Strengthening Energy Policy in the Great Lakes Region

Workshop Summary

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The Alternative Energy Future

The first of the regional stakeholder workshops to discuss the project findings and potential opportunities for paths forward was held in the Great Lakes region, where at the state/provincial and local levels, there has been great diversity in both the energy policy and political landscapes, as well as a long history of collaborative governance to solve environmental problems.

On climate and energy policy, it is perhaps no surprise that Great Lakes stakeholders—especially those from Michigan—are keenly interested in the future of the automotive industry. Shifts towards electric vehicles will impact not only regional manufacturers and suppliers, but also have ramifications on transportation infrastructure in a region that is decidedly more rural—and more reliant on the automobile—than its East and West Coast counterparts. In the electricity sector, while federal policy as well as market forces have led to a transition away from coal in recent years, divergent state-level policies in the region have largely dictated whether that shift has been toward natural gas or renewables, or an increasing reliance on existing nuclear plants. An aggressive renewable portfolio standard in Illinois, for example, has led to it to become the nation’s sixth highest producer of wind energy, whereas restrictive state-led wind siting rules in Ohio and a boom in hydraulic fracturing have given rise to an electricity sector there which is increasingly fueled by natural gas. Some of the diversity in state level energy policy in the Great Lakes region is perhaps reflective of political diversity in the region. Michigan, Ohio, and Wisconsin, for example, have historically been seen as swing states. Though the 2016 Presidential election helped solidify Republican control of state government in these states, Illinois and Minnesota retained split control even after the 2016 election, with a Republican governor and Democratic legislature in Illinois, and a Democratic governor and Republican legislature in Minnesota. Workshop participants drew on their experiences in states with diverse economic and political interests to consider how energy and climate policy might resonate among these diverse regional actors.

Stakeholders to the workshop also brought with them knowledge of another long-standing collaborative policymaking effort: addressing Great Lakes water quality. For the last century, stakeholders in the region have been involved in collaboration not just across state boundaries, but also national borders, entering into agreements with the province of Ontario and working collaboratively with municipalities there to restore water quality in the Great Lakes. Workshop participants both acknowledged the water quality improvements that have been made over the last few decades as a result of these durable water policies, but also noted that they have not yet completely solved the problem, pointing to municipal water system shutdowns as a result of toxic Lake Erie algal blooms as a recent high-profile example. Since the region had been unable to use policy to fully ameliorate pollution in such a highly visible shared resource with acute localized effects on human health, many participants were doubtful that existing policy frameworks would allow for effective resolution of the invisible carbon problem in which effects are much more diffuse.

Clean Air Act-type Regulation, or New Legislation?

When asked what a successful climate policy might look like, workshop participants pointed to many of the same characteristics that the project team found present in its analysis of the Clean Air Act. In particular, they felt that a successful climate policy should be flexible, allowing states and localities to meet a federally-set goal or standard by locally-preferred means. A successful climate policy should also be adaptable, allowing it to evolve over time as available technologies or conditions on the ground—be they economic, social, or environmental—change. Much like the project team, workshop participants often noted that the characteristics of flexibility and adaptability, while distinct, may be mutually-reinforcing: policies that are flexible may provide an easier path to adapt to changing conditions, while policies that are adaptable by their nature may need to have mechanisms flexible enough to allow for adaptation.

Though stakeholders acknowledged that the Clean Air Act had led to significant improvements to air quality in the previous decade, there were concerns about using the Clean Air Act as the driver for carbon reduction. One of these concerns was that the Clean Air Act had done little to promote collaboration or even communication among state and local government agencies. Participants pointed to silos, for example, between state air and energy departments, and noted that there is no structure to encourage knowledge-sharing between counterparts at the local level even in the same state, let alone across state lines. This, participants stated, has led to challenges in regulating the Clear Air Act’s existing suite of pollutants and sources. In order to effectively address climate change, respondents insisted that even more collaboration would be required, and questioned whether the Clean Air Act would be poised to allow for such collaboration. Workshop attendees were also concerned that the Clean Air Act itself was not set up to move the needle on climate mitigation. Though some felt it might be adaptable enough to address carbon as a pollutant as was proposed in the Clean Power Plan, there was widespread agreement that the slow speed of the rulemaking process and lengthy legal battles may mean it will be years before such regulations are implemented. While workshop participants largely agreed with the project team that the Clean Air Act’s extensive processes are key to the policy’s durability amidst shifting political priorities, many were concerned that a policy that was intentionally slow-moving was inappropriate for a problem as pressing as climate change.

Workshop participants expressed similar concerns about delays they felt would be inevitable in any federally-led regulatory or legislative solution. The concern about the slow wind-up period for a large regulatory program made a regulatory option outside the auspices of the Clean Air Act a non-starter for participants. Similarly there was near-universal skepticism among workshop participants that the current political climate in DC would allow for adoption of comprehensive legislation that would be ambitious enough to make a significant impact on carbon emissions. Concern about the delay was attributable both to overwhelming agreement of the urgency of addressing climate change, but also a strong feeling that there might be another option that would be less logistically and politically challenging. Few suggested abandoning the more comprehensive approach altogether. Instead, there was strong sense that there are smaller, more pragmatic options that could be taken now while we await what might be years—or decades—for litigation surrounding the Clean Power Plan to work its way through the courts or for the political climate at the national level to shift and allow for comprehensive legislation.

Cities and States—and the Private Sector, too—as Option C

The pessimism of workshop participants on the prospects for a comprehensive climate policy was matched by their optimism that a diverse group of cities, states, and private companies already have the political will to make deep cuts to carbon emissions, but just lack the resources to do so. Stakeholders frequently redirected the conversation to anecdotes of cities with ambitious climate reduction goals, but which do not themselves have the financial or human resources to achieve those goals, or that have found themselves stymied by state or federal policies that hinder their ability to act. For example, while there may be the political will to electrify the fleet of municipal vehicles, municipalities are ineligible for state or federal electric vehicle tax rebates because they do not pay income taxes. Participants also noted the strong interest among the private sector to both reduce its own carbon emissions and also bring technologies and services to the market that would facilitate decarbonization, but that incentives were needed to make the business case for early action. There was a strong sense that there was wide-ranging untapped will to act, but that financial, human resource, and regulatory barriers were hindering that potential.

As a result, participants brought to the workshop a suite of more discrete policy actions, largely centered around providing financial incentives to those municipalities and businesses who were already willing to act rather than using regulation to coerce action across the board. These might take the form of incentives for clean-tech research and development, tying federal transportation funding or farm bill incentives to climate-related outcomes, or incentivizing cities who consider climate impacts within their FEMA hazard mitigation plans. Participants agreed that in order to make meaningful steps at carbon reduction, these actions should be cross-cutting and incentivize innovation and action in various sectors (e.g, power, transportation, land use, etc.), and that it was crucial to ensure that these actions reinforce one another rather than work at cross purposes, echoing the project team’s finding that the linkages across Clean Air Act’s programs contributed to its effectiveness. Workshop participants felt, however, that grouping all of these actions together into a single carbon reduction bill was a political non-starter. Instead, they talked about how each of these actions may be able to build distinct coalitions around the unique co-benefits created by each policy, from economic development and employment in the clean tech and renewable electricity sectors, to air quality and public safety in transportation and land use sectors.

There was also discussion about how federal policy might support local climate action without making direct financial transfers. To date, given the lack of formal networks for sharing carbon reduction solutions, local governments and business who are compelled to act are largely left to their own experimentation. On the one hand, this experimentation may lead to important breakthroughs. On the other, relying on continuous experimentation can be daunting, particularly for smaller firms or cities with limited staff capacity and fewer financial resources to be able to bankroll failed experiments. Workshop participants suggested that, in addition to financially incentivizing experimentation, the federal government should be evaluating the effectiveness of climate-related incentive programs—akin to the evaluation of federal education and health care grants—to build a better understanding of what works and what doesn’t, thereby reducing the financial risk associated with taking climate action.

As previously noted, there was widespread agreement among workshop participants that these smaller actions were not the optimal climate solution. Participants felt, however, that they were the pragmatic solution. While individually each of the proposed actions would have a small effect, there was optimism that when taken collectively, they would lead to some incremental progress while awaiting a more comprehensive regulatory or legislative approach to achieve the deep cuts in carbon emissions that are needed to mitigate against the worst effects of climate change. Comprehensive federal action was largely seen as important to provide the private sector with a sense of stability and predictability, particularly in areas where major infrastructure investments are required, for example, in building infrastructure for the next generation of mobility or making investment decisions about nuclear power plants. Some participants felt that comprehensive federal action may eventually also be needed to compel stakeholders who have eschewed climate action into compliance, and thus favored the Clean Air Act’s approach of allowing states some—but not unlimited—discretion. Other participants, however, were more optimistic that market forces and public would render regulation unnecessary.

Overall, the Great Lakes region workshop participants largely agreed with the project team’s assessment of the importance of durability, adaptability, and flexibility to the success of the Clean Air Act. Its cooperative model of providing states with some, but not too much, discretion has allowed for achieving targets using cost-effective means based on local context while still compelling action in states that would otherwise not act, characteristics that most participants find important for future energy policy. They also acknowledged that the process the Clean Air Act explicitly requires to alter programs has been key to its durability and adaptability over time. However, they felt that that the plodding nature of that process also makes the Clean Air Act inadequate for addressing a problem as pressing as the climate crisis. While most did not rule out using the Clean Air Act as a model for future energy policy, because the prospects for comprehensive action seemed so distant to most workshop participants, there was much more interest in discussing more pragmatic approaches that would empower local and state actors who are already eager to act with the resources to be able to do so.