Commentary: Leading on Climate Policy: The Experiences of California and Sweden

In the first week of May 2013, the concentration of carbon dioxide in Earth’s atmosphere broke through the 400-parts-per-million level. This milestone pushes the stated goal of the international community to keep worldwide temperatures below a 2°C increase even farther from reach and illustrates the relentless challenge of climate change. A comprehensive international agreement to rein in emissions of greenhouse gases has proved elusive, and the world’s largest emitters have had decidedly mixed progress in terms of crafting effective national climate policies. At the same time, there are notable examples both at the national and subnational levels of pioneering climate policy initiatives.

"In the context of global climate change, Sweden and California share a leading role in the development of policy within their jurisdictions and outreach to their communities. But they do not want to stand alone."

Against this backdrop, a delegation of 12 academics and regulators from Sweden joined nearly 100 counterparts in San Francisco this spring for the workshop “What Is the Value of Being First? Perspectives from the California and Sweden Experiences,” co-hosted by Resources for the Future, the Swedish Mistra Indigo program, and the ClimateWorks Foundation. Within their respective communities, the country of Sweden and the state of California are recognized as leaders in environmental policy. Sweden is recognized especially for its leadership within Europe with respect to water pollution and acidification in the environment. California is recognized within the United States for its leadership with respect to air pollution.

In the context of global climate change, the two share a leading role in the development of policy within their jurisdictions and outreach to their communities. But as leaders they do not want to stand alone, and they seek collaboration. These jurisdictions, in acting as leaders, have strong connections to their counterparts abroad. Three themes emerged in the workshop:

• Multiple approaches and policy instruments played essential roles in the environmental successes of California and Sweden.
• The crucial interaction between air pollution and climate change requires coordinated action.
• Strong research and development undergirds the two leaders’ success in designing and implementing climate policy.

California and Sweden: The Path to Leadership

California possesses a different perspective on climate than other states and nations, in part because of its unique nexus of problems and opportunities for regulation related to transportation. The geographic size of the state and the corresponding automobile market, in combination with its photochemical smog and the associated damage to crops and human health, spurred California’s leadership on air pollution before action was taken in Washington. That leadership position led to a special provision that essentially allows the state to write rules that meet or exceed those written under the Clean Air Act. In turn, other states have the option to adopt California’s rules in lieu of federal rules when they are more stringent.

Another factor that has contributed to the state’s success is the skilled technical staff at the California Environmental Protection Agency’s Air Resources Board. Still another factor is strong legislative leadership, including bipartisan gubernatorial support.

Finally, research and development is essential. California’s environmental policy—just like the state overall—has benefited from the presence in the state of 7 of the top 50 research universities in the world.

Sweden is a first mover on climate policy because it had the opportunity to act, and its policies have been driven by hard science. The country’s neutrality during World War II has proved to be one advantage that allowed it to think about environmental issues before most countries.

Additionally, there have not been large political fights about environmental issues in Sweden. Politicians and the public at large generally have agreed that they want a clean environment.

The same opportunities have not always been the case with respect to climate policy, however. Sweden has moved forward in pursuing a clean energy portfolio despite the challenges of needing energy imports and possessing limited energy resources within the country’s borders.

Sweden is more hesitant to be a first mover today than it was in the past, in part because of its open borders within the European Union. The country worries that if it continues to be first on climate policy and if this raises the cost of production in Sweden, it may not be able to compete with the rest of the European Union. Despite those concerns, Sweden has increased its GDP by 50 percent with no increase in GHG emissions since 1990—so there can be success as a front-runner.

Multiple Approaches and Policy Instruments

Successful environmental improvements have required persistent regulatory efforts, but policymakers have employed flexible regulations infused with incentives when possible, including the use of prices to improve efficiency and reduce costs. Regulation has thus far played a larger role than environmental pricing (such as a cap-and-trade program or emissions taxes) and continues to do so in California. Workshop participants noted a concern about the use of environmental prices, in that they may exacerbate emissions leakage and undermine competitiveness when there is incomplete participation among major economies. Combining regulatory policies with pricing allows prices to be set at a relatively lower level, which may help preserve competitiveness.

The data presented at the event suggest only weak evidence that environmental prices have driven innovation or technology diffusion. Nonetheless, higher fuel taxes in Sweden and elsewhere around the globe are associated with greater fuel efficiency. Evidence also suggests that economies continue to grow after environmental prices are introduced.

Experience with regulation, which has been more common, shows abundant evidence of innovation. Engineers and other innovators respond when they are given incentives to do so. Local governments also respond to incentives in planning infrastructure. The historic experience invites a mix of policies looking forward. But even where regulation plays a dominant role, there is the hope that the greater use of prices over time can introduce more efficiency and reduce costs.

Linking Air Pollution and Climate Policy

At the global level, climate pollution that has a short residence time in the atmosphere, including black carbon from the combustion of coal and biomass, is recognized as the second most important source of climate pollution behind carbon dioxide emissions. Short-lived pollution is especially damaging in the Arctic region, where it contributes to the melting of snowpack and local warming. Such pollutants have been a traditional focus of conventional air pollution policy; black carbon, for example, also leads to substantial negative health outcomes, especially in the developing world.

In California, reducing conventional air pollution to achieve associated health outcomes may be harder than meeting greenhouse gas emissions targets, and doing so will require coordinated regulations. Workshop participants also noted that, going forward, nitrogen oxides may become the binding constraint for both air pollution and climate change, with growing relevance also in water pollution.

The Role of Research and Development

Success in both Sweden and California has been built on research and development. This element of success includes natural science, technology, and social science research. In both jurisdictions, the orientation toward research and development to investigate problems and find solutions as well as the reliance on science as a basis for regulation have contributed to the success of industry and a culture of innovation.