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A new federalism can meet the climate challenge

Illustration of Washington, D.C. landmarks

Illustration of Washington, D.C. landmarks

Cristina Romero Palma

In recent years, U.S. state and local governments continued stepping up to demonstrate strong leadership in addressing the climate challenge, even when facing headwinds from the federal level. They continue to make progress, all while leading responses to the COVID-19 pandemic and combatting extreme weather events. Still, the possibility of eventual federal reengagement on climate solutions puts in question the future roles of state and local governments in carrying out such policies.

To take a closer look at which strengths these levels of government can leverage, WRI convened a group of thought leaders among current and former U.S. federal, state and local government officials for a recurring dialogue. Selected participants have experience at various governmental levels in conducting energy, environmental or transportation policy. Together, they laid out a vision for what climate action could look like at all levels of government, as described in the new working paper "New Climate Federalism: Defining Federal, State, and Local Roles in a U.S. Policy Framework to Achieve Decarbonization."

State and local governments play a key role as laboratories of democracy.

The task of decarbonizing the U.S. economy is too big for any one level of government to tackle alone, so each level of government — federal, state and local — must fully bring their strengths to the table. The "new climate federalism" model proposes a framework for federal, state and local governments to work together to address climate change.

What role can local, state and federal government play in U.S. climate action?

Action at every level of government is crucial to effectively address climate change. However, each level has distinct roles and capabilities that, when combined, can lead to the best outcomes. Here’s how dialogue participants envision these roles at play:

Areas for a strong federal role

Dialogue participants generally agreed that federal leadership is essential to addressing the climate crisis, and that a strong federal role is appropriate in a range of circumstances. This is generally the case when:

  • the policy or action requires large investments, significant expertise or resources that are generally not available to most state and local governments.
  • the need for national uniformity in the policy or action outweighs the benefits of allowing variations and experimentation at the state and local levels.
  • there is potential for a "race to the bottom" if left in whole or in part to state and local governments.
Areas for a strong state and local role

Participants noted that there are areas where strong state and local roles are essential, as they are better able to take local and regional conditions into account when designing and implementing policies. The size of the United States — as well as the variations in local economies, climate, topography, demographics, land use and expected climate impacts — can make the ability to address local concerns without federal interference vitally important. In general, a strong state or local role is appropriate when:

  • the policy area requires close knowledge of local topography, settlement patterns, climate or other local facts that differ from the nation overall.
  • effective administration of the policy requires extensive engagement with local communities.
  • state and local governments have the resources or expertise to carry out the actions or policies with limited federal engagement.
  • discretion is provided to state and local governments without leading to a "race to the bottom" or creating challenges for regulated parties due to differences in regulation from place to place.
Areas for cooperation

Most policy areas call for shared responsibility among federal, state and local governments. A cooperative approach can allow policymakers to capture the opportunities offered by federal action while allowing state and local governments to bring their comparative advantages to the effort.

The task of decarbonizing the U.S. economy is too big for any one level of government to tackle alone.

Historically, this is how most energy, environmental and transportation policies are implemented. For instance, the adoption of electric vehicles (EVs) has been supported by federal tax credits as well as various state and local incentives and tax or fee exemptions. Moving forward, any future federal program to support the deployment of zero-emission vehicles (ZEVs) will depend on state and local support to roll out charging infrastructure. As a result, this framework encompasses many major federal policies areas under debate, including clean energy standards, carbon pricing programs and zero-emission vehicle standards.

This collaborative, multi-level government framework, commonly referred to as "federalism," is not a new concept: it is in the DNA of U.S. democracy. Nearly every domestic challenge faced by the United States involved at least some discussion around defining the best roles for each level of government. Decision-makers chose a strong federal role for some issues, while subnational governments took the lead for others. Some issues called for a broadly shared approach that combined the strengths of each government level. The repeated success of this framework speaks to its value. As the nation turns to address what is arguably one of its greatest environmental challenges yet, success depends on embracing this model once again.

Principles for a new climate federalism

The success of a new climate federalism depends on appropriate action at the local, state and federal government, regardless of which branch leads. The following principles should guide U.S. action on climate change:

  • Ambitious federal action is necessary to address the climate challenge. Moreover, given the urgency and scale of the challenge of climate change, all levels of government — federal, state and local — must be part of the solution.
  • Policies at every level should promote equitable and healthier outcomes for all Americans, especially disproportionately harmed communities of color and low-income communities.
  • Preemption should be rare. Actions by the federal government should enable and not impede more ambitious actions by state and local government that aim to drive additional greenhouse gas emissions reductions with strategies that reflect knowledge of state-specific circumstances. Likewise, state governments should enable and not impede more ambitious action by local governments.
  • The best way to achieve consistency in regulations across the country is to establish federal standards that are sufficiently ambitious to address the climate challenge, while preserving the ability of state and local governments to take more ambitious action and adopt compliance strategies that reflect local and regional conditions.
  • State and local governments play a key role as "laboratories of democracy" that can help pioneer new solutions and spur market development in a manner that can help enable more ambitious federal policies over time. The federal government should learn from and engage state and local governments and replicate successful policies at the national level where appropriate.
  • A strong federal role is clearly necessary and appropriate in certain areas. For example, the federal government should establish national emission reduction targets consistent with science; engage the international community to ensure sufficient international action to meet the climate change challenge; support continued research, development and demonstration of technologies that will underpin decarbonization and position U.S. industry for leadership in the global low-carbon economy; provide funding and technical support for subnational efforts; maintain an emissions registry and require adequate and comparable emissions measurement, monitoring, reporting and verification across the economy; and take steps to decarbonize the federal government’s own operations.
  • A strong subnational role is clearly necessary and appropriate in other areas of action. For example, subnational governments are typically in the best position to: implement local land-use planning and zoning decisions; implement local transportation solutions (with the support of federal funding); carry out infrastructure resilience planning and implementation; and allocate funding to address climate change in an equitable manner.
  • In a great majority of circumstances, a collaborative approach to energy and climate action across all levels of government will work best. Examples of programs that warrant a collaborative approach include clean energy standards, carbon pricing programs and zero-emission vehicle standards.
  • The federal government has considerable financial and technical resources and thus should look for opportunities to act as a catalyst to drive additional state and local action in a manner that promotes equitable outcomes for all Americans.

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