Exploring State Climate and Clean Energy Actions
State Climate and Clean Energy Policies and Programs
Some states have implemented climate change mitigation policies that require direct GHG emission reductions from power plants, typically through market-based programs and GHG performance standards. State clean energy policies, such as renewable portfolio standards (RPS) and energy efficiency resource standards (EERS), reduce GHG emissions by altering the mix of energy supply and reducing energy demand. State utility planning processes, such as integrated resource planning and multi-pollutant planning requirements can also be mechanisms to advance GHG emission reductions. Cutting Power Sector Carbon Pollution:
State Policies and Programs.
- Policies or Programs that Require Direct Power Plant GHG Emission Reductions
Existing state actions that require direct power plant GHG emission reductions typically fall in one of two categories: market-based emission limits or emission performance standards.
GHG Emission Trading Program
Ten states currently use emissions trading programs (or "cap-and-trade" programs) to reduce GHG emissions. The state programs set an emissions cap on GHGs and require sources to acquire and surrender environmental permits, or allowances, equal to their emissions at the end of a given compliance period. The allowances can be traded across sources and others, creating a market for them. Learn more about the Market-based Programs (PDF) (Page 10).
CO2 Emission Performance Standards
CO2 emission performance standards are enforceable emission limits on electric generating units and can apply either directly to EGUs or to the local distribution company (LDC) that sells electricity to the customers. At least four states have set some form of CO2 performance standard. Learn more about CO2 Emission Performance Standards (PDF) (Page 18).
- Policies or Programs that Reduce Demand for Energy and GHGs through Energy Efficiency
State demand-side energy efficiency policies and programs reduce energy use and avoid greenhouse gas emissions associated with electricity generation. States incentivize investment in demand-side energy efficiency improvements by overcoming market barriers that otherwise prevent these investments, such as lack of information on energy efficient options, high transaction costs, split incentives, lack of product availability, and perceptions of organizational risks. Reducing electricity demand also improves system efficiency by reducing the transmission and distribution losses that occur across the grid.
Demand-side energy efficiency is considered a key strategy for reducing GHGs in states that currently have mandatory GHG targets, accounting for roughly 35 percent to 70 percent of expected reductions of state's power sector emissions.
Energy Efficiency Resource Standards
Energy Efficiency Resource Standards (EERS) set multi-year targets for energy savings that utilities or third-party program administrators typically meet through customer energy efficiency programs but also through other approaches, such as peak demand reductions, building codes and combined heat and power (CHP). An EERS can apply to retail distributors of either electricity or natural gas, or both, depending on the state. At least 28 states have some sort of EE standard or goal. Learn more about Energy Efficiency Resource Standards (EERS) (PDF) (Page 26).
Demand-side Energy Efficiency Programs
Demand-side energy efficiency programs are programs designed to advance energy efficiency improvements within a state or utility service area. They are typically implemented to help meet state policies, standards or objectives, such as energy efficiency resource standards (EERS), 'all cost effective' energy efficiency goals, integrated resource planning, and other demand-side management program and budget processes. All 50 states and the District of Columbia have implemented demand-side energy efficiency programs. Learn more about Demand-side Energy Efficiency Programs (PDF) (Page 30).
Buildings Energy Codes
Energy codes establish minimum efficiency requirements for new and renovated residential and commercial buildings. These measures are intended to eliminate inefficient technologies with minimal impact on up-front project costs. This can reduce the need for energy generation capacity and new infrastructure while reducing energy bills. Energy codes lock in future energy savings during the building design and construction phase, rather than through a renovation. At least 38 states have building energy codes. Learn more about Building Energy Codes (PDF) (Page 32).
Appliance and Equipment Efficiency Standards
State appliance standards establish minimum energy efficiency levels for those appliances and other energy-consuming products that are not already covered by the federal government. These standards typically prohibit the sale of less efficient models within a state. States are finding that appliance standards offer a cost-effective strategy for improving energy efficiency and lowering energy costs for businesses and consumers, though these standards are superseded when Federal standards are enacted for new product categories. At least 11 states currently have either enacted standards for equipment not covered federally or obtained waivers to enact tougher appliance standards where the federal government regulations have become outdated. Learn more about Appliance and Equipment Efficiency Standards (PDF) (Page 36).
Incentives and Finance Mechanisms for Energy Efficiency
States offer a diverse portfolio of financing and incentive approaches that are designed to address specific financing challenges and barriers and help specific markets and customer groups invest in energy efficiency. These programs exist in every state and include revolving loan funds, energy performance contracting, tax incentives, rebates, grants, and other incentives. Learn more about Incentives and Finance Programs for Energy Efficiency (PDF) (Page 37).
- Policies or Programs that Increase the Use of Renewable Resources and Reduce GHGs
States have adopted a range of requirements and programs to increase the use of renewable energy, including renewable portfolio standards, performance-based incentives and public benefit funds.
Renewable Portfolio Standards
A renewable portfolio standard (RPS), also known as a renewable electricity standard (RES), is a mandatory requirement for retail electricity suppliers to supply a minimum percentage or amount of their retail electricity load with electricity generated from eligible sources of renewable energy. An RPS indirectly affects EGU CO2 emissions by reducing the utilization of fossil-fuel-fired EGUs. RPS designs vary from state-to-state, typically by applicability, targets and timetables, geographic and resource eligibility and alternative compliance payments. As of March 2016, at least 29 states had mandatory renewable portfolio standards. Learn more about Renewable Portfolio Standards (RPS) (PDF) (Page 39).
Performance-based Incentives and Finance Mechanisms for Renewable Energy
States use public benefit funds and performance-based incentives to address financial challenges and barriers and to help specific markets and customer groups produce clean energy, including feed-in tariffs and other payments, or tax incentives. Most states have some form of financial mechanisms and incentives for renewable energy. Learn more about Incentives and Finance Programs for Renewable Energy (PDF) (Page 43).
- State Utility Planning Processes That Can Advance GHG Reductions
Some public utility commissions require utilities to conduct portfolio management or integrated resource planning to provide least cost and stable electric service to customers over the long term. A few states have policies or requirements for utilities to specifically factor pollution reduction requirements into their planning.
Portfolio Management & Integrated Resource Planning
Portfolio management refers to energy resource planning that incorporates a variety of energy resources, including supply-side (e.g., traditional and renewable energy sources) and demand-side (e.g., energy efficiency) options. The term "portfolio management" typically describes resource planning and procurement in states that have restructured their electric industry. However, it can also include the more traditional integrated resource planning (IRP) approaches applied to vertically integrated utilities.
Multi-pollutant Planning Policies and Requirements
Two states, Minnesota and Colorado, have worked collaboratively with their investor-owned utilities to develop multi-pollutant emission reduction plans on a utility-wide basis. This multi-pollutant, collaborative approach enables utilities to determine the least cost way to meet long term and comprehensive energy and environmental goals. Learn more about State Multi-pollutant Utility Planning Requirements (PDF) (Page 46).
To learn more about how these policies are designed and where they are in effect, see Identifying and Analyzing Policy Options.
State Benefits of Climate and Clean Energy Policies
State and local governments have found that climate and clean energy policies help them achieve multiple environmental, energy, and economic goals: reducing emissions; increasing energy security; saving money and supporting local jobs.
State energy efficiency and renewable energy policies and programs reduce demand for fossil-fuel powered electricity, increase electricity generated from clean, renewable sources and encourage high efficiency technologies that reduce electricity waste.
By implementing clean energy policies, states can:
- Reduce harmful air pollution which:
- Improves air quality and people's health
- Reduces illnesses and health care costs, and improves worker productivity
- Helps them meet federal air quality standards and climate change mitigation targets
- Increase electric system efficiency and diversity which:
- Improves reliability of the electric system and averts blackouts
- Avoids or reduces need to construct additional power plants and transmissions and distribution infrastructure
- Reduces energy losses
- Save taxpayers and consumers money and enhances economic development because these policies:
- Lower health, energy, fuel and energy supply costs for consumers, businesses, utilities, and governments
- Increase the amount of money available to spend on other goods and priorities
- Improve competitiveness of local businesses when compared to less efficient ones
- Increase demand for clean energy businesses and the companies that support them, increasing income, jobs, and sales.
- Learn more about the Benefits of Clean Energy
- Estimate the potential benefits estimate the potential benefits of new state clean energy policies
- Evaluate the benefits of existing clean energy policies for my state
Examples of State GHG Reduction Strategies
Several states have set mandatory statewide reduction targets and have developed state GHG reduction strategies describing the measures they will use to meet their requirements. These strategies include a range of options that the states have analyzed and are implementing for their potential to reduce GHGs while preserving or enhancing economic growth. As states develop their own strategies to meet the goals established under the Clean Power Plan for existing sources, they can look to these strategies to understand the options others have found to be potentially effective tools for reducing GHGs. A sampling of some recent plans are available below.