State Actions

Several states currently have some sort of carbon pricing or have a proposal and/or some sort of push underway. Proposed legislation for some form of price on carbon was accelerating, with a plethora of legislative proposals in 2018-19, but efforts have slacked off a bit in 2020. Overall cap and trade is growing, but carbon tax seems to be a hard sell. Some states, such as Washington are moving away from carbon tax proposals toward cap and trade.

The two large pricing schemes currently in force in the U.S. are both cap-and-trade. They include California’s cap and trade system and the Regional Greenhouse Gas Initiative (RGGI).

Cap and Trade in the Western U.S.

California has had a cap and trade system since 2011, but it was hampered by litigation beginning in 2013. The case brought by the California Chamber of Congress claimed that cap and trade is a form of tax and so requires a 2/3 vote. AB 398 was passed and signed into law in 2017 which extended cap and trade to 2030. It passed with a 2/3 vote making the litigation moot. California’s cap and trade is considered a key element for California to reach its emission reduction goals.

California is in a trading market with Quebec, governed by the Western Climate Initiative (WCI).

Washington state’s Clean Air Rule, September, 2016, instituted what is essentially cap and trade on large stationary emission sources. Elements of the rule were in litigation, but in 2020, the Washington State Supreme Court ruled that the portions of the rule that applied to stationary sources were upheld. Both cap and trade and carbon tax legislation has been proposed in Washington, but nothing has passed. The most recent legislation is a cap and trade proposal SB 5981 (2019).

Cap and Trade legislation was poised for passage in the Oregon Legislature in both 2019 and 2020, but both times Republicans walked out preventing a quorum for the two-thirds vote required. Both bills (SB 1580 in 2020 and HB 2020 in 2019) were modeled after California’s system and would allow the possibility of trading with California through the Western Climate Initiative.

The three Pacific Coast states of California, Oregon and Washington formed the Pacific Coast Collaborative in 2008 to jointly fight climate change. A natural follow on is that the three states trade together in WCI if cap and trade is approved in Oregon and Washington.

Cap and Trade in Northeast and Mid-Atlantic U.S.

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative cap and trade system among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont, and Virginia to cap and reduce CO₂ emissions from the power sector.

RGGI is gradually growing. In January 2018, the Governor of New Jersey signed an Executive Order requiring the state to rejoin RGGI after withdrawing in 2012. Pennsylvania joined in 2019. It was an important event in that Pennsylvania is a major fossil fuel producer and the fourth largest carbon emitter following Texas, California and Florida (2016 data). Virginia joined in 2020 after a five year legislative battle.

A 2019 study by the Acadia Center reviewed the progress of RGGI since its inception in 2009. The study showed that carbon emissions from power plants in the RGGI states fell by 47%, which is 90% greater than the rest of the U.S.. Meanwhile economic growth in the RGGI states was 31% greater than the rest of the country. How much of the emissions reductions was actually due to the cap has been argued. However a 2015 study by Duke Nicholas Institute found that about half of the region’s emissions reductions up to that date could be credited to RGGI.

The Transportation and Climate Initiative (TCI) is a consortium of twelve states and the District of Columbia. At the end of 2018, nine of the states agreed to develop a framework that caps the region’s overall transportation emissions and trades in a system modeled after RGGI.

The New Mexico Interagency Climate Change Task Force released a report in 2019 outlining emission reduction strategies including a cap and trade system. The Task Force will report on progress in September 2020.

Massachusetts also recently proposed amended legislation calling for a market based compliance system, which could be either cap and trade or carbon tax S.1924 (2019).

Carbon Tax Attempts

There have been numerous attempts to get a carbon tax at the state level, but so far none has gained real traction. States which have recently attempted legislation include: Connecticut, HB 6635 (2019), Hawaii, HB 1579 (2019), Maryland HB 1235 (2019), Massachusetts H.2810, (2019), Minnesota SF 4086 and HF 4517 (2018), Montana HB193 (2018), New Hampshire HB 735 (2019), New Mexico SB 393 (2019), New York A3459 (2019), Rhode Island HB5869 2019), Texas HB4599, HB223 (2019), Utah HB 304 (2019), and Vermont H.463 (2019).

Washington state had several bills proposing a carbon tax, including seven in 2018, but have since modified to proposing cap and trade.

At a municipal level, the city of Boulder, CO initiated a Climate Action Plan (CAP) tax in 2007. It is the nation’s first voter-approved tax dedicated to addressing climate change. Unlike Boulder, the state of Colorado is trailing on carbon pricing, choosing to wait and watch actions in neighboring states (Utah).

Additional Information

For a compilation of climate change legislation passed by states see the Digital Environmental Legislative Handbook. For an excellent summary and updates on carbon pricing legislation see state information on the NCEL website.

The New England efforts are loosely coordinated by the National Caucus of Environmental Legislators (NCEL).

Last updated September 14, 2020