instance, includes several equity and environmental justice provisions, including a commitment to invest 50% of the state's RGGI auction proceeds toward energy efficiency for low-income housing. Michigan established the state's first Advisory Council for Environmental Justice to ensure that all residents receive equal protection from environmental hazards.
Much more work is needed by states to implement policies that incorporate equity and environmental justice concerns into all aspects of climate and energy planning. 2021 is likely to see more states stepping up. They will find an ally in the Biden administration, which has signaled its intention to prioritize environmental justice issues through, among other commitments, its nominees for key environmental posts and its executive order directing 40% of all clean energy investments to benefit disadvantaged communities.