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The surprisingly inexpensive cost of state-driven emission control strategies

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Traditionally, analysis of the costs of cutting greenhouse gas emissions has assumed that governments would implement idealized, optimal policies such as uniform economy-wide carbon taxes. Yet actual policies in the real world, especially in large federal governments, are often highly heterogeneous and vary in political support and administrative capabilities within a country. While the benefits of heterogeneous action have been discussed widely for experimentation and leadership, little is known about its costs. Focusing on the United States, we represent plausible variation (by more than a factor of 3) in the stringency of state-led climate policy in a process-based integrated assessment model (GCAM-USA). For a wide array of national decarbonization targets, we find that the nationwide cost from heterogeneous subnational policies is only one-tenth higher than nationally uniform policies. Such results hinge on two critical technologies (advanced biofuels and electricity) for which inter-state trade ameliorates the economic efficiencies that might arise with heterogeneous action.
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https://doi.org/10.1038/s41558-021-01128-0
1School of International Affairs and Department of Civil and Environmental Engineering, Pennsylvania State University, University Park, PA, USA. 2Joint
Global Change Research Institute, Pacific Northwest National Laboratory, College Park, MD, USA. 3School of the Environment, Yale Program on Climate
Change Communication, Yale University, New Haven, CT, USA. 4Center for Global Sustainability, School of Public Policy, University of Maryland, College
Park, MD, USA. 5School of Global Policy and Strategy, University of California San Diego, La Jolla, CA, USA. 6Scripps Institution of Oceanography,
University of California San Diego, La Jolla, CA, USA. 7Mechanical and Aerospace Engineering, Jacobs School of Engineering, University of California San
Diego, La Jolla, CA, USA. 8The Brookings Institution, Washington, DC, USA. e-mail: weipeng@psu.edu
As governments get serious about decarbonization, politi-
cal leaders in large and politically diverse countries need to
grapple with huge variations in political and administrative
feasibility within their countries. That heterogeneity in interests and
capabilities has led many federal governments to encourage or tol-
erate large internal variations in policy effort. Diverse studies have
pointed to the benefits of heterogeneous approaches for experimen-
tation and learning14. Yet these realities in climate politics have
not been well represented in leading modelling frameworks, which
typically assume nationally uniform policy efforts58. This gap in
modelling work also reflects the widely held assumption by poli-
cymakers that heterogeneous subnational policy efforts will be a lot
more costly than nationally uniform efforts9.
To assess the potential increase in cost from heterogeneous
subnational policy formation compared with theorized opti-
mal uniform nationwide policy, we study the case of the United
States. The United States is the world’s second largest emitter and
already displays one of the world’s largest variations in subna-
tional action. Bottom-up coalitions, such as the ‘America is All In
initiative, have gathered thousands of signatories from political
leaders in cities, states, companies and universities that represent
a constituency of more than half the U.S. population10. More than
30 states have completed state-level climate action plans, or are
in the process of developing one11. Nearly 40 states have created
renewable portfolio standards or voluntary renewable energy
goals to facilitate low-carbon transition12. Meanwhile, some states
are making limited effort and are under no sustained public pres-
sure to strengthen it.
Here we focus on heterogeneity in the stringency of policy efforts
made by each state. For ease, we will represent those policy efforts
as state-varying prices on carbon, although in practice no enterprise
uses only simple price instruments—a variety of other mechanisms,
such as renewable portfolio standards, low-carbon fuel standards
and industrial policies are the norm13,14. Our approach, by design,
allows us to assess the long-term dynamics that arise when states
vary in their willingness to act and when the country, as a whole,
varies the national decarbonization targets it might pursue. We see
this long-term view of heterogeneity in action as a complement to
studies that have focused on much nearer-term policy heterogene-
ity and thus been able to look more granularly at specific policy
instruments15. (See Supplementary Note2 for a comparison with
America’s Pledge study that examines nearer-term policies13.)
Methodologically, we employ a process-based integrated assess-
ment model (IAM): the Global Change Assessment Model with
state-level detail in the United States (GCAM-USA; Methods)16.
It includes detailed representation of sectoral and technology
options, as well as the interactions between the economic, energy
and land-use systems. These representations allow us to assess the
deployment trajectories of critical technologies in each state, the
competition between different technologies in various sectors and
the impacts of varying cost and policy assumptions on infrastruc-
ture investments across space and time. Our analysis hence goes
beyond prior studies based on simpler economic models1719 by
identifying critical sectors, technologies and processes that deter-
mine the cost of heterogeneous policy efforts.
Scenario design
We examine 12 mitigation scenarios that vary across two dimensions:
i. National mitigation eort, measured by four targets of nation-
al total greenhouse gas (GHG) emissions for 2050 (for exam-
ple, 20%, 40%, 60% and 80% below 2005 levels; Supplementary
Fig.1). We also include a 95% decarbonization target as a sen-
sitivity analysis, which is close to the net-zero emissions target
set by the Biden Administration (Supplementary Fig. 7).
The surprisingly inexpensive cost of state-driven
emission control strategies
Wei Peng 1 ✉ , Gokul Iyer 2, Matthew Binsted 2, Jennifer Marlon 3, Leon Clarke4,
James A. Edmonds 2 and David G. Victor 5,6,7,8
Traditionally, analysis of the costs of cutting greenhouse gas emissions has assumed that governments would implement ideal-
ized, optimal policies such as uniform economy-wide carbon taxes. Yet actual policies in the real world, especially in large fed-
eral governments, are often highly heterogeneous and vary in political support and administrative capabilities within a country.
While the benefits of heterogeneous action have been discussed widely for experimentation and leadership, little is known
about its costs. Focusing on the United States, we represent plausible variation (by more than a factor of 3) in the stringency of
state-led climate policy in a process-based integrated assessment model (GCAM-USA). For a wide array of national decarbon-
ization targets, we find that the nationwide cost from heterogeneous subnational policies is only one-tenth higher than nation-
ally uniform policies. Such results hinge on two critical technologies (advanced biofuels and electricity) for which inter-state
trade ameliorates the economic efficiencies that might arise with heterogeneous action.
NATURE CLIMATE CHANGE | VOL 11 | SEPTEMBER 2021 | 738–745 | www.nature.com/natureclimatechange
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... These choices involve critical trade-offs: the most economically efficient strategy may be politically infeasible 2 , the fairest may be expensive 3 and letting each country choose its own policy may compromise the global targets. Writing in Nature Climate Change, Wei Peng and colleagues 4 show that allowing individual states in the United States to have their own climate policies does not make achieving national climate targets considerably more expensive than a uniform national policy. ...
... Climate strategies should strike a tricky balance between efficiency, fairness and sovereignty 3 . Peng et al. 4 demonstrate a novel way to operationalize 'sovereignty' in an IAM based on empirical data on public support for climate action. They also show that in the case of the United States, sovereignty does not necessarily impede efficiency. ...
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