Articles

https://doi.org/10.1038/s41558-017-0001-0

Effectiveness of state climate and energy policies

in reducing power-sector CO2 emissions
Geoff Martin1,2 and Eri Saikawa *
1

States have historically been the primary drivers of climate change policy in the US, particularly with regard to emissions
from power plants. States have implemented policies designed either to directly curb greenhouse gas (GHG) emissions from
power plants, or to encourage energy efficiency and renewable energy growth. With the federal government withdrawing from
the global climate agreement, understanding which state-level policies have successfully mitigated power-plant emissions is
urgent. Past research has assessed policy effectiveness using data for periods before the adoption of many policies. We assess
17 policies using the latest data on state-level power-sector CO2 emissions. We find that policies with mandatory compliance
are reducing power-plant emissions, while voluntary policies are not. Electric decoupling, mandatory GHG registry/reporting
and public benefit funds are associated with the largest reduction in emissions. Mandatory GHG registry/reporting and public
benefit funds are also associated with a large reduction in emissions intensity.

T
he United States (US) plays an important role in the global
effort to address climate change. The US has historically been
the world’s largest emitter of CO2, and is currently the second
largest emitter1. Within the US, the electric power sector is responsi-
ble for the largest share of the country’s GHG emissions, contribut-
ing to 29% of total emissions in 20152, with a wide variation among
the states (Fig. 1). Yet to date, the US federal government has not
implemented any policies specifically addressing GHG emissions
from the power sector.
States have historically been the primary drivers of climate
change policy in the US3, 4. As states aim to fill the federal void on
climate leadership, they have the opportunity to learn from past
experience and create plans to address power-sector emissions
based on empirical evidence. Understanding which state-level
policies are effective at reducing power-sector emissions therefore
becomes especially important.
State policymakers have implemented climate-related policies
that fall into two broad categories—climate policies and energy
policies with climate implications3, 5. Climate policies are those that
explicitly target GHG emissions from power plants. Energy policies
with climate implications (henceforth referred to as energy policies)
do not explicitly target GHG emissions or climate change in their
design, but rather are intended to change the energy landscape in
ways that have implications for GHG emissions and climate change.
While climate change may motivate the adoption of energy policies,
reducing GHG emissions is not explicit in the policy design. Energy
policies can thus be framed in terms of economic opportunities or
energy security, rather than as climate solutions, potentially making
it easier to garner bipartisan support3, 6.
There are two final distinctions with regard to policy types.
First, states can design policies to be either mandatory or volun-
tary. Mandatory policies establish legally binding targets, and non-
compliance can result in penalties, whereas voluntary policies do
not have a legal mechanism for enforcement. Most policies, with the
exception of climate action plans (CAPs), can be neatly assigned to
either the voluntary or mandatory category. There is a wide varia-
tion, however, among and even within CAPs, as plans can often
contain both voluntary and mandatory components7. Finally, aside
from state-level policies that are confined to state borders, there are
also regional initiatives through which states collaborate to reduce
emissions. Of these subnational efforts, two in particular address
power-sector emissions—the Regional Greenhouse Gas Initiative
(RGGI) and the Western Climate Initiative (WCI)—and are anal-
ysed in this study.
Much of the literature assessing the effectiveness of state-level
climate and energy policies has examined the impact of different
policy measures on investment in renewables or increasing renew-
able capacity. The focus has largely been on binding renewable
portfolio standards (RPS), which typically require electric utilities
to provide a certain amount of electricity from renewable sources,
and results have been mixed. Some found it to increase in-state
renewable energy development8 and in-state renewable investment
and deployment, although not increasing the percentage of renew-
able energy generation9. Others found that RPS had a significant
negative effect on investments in renewable capacity because the
adoption was mostly symbolic10, 11. Some studies have gone beyond
RPS and found that RPS, combined with other policies, was asso-
ciated with increased wind generation12 and non-hydro renewable
energy penetration13.
Ultimately what matters from a climate lens is not whether poli-
cies increase renewable energy, but rather whether they are success-
ful in curbing GHG emissions. Increased investment in renewables,
greater renewable capacity or even higher renewable generation
levels cannot serve as a suitable proxy for the decarbonization of
the power sector, as simply increasing renewable capacity without
decreasing fossil fuel electricity generation is not a solution to cli-
mate change. However, little empirical research has been conducted
demonstrating the strengths or weaknesses of various power-sector
climate-related policies with regard to their effectiveness at reduc-
ing CO2 and other GHG emissions.
The limited number of studies that have assessed the effect of
state-level policies on CO2 emissions are either outdated or are too
narrow in focus. Drummond (2010)14 divided state climate actions
into two broad categories—CAPs and the presence of policy entre-
preneurs—and found that the presence of these factors, alone or
in combination, led to moderate reduction of GHG emissions.

Department of Environmental Sciences, Emory University, Atlanta, GA 30322, USA. 2Planning and Development, Town of Hartford, Hartford 05001 VT,
1

USA. *e-mail: eri.saikawa@emory.edu

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NaTUrE CliMaTE CHanGE Articles
250

200
MMTCO2 per year

150

100

50

0
VT
ID
ME
RI
AK
SD
NH
DE
HI
CT
OR
MA
WA
NV
NJ
MT
MD
MS
NE
NM
MN
VA
ND
KS
NY
SC
IA
UT
AR
TN
CO
LA
WI
OK
WY
CA
AZ
NC
GA
MI
AL
MO
WV
KY
IL
OH
PA
IN
FL
TX
State

Fig. 1 | Carbon dioxide emissions (in million metric tonnes (MMT) per year) from the power sector in each state in 2014, ranked from lowest to highest.
Data from ref. 26.

Drummond’s (2010) study14, while illustrative, neglects a wide
range of other climate and energy policies that states have used to
control their GHG emissions. Furthermore, Drummond’s (2010)14
time series data ends in 2007 and many states have implemented
new policies or updated old ones over the past decade. Grant et al.
(2014)5 analysed 2010 plant-level carbon emissions data to deter-
mine the effectiveness of a broader range of state climate policy
on carbon emissions. However, 118 climate-related policies were
passed by 41 different states from 2010 through 201415.
Prasad and Munch (2012)16 conducted the first multivariate
analysis of the effect of renewable energy policy on carbon emis-
sions from the electrical power sector. Their study provides a start-
ing point for discussions on policy effectiveness, but analysed only
data from 1997 to 2008, representing a period prior to adoption of
broader policies. Furthermore, they examined only the 39 states
with significant wind energy potential because these were the only
states they expected would have the potential to lower carbon emis-
sions. While this assumption may have held more weight in the early
2000s, solar and other renewable technologies have become increas-
ingly cost-competitive with wind, and assessing only states with sig-
nificant wind potential limits the generalizability of the results.
Our study, using the most recent state-level CO2 emissions data,
broadens state-level CO2 emissions analysis to include a wider range
of climate-related policies. We examine the effect of 17 state-level
policies (8 climate and 9 energy policies) on CO2 emissions in the
electricity sector, using data from 1990 to 2014. Table 1 provides
a description of the policies, and the number of states that have
adopted them as of 201415. This study assesses policy outcomes
across all 50 states from 1990 to 2014, all years for which power-
sector emissions data are available. Our study seeks to answer the
following questions. First, what is the effect of state-level climate-
related policies on power-sector emissions? Second, which poli-
cies can be labelled effective climate policies? By focusing on what
policies lead to a significant reduction in CO2 emissions, we hope to
provide vital, generalizable information for policymakers to intro-
duce smart strategies in addressing climate change.
Results and discussion
Figure 2 shows the results of regressions when each individual pol-
icy is tested separately. Detailed regression results, including results
for the control variables, are shown in Supplementary Appendix 1.
With the exception of voluntary GHG registry/reporting, all
coefficients of the statistically significant policies had a negative
sign, indicating that these policies are associated with decreasing
emissions from the electricity sector. The increase in emissions
associated with the voluntary GHG registry/reporting coefficient
may be due to selection bias, as states that are either aware that
their emissions are increasing or are less committed to controlling
their GHG emissions may choose to participate only in the volun-
tary reporting programme. The policies that significantly reduce
emissions vary from approximately 1.12 million tonnes of CO2
(MMTCO2) per year (MGPO) to approximately 10.3 MMTCO2 per
year (AB 32). In other words, the policies associated with a signifi-
cant reduction in emissions reduced emissions by about 2.7–25% of
average state-level annual emissions from the power sector.
California’s cap-and-trade programme (AB 32) has the largest
impact of any policy tested here by an order of magnitude. These
results should be taken with caution, however. This is not only
because California is the only state to have implemented AB 32, but
five other policies (CAP, mandatory GHG registry/reporting, bind-
ing RPS, emissions performance standards and the WCI) were imple-
mented in California either during or after 2006. Furthermore, CAP
and mandatory GHG registry/reporting were also authorized as part
of AB 32. Thus, a more suitable interpretation of this result is that the
suite of policies that California adopted around 2006, either under
AB 32 or otherwise, greatly reduced that state’s emissions. A sensitiv-
ity analysis using 2012, the year that the cap-and-trade programme
authorized under AB 32 was adopted, as the start year yields a nega-
tive effect on emissions that is large but insignificant at the 0.05 level.
The results also provide insight into the efficacy of voluntary and
mandatory policies. All but one (MGPO) of the mandatory policies
assessed are associated with a significant emissions reduction, while
none of the voluntary policies is (Fig. 2). Our result indicates that vol-
untary programmes do not provide enough incentive for utilities or
energy providers to reduce their emissions. Lyon (2007)17 also found
voluntary programmes to be ineffective. Voluntary programmes might
have beneficial spillover effects, or may be the only politically feasible
strategy for some states18, but given the urgent need for substantial cuts
to GHG emissions, the case for voluntary policies appears weak.
The policy associated with the largest reduction in CO2 emissions
that has been implemented in six states is emissions performance
standards, reducing emissions by approximately 3.9 MMTCO2 per
year. The finding agrees with the study by Grant et al. (2014)5, who
found that emissions standards significantly decreased emissions at
the power-plant level. Yet in terms of political feasibility, emissions
standards might not be the most viable option as policymakers look

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Articles
Table 1 | Description of the 17 policies used in this study and the number of states adopted in 2014.
Climate policy
Mandatory
GHG targets
Mandatory GHG registry/reporting
Regional Greenhouse Gas Initiative (RGGI)
Emissions performance standards
California Global Warming Solutions Act (AB 32)
Voluntary
Climate Action Plan (CAP)
Voluntary GHG registry/reporting
Western Climate Initiative (WCI)
Energy policy
Mandatory
Binding renewable portfolio standards (RPS)
Public benefit fund (PBF)
Mandatory energy-efficiency targets
Electric decoupling
Deregulation
Mandatory green power option (MGPO)
Voluntary
Voluntary RPS
Quasi-PBF
Voluntary energy-efficiency targets
Climate and energy policies are shown separately. Data from refs 15,25. aNew Jersey was part of RGGI when it formed in 2009 but withdrew in 2011 and has not rejoined to date.
to adopt effective policies in their states or at the national level.
Substantial literature indicates that market-based mechanisms, such
as a tax or cap-and-trade programme, can achieve the same result as
regulation at lower costs19–22.
The implementation of a CAP, the most common policy with
adoption by 34 states, is not associated with a significant reduction
in emissions from the power sector. This is in line with previous
research testing the effect of CAP on CO2 emissions from the power
sector5, and in contrast to research examining the effect of CAP on
non-industrial emissions14. These results make sense, as CAP typi-
cally cover all sectors, not just the power sector. CAP policies also
do not necessarily address mitigation, and may include a focus on
adaptation. This might explain the statistically insignificant result,
as using CO2 emissions from the power sector as the dependent
variable might not capture its purpose, thus underestimating the
impact of those for which mitigation is the intent.
The analysis indicates that WCI is not associated with a sig-
nificant reduction in emissions in participating states. This result
can be due to a number of factors. First, the start year for this
policy—2007—is the year in which five WCI member states signed
an agreement establishing the programme. This initial agreement,
however, only established an economy-wide GHG emissions target
of 15% below 2005 levels by 202023, but did not create the market-
based mechanism to achieve that goal. Second, California is the
only US state within the WCI that has actually implemented a
market-based mechanism for achieving the reduction targets estab-
lished under the WCI. For the other six states within the WCI, the
914
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NaTUrE CliMaTE CHanGE
Description Number of states
Goals for emission reduction levels by a certain time period 20
Requirements for all power plants to register and record their emissions 18
First US cap-and-trade programme to reduce GHG emissions from the power 9a
sector, comprised of nine northeastern states
Performance standards designed to reduce CO2 emissions 6
The act requires the state to return to 1990 GHG emission levels by 2020 1
Detail steps that a state plans to take to address climate change 34
Voluntary or market-based registries 24
Collaboration of states working to identify, evaluate and implement emission- 7
trading programmes
Requires electric utilities to generate a specified amount of electricity from 31
renewable sources
Provide money for renewable energy, energy efficiency and R&D 22
Encourage more efficient generation, transmission, and use of electricity 25
Compensates utilities for selling less electricity 16
Consumer choice of electricity generation suppliers 14
Requires utilities to offer customers electricity generated from renewable 12
sources
Same as RPS but the adherence to RPS is not enforceable 7
Allows utilities to collect fees from customers for renewable energy or energy 5
efficiency
Same as mandatory energy-efficiency target, but adherence is not enforceable 9
signing of the agreement in 2007 did not send a strong enough mar-
ket signal to see a noticeable decrease in emissions.
While the WCI is a weak alliance of states, RGGI is associated
with a significant reduction in CO2 emissions. It is important to
note, however, that emissions in the states participating in RGGI
were already declining before RGGI’s implementation24. It is pos-
sible that regulators in the Northeast and Mid-Atlantic states imple-
mented RGGI because emissions were already declining.
Turning to the control variables (Supplementary Appendix 1),
emissions significantly increase as population increases, and the
price of electricity has a strong effect on emissions, with almost
700,000 MTCO2 emissions decrease for every US$0.01 kWh−1
increase, holding everything else constant. To our surprise, the
ratio of electricity sold across borders to total within-state genera-
tion (exports) is not a significant determinant of emissions. One
explanation for this might be that states that are exporting electric-
ity produce more renewable electricity than importing states, or
that importing states are demanding clean energy from exporting
states, perhaps to meet renewable energy requirements. Good data
and further studies are essential to better understand the dynamics
related to interstate energy flows.
In addition to individual policies, we also tested common policy
combinations. Most states have adopted more than one of the poli-
cies assessed in this study, and multiple policies are often adopted
contemporaneously (Supplementary Appendix 2). Models that
include only one policy at a time may mistakenly attribute a change
in emissions to the policy included in the model, when a policy
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NaTUrE CliMaTE CHanGE Articles
a

GHG targets

Mandatory GHG registry/reporting

RGGI

Emissions performance standards

AB 32

CAP

Voluntary GHG registry/reporting

WCI

–15 –10 –5 0 5
Coefficient estimate (MMTCO2 per year)

Binding RPS

PBF

Mandatory energy-efficiency
targets

Electric decoupling

Deregulation

MGPO

Voluntary RPS

Quasi-PBF

Voluntary energy-efficiency targets

–15 –10 –5 0 5
Coefficient estimate (MMTCO2 per year)

Fig. 2 | Coefficient estimate in million tonnes of CO2 emissions (MMTCO2) per year for each of the state-level policies tested individually. a,b, Effects
of state-level climate (a) and energy (b) policies on CO2 emissions with 95% confidence interval are shown separately. Filled circles are for mandatory
policies and open circles are for voluntary policies.

absent from the model could have been responsible for the change
in emissions. We assessed up to five-policy combinations that were
adopted by more than ten states in 2014. In Table 2, we show the
results of the four- and five-policy combinations on CO2 emissions.
The results of the two- and three-policy combinations are provided
in Supplementary Appendices 3 and 4, respectively.
In agreement with the individual policy models, mandatory GHG
registry/reporting, electric decoupling and public benefit fund (PBF)
are always associated with large, significant decreases in emissions in
the two- and three-policy models. However, we also found that GHG
targets (mandatory energy-efficiency targets) were not associated
with significant emissions decreases when the model also included
electric decoupling or mandatory GHG registry/reporting (electric
decoupling). As mandatory GHG registry/reporting is almost always
implemented after GHG targets, it is most likely that the association
we found in the individual policy model for GHG targets was due
to mandatory GHG registry/reporting instead. Similarly, binding
RPS no longer had a significant effect on emissions when combined
with other policies, except voluntary GHG registry/reporting. This
aligns with the past studies5,16, which found no impact of RPS on
power-sector emissions. In the four- and five-policy models, electric
decoupling, mandatory GHG registry/reporting and PBF were still
associated with large, significant decreases in emissions.
As an additional sensitivity test, we assessed the impact of
four- and five-policy combinations on the electricity sector’s over-
all CO2 emissions per megawatt hour (MWh), or emissions inten-
sity (Table 3). We chose to do this because many of the policies
evaluated, by either encouraging renewable energy development or

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Table 2 | Effect of the combination of four or five state-level policies on power sector CO2 emissions (tonnes). Each column shows
different model results and one standard error is shown in parentheses below coefficients.
Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a Model 7a

Exports −​3,468,000 −​3,416,000 −​2,991,000 −​3,932,000 −​3,938,000 −​2,486,000 −​2,338,000

(2,906,000) (2,901,000) (2,928,000) (2,909,000) (2,931,000) (2,922,000) (2,927,000)

Population 2.752*** 2.724*** 2.777*** 2.829*** 2.841*** 2.761*** 2.750***

(0.216) (0.215) (0.218) (0.217) (0.218) (0.218) (0.218)

Price −​474,100*** −​443,200*** −​487,000*** −​585,700*** −​630,500*** −​549,200*** −​594,000***
(114,700) (115,600) (114,100) (113,800) (112,500) (114,300) (112,700)
CAP 506,000 492,300 368,400 1,141,000* 1,016,000 767,400 554,500
(533,500) (519,100) (515,800) (545,700) (544,900) (540,400) (538,100)

GHG targets −​888,700 −​763,600 −​846,500 −​1,462,000* −​1,605,000**

(635,000) (632,700) (650,800) (624,300) (621,000)
Mandatory GHG registry/ −2
​ ,603,000*** −​2,629,000***
reporting (677,800) (680,100)
PBF −​148,200* −​1,556,000** −​1,528,000*
(609,300) (581,200) (617,300)
Binding RPS −​440,500 −​183,000 −​378,900 −​687,200 −​365,400 −​594,100
(539,400) (551,700) (545,900) (536,600) (568,000) (549,000)
Deregulation −​1,096,000*
(531,300)
Mandatory energy- efficiency −​978,900
targets (621,100)
R2 0.99 0.99 0.99 0.99 0.99 0.99 0.99
Model 8a Model 9a Model 10a Model 11a Model 12a Model 13a Model 14a
Exports −​1,729,000 −​3,937,000 −​3,244,000 −​2,408,000 −​1,582,000 −​3,779,000 −​3,797,000
(2,935,000) (2,923,000) (2,942,000) (2,930,000) (2,933,000) (2,930,000) (2,926,000)
Population 2.855*** 2.820*** 2.897*** 2.708*** 2.815*** 2.808*** 2.831***
(0.219) (0.217) (0.219) (0.217) (0.219) (0.217) (0.217)

Price −​568,800*** −​602,700*** −​628,300*** −​596,500*** −​551,100*** −​577,800*** −​582,600***

(113,000) (112,500) (110,900) (113,400) (113,500) (114,200) (114,000)
CAP 706,400 1,056,000 941,600 385,900 589,300 −​1,156,000*
(537,300) (538,700) (534,900) (528,100) (524,500) (546,900)
GHG targets −​1,524,000* −​454,500 −​692,500
(620,900) (643,900) (652,700)
Mandatory GHG registry/ −​2,810,000*** −​2,703,000*** −​2,319,000*** −​2,587,000***
reporting (645,700) (649,600) (668,000) (678,900)

PBF −​1,532,000* −​1,396,000* −​1,751,000** −​1,329,000* −​1,468,000*

(611,000) (665,500) (612,600) (611,400) (614,000)
Binding RPS −​267,000 −​399,000 −​408,900 −​685,300 −​76,610 −​180,100 −​252,400
(570,200) (548,500) (546,900) (548,600) (583,800) (565,400) (565,600)
Deregulation −​664,700
(575,700)
Mandatory energy- efficiency −​1,728,000** −​1,508,000* −​1,872,000**
targets
(599,100) (599,800) (597,700)

R2 0.99 0.99 0.99 0.99 0.99 0.99 0.99

*
P < 0.05, **P <​ 0.01, ***P <​ 0.001.

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Table 3 | Effect of the combination of four or five state-level policies on power sector CO2 emissions intensity (million tonnes/MWh).
Each column shows different model results and one standard error is shown in parentheses below coefficients.
Model 1b Model 2b Model 3b Model 4b Model 5b Model 6b Model 7b

Exports −​0.191*** −​0.188*** −​0.167*** −​0.199*** −​0.204*** −​0.190*** −​0.189***

(0.0299) (0.0298) (0.0297) (0.0297) (0.0299) (0.0297) (0.0298)
Population 2.30 ×​ 10−10 4.24 ×​ 10−10 2.44 ×​ 10−9 7.95 ×​ 10−10 8.63 ×​ 10−10 1.03 ×​ 10−10 2.00 ×​ 10−11
(2.22 ×​ 10 )−9
(2.21 ×​ 10 )
−9
(2.21 ×​ 10 )
−9
(2.21 ×​ 10 )
−9
(2.22 ×​ 10 )−9
(2.21 ×​ 10 )
−9
(2.22 ×​ 10−9)
Price −​0.00211 −​0.00131 −​0.00176 −​0.00155 −​0.00228* −​0.00133 −​0.00194
(0.00118) (0.00119) (0.00116) (0.00116) (0.00115) (0.00116) (0.00115)
CAP −​0.00992 −​0.00562 −​0.00565 −​0.00413 −​0.00640 −​0.00802 −​0.0107
(0.00549) (0.00534) (0.00523) (0.00556) (0.00556) (0.00550) (0.00549)
Electric decoupling 0.00318 0.00677 0.0178*
(0.00694) (0.00673) (0.00694)
GHG targets 0.00855 0.0204** 0.0164* 0.0116 −​0.00959
(0.00654) (0.00645) (0.00664) (0.00635) (0.00633)

Mandatory GHG registry/reporting −​0.0229*** −​0.0239***

(0.00691) (0.00694)
PBF −​0.0194** −​0.0174** −​0.0203**

(0.00626) (0.00593) (0.00628)

Binding RPS −​0.000800 0.00739 0.0121* 0.000778 0.00560 0.00186
(0.00555) (0.00567) (0.00554) (0.00549) (0.00578) (0.00560)

Deregulation −​0.0111*
(0.00542)
Mandatory energy-efficiency targets −​0.0387***
(0.00630)
R 2
0.96 0.97 0.97 0.97 0.97 0.97 0.96
Model 8b Model 9b Model 10b Model 11b Model 12b Model 13b Model 14b
Exports −​0.174*** −​0.199*** −​0.182*** −​0.189*** −​0.172*** −​0.202*** −​0.202***
(0.0296) (0.0299) (0.0298) (0.0298) (0.0295) (0.0298) (0.0298)
Population 1.94 ×​ 10−9 1.06 ×​ 10−9 2.65 ×​ 10−9 3.50 ×​ 10−10 2.21 ×​ 10−9 8.33 ×​ 10−10 7.40 ×​ 10−10
(2.21 ×​ 10 )
−9
(2.22 ×​ 10 )
−9
(2.22 ×​ 10 ) (2.21 ×​ 10 )
−9 −9
(2.20 ×​ 10 )−9
(2.21 ×​ 10 )
−9
(2.21 ×​ 10−9)
Price −​0.00139 −​0.00110 −​0.00111 −​0.00107 −​0.000308 −​0.00165 −​0.00163
(0.00114) (0.00115) (0.00112) (0.00115) (0.00114) (0.00116) (0.00116)
CAP −​0.00820 −​0.00184 −​0.00263 −​0.00611 −​0.00307 −​0.00452
(0.00542) (0.00551) (0.00542) (0.00537) (0.00528) (0.00557)
GHG targets 0.0115 0.0176** 0.0185**
(0.00627) (0.00655) (0.00665)
Mandatory GHG registry/reporting −​0.0173** −​0.0141* −​0.0243*** −​0.0233***
(0.00660) (0.00658) (0.00680) (0.00692)
PBF −​0.0180** −​0.0166* −​0.0201** −​0.0203** −​0.0197**
(0.00625) (0.00677) (0.00617) (0.00622) (0.00626)
Binding RPS 0.0107 0.0105 0.0151** 0.00886 0.0206 0.00633 0.00662
(0.00575) (0.00561) (0.00554) (0.00558) (0.00588) (0.00575) (0.00576)
Deregulation −​0.005421
(0.005855)
Mandatory energy-efficiency targets −​0.0347*** −​0.0324*** −​0.0346***
(0.00605) (0.00608) (0.00602)
R2 0.97 0.97 0.97 0.97 0.97 0.97 0.97
*
P < 0.05, **P <​ 0.01, ***P <​ 0.001.

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Articles
targeting power-plant efficiency, are designed implicitly or explicitly to
reduce a state’s overall emissions intensity. Furthermore, the proposed
federal Clean Power Plan allowed states to use intensities as their per-
formance standards. The results suggest that mandatory GHG registry/
reporting, PBF and mandatory energy-efficiency targets are effective at
reducing the emissions intensity but not electric decoupling. In some
cases, electric decoupling and GHG targets were even associated with
a small increase in emissions intensity. One explanation for this result
could be that electric decoupling incentivizes utilities to sell less elec-
tricity, but not necessarily increase renewable generation. Similarly,
states may choose to meet GHG targets by reducing energy consump-
tion, rather than increasing renewables. Mandatory GHG registry/
reporting and PBF therefore appear best for reducing both emissions
and emissions intensity effectively. We also find that the exports vari-
able is significant and negative across all emissions intensity models.
This finding supports our earlier hypothesis that states exporting elec-
tricity are producing more renewable electricity, potentially helping
importing states meet RPS requirements.
Conclusion
Much of the previous research on state-level climate and energy
policy has focused either on one policy in particular, such as bind-
ing RPS or CAP, or has analysed policy effectiveness on the basis
of a measure other than its ability to reduce carbon emissions. Our
study provides a thorough analysis of some of the most prominent
climate and energy policies used by states and their ability to reduce
emissions from the power sector. The results of this study indicate
that many of these policies are effective. All of the effective policies
are mandatory or have binding targets, while none of the voluntary
policies is associated with emissions reduction. In particular, electric
decoupling and mandatory GHG registry/reporting are associated
with the largest reduction in emissions. Furthermore, our results
indicate that mandatory GHG registry/reporting and PBF are effec-
tive in reducing both emissions and emissions intensity from the
power sector.
There are several limitations to this study. One major limita-
tion is that it does not assess the differences within policies. For
instance, there are many different forms of RPS, with varying
degrees of stringency, enforcement mechanisms or compliance
periods. While we capture voluntary versus mandatory, we do not
capture other differences that might matter in terms of their effect
on emissions.
Another limitation to this analysis is the chosen start year for
the policy variables. We have chosen the year that the policy was
signed into law, which may or may not be the same as the start
of the compliance period. We used this start year because it can
be tracked clearly and consistently across all policies and because
the law arguably sends a signal to the market and other actors to
begin to take the steps necessary to comply. It is possible, however,
that a policy’s effect on emissions is not recognized until years after
it becomes law. It is likely, therefore, that the policy variables are
underestimated by the models, and future studies might assess
policies on the basis of the start of compliance periods or after a
specified lag period.
Furthermore, our models might underestimate the effect of poli-
cies because of the inclusion of the electricity price variable. Aside
from the direct effect that policies have on emissions, they may also
indirectly affect emissions by increasing the price of electricity. For
example, if GHG emissions standards force utilities to employ more
expensive technologies, this would drive up the price of electricity,
indirectly incentivizing consumers to conserve electricity and thus
further reducing emissions. A portion of this indirect effect would
be absorbed by the electricity price variable rather than being attrib-
uted to the policy.
The effects of policies may be overestimated due to the pos-
sibility of reverse causation. While we control for state and year
918 Nature Climate Change | VOL 7 | DECEMBER 2017 | 912–919 | www.nature.com/natureclimatechange
© 2017 Macmillan Publishers Limited, part of Springer Nature. All rights reserved.
NaTUrE CliMaTE CHanGE
fixed effects, it is still possible that policymakers decided to
enact a policy because their state’s emissions were declining, or
as a result of the declining cost of renewables. Furthermore, this
study includes power-sector emissions through 2014. It is imper-
ative that studies continue to monitor policy effectiveness as new
data become available. This is particularly important, given that
many targets within policies become increasingly stringent as
time progresses.
Despite these limitations, our study provides evidence that
many policy innovations implemented at the state level are suc-
cessfully reducing carbon emissions from the power sector. This
is a heartening finding for those states that have implemented
these successful policies. For those that have not yet implemented
them, this study provides guidance as to which strategies to pur-
sue. Finally, if and when the federal government takes leadership in
climate mitigation efforts, it can learn from the successes of state-
level actions analysed here.
Methods
Methods, including statements of data availability and any asso-
ciated accession codes and references, are available at https://doi.
org/10.1038/s41558-017-0001-0.
Received: 23 April 2017; Accepted: 21 September 2017;
Published online: 6 November 2017
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Additional information
Supplementary information is available for this paper at https://doi.org/10.1038/
s41558-017-0001-0.
Reprints and permissions information is available at www.nature.com/reprints.
Correspondence and requests for materials should be addressed to E.S.
Publisher’s note: Springer Nature remains neutral with regard to jurisdictional claims in
published maps and institutional affiliations.

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Articles
Methods
In this study, we examine the effect of 17 state-level climate and energy policies
on CO2 emissions in the electricity sector using data from 1990 to 2014. The
independent policy dummy variables are set to 0 before adoption and 1 after
adoption. The adoption year is defined as the year that the specific policy was
signed into law. This may not correlate exactly with the year in which the policy
took effect for all policies, but it is a standard that can be easily determined, and
the signing of a policy into law sends a signal to firms and sets expectations for
their future requirements. There is also variance among policies of the same
name—we did not code on the basis of the stringency of requirements or dates for
compliance. We did, however, separate policies on the basis of whether or not they
had mandatory or voluntary requirements.
CO2 emissions at state, national or international scales are the result of
many complex factors and mechanisms. Kaya (1990)27 proposed a framework
(Supplementary Appendix 5) that allows for decomposing the complexity
into four key variables that drive carbon emissions. The interaction of human
population, gross domestic product (GDP) per capita, energy intensity and
carbon intensity has been used by the Intergovernmental Panel on Climate
Change to develop future emissions scenarios28. The price of electricity
influences the energy production/GDP and CO2 emissions per unit of energy
produced. Polices that attempt to control emissions can be grouped into
categories that focus on controlling emissions (climate policies), and those that
indirectly affect emissions by focusing on energy efficiency and non-fossil fuel
modes of production (energy policies).
This simplified framework illustrates not only what factors influence
carbon emissions, and are therefore important to consider in developing
explanatory models, but also the levers that policymakers can utilize
to reduce carbon emissions. Energy intensity and carbon intensity
(Supplementary Appendix 5) are what policymakers try to affect when
designing climate and energy policies. Many policies are of a command-and-
control style, in that they proscribe certain mechanisms for achieving their
aims. For example, renewable portfolio standards (RPS) require utilities to
increase electric production using non-fossil fuel energy sources. Others
are more flexible in their approach, or even employ market mechanisms,
such as the Regional Greenhouse Gas Initiative (RGGI) and California’s
cap-and-trade programme authorized under the California Global Warming
Solutions Act (AB 32). These types of policy set certain targets, but then allow
utilities to determine the best path to compliance. Regardless of the lever
that a climate or energy policy targets in its design, policies must overcome
opposing forces, such as population or economic growth, in order to have an
effect on emissions levels. Alternatively, policies implemented in the context
of changing conditions that might independently reduce electricity emissions,
such as technological improvements, might erroneously appear effective.
Controlling for these independent factors can help reduce the chance of
inaccurately attributing changes in emission levels to the implementation of
policies.
We employ the following fixed-effects regression model for each policy to
control for unobserved state and year heterogeneity, as well as certain state-specific
characteristics that may have an independent effect on annual power-sector
carbon emissions:
CO2 = αi + γt + β1policyit + β2exportsit + β4populationit + β5priceit + ε
where αi represents state fixed effects, γt represents year fixed effects, ‘policy’
is a dummy variable for the presence or absence of a specific climate or energy
policy for a given state-year, ‘exports’ is the percentage of a state’s total electricity
production that is exported to other states, ‘population’ represents the state’s
population, ‘price’ is the price of electricity within a state and ε represents the
error term. Our model illuminates changes in emissions trends as a result of policy
between states that implement a policy and those that do not, as well as the trend
within a state before and after policy implementation. We run separate models for
each of the 17 policies assessed. As a sensitivity test, we run models with up to five
policies, the combinations of which, with results, are shown in Tables 2 and 3, and
Supplementary Appendices 3 and 4.
A few policies deserve further explanation. Quasi-PBFs, as defined by
C2ES (2014)29, allow utilities to add charges to customers’ utility bills to
fund renewable energy or develop energy-efficiency programmes. They are
quasi-PBFs because the state does not formally maintain a PBF. The Western
Climate Initiative (WCI) started in 2007 as an agreement between five western
states to develop a regional target for curbing GHG emissions and design and
implement a market-based mechanism for doing so. We use 2007 as the start
date for the WCI, but the programme has undergone significant changes since
then. To date, only California has implemented a cap-and-trade system and
is working with Canadian provinces to harmonize their emissions-trading
programmes under the direction of the non-profit corporation WCI, Inc. We
thus test California’s cap-and-trade programme, mandated under AB 32,
separately to determine whether California’s programme is successful
outside of the WCI. It is important to stress that because AB 32 is clearly
© 2017 Macmillan Publishers Limited, part of Springer Nature. All rights reserved.
NaTUrE CliMaTE CHanGE
not a replicated policy intervention, the results from the AB 32 model
run cannot be interpreted with authority. Finally, while Kim et al (2016)30
show that deregulation leads to higher levels of renewable energy policy, it
is unclear whether this leads to lower carbon emissions. It is also possible
that deregulation, by opening generation up to market competition from
competitors potentially looking to use cheap fossil fuels, is correlated with
higher emissions.
The dependent variable is CO2 emissions (tons of CO2 per year) from the
electric power sector within a state. The data were derived from the EPA’s
‘State CO2 Emissions from Fossil Fuel Combustion, 1990–2014’ report, using
data collected by the EPA and the US Energy Information Administration24.
The emissions data cover all 50 states for each year between 1990 and 2014.
Thus, our unit of analysis is the state-year, and we have 1,250 state-years. In
a sensitivity test, we also create a model with a dependent variable of CO2
emissions intensity (tons of CO2 MWh−1). We derived the state-level emissions
intensity from the EIA’s ‘Net Generation by State by Type of Producer by Energy
Source’31 and the EPA’s ‘State CO2 Emissions from Fossil Fuel Combustion,
1990–2014’ reports24. To determine a state’s emissions intensity, we divided
state-level electric-power-sector CO2 emissions (in million metric tons, MMT)
by state-level electric power industry generation (MWh) for each year from
1990 to 2014.
Supplementary Appendix 6 defines the control variables and provides
their sources. Descriptive statistics of all variables employed in this study
are shown in Supplementary Appendix 7. We conducted variance inflation
factor analysis (Supplementary Appendix 8) for all individual models, and
did not find evidence of multicollinearity. We also control for state and year
fixed effects. State fixed effects account for the wide variation among state’s
power-sector emissions (Fig. 1) by subtracting the state CO2 emissions means,
so that the models can compare changes in emissions within states, rather
than comparing changes in emissions among states. The state fixed effects
variable will capture unobserved heterogeneity among states, including the
renewable energy potential of states or infrastructural investments or other
historical legacies that may be associated with a reliance on fossil fuels
for power generation. Year fixed effects control for year-to-year national
emissions trends that might be associated with factors such as technological
improvements that have driven declines in the cost of renewables and natural
gas, or changing economic conditions. The models explain the variation
in emissions from year to year almost perfectly. While state fixed effects
play a large role in these high R2 values, removing state fixed effects from
the models still yields R2 values between 0.44 and 0.50, explaining much of
the variation. State-level policies that significantly reduce emissions must
decrease emissions beyond expected emissions levels, given national trends.
Population. The Kaya identity, discussed above, states that there is a direct
association between population and CO2 emissions27,32,33. While there has been
much debate about the impact of a growing population on the environment in
general, there is less debate about the impact of population size on CO2 emissions.
Larger populations typically generate higher emissions.
Exports. Electricity markets are not bound by state borders; indeed, some states
are net importers of electricity while others are net exporters. A state that exports
electricity might have higher emissions simply because the state is generating for
consumers beyond its borders, and not because of the ineffectiveness of its climate-
related policies. For example, if a state increases its renewable energy generation in
order to comply with its RPS, but sells the electricity across state lines, the effect on
emissions may be seen only in the importing state. Alternatively, a state could reduce
its emissions by importing electricity (effectively ‘exporting’ emissions), regardless
of the effectiveness of the state’s climate policies. As Prasad and Munch (2012)16
note, however, with existing data it is impossible to know the exact fuel source of
all imports and exports of electricity. Therefore, the interpretation of controlling
for electricity imports would be impossible. Instead, we use the ratio of electricity
exported to the total in-state electricity production (setting this variable to 0 for
importing states) to control for the potential impact electricity exports might have
on emissions.
Electricity price. Lyon and Yin (2010)34 note the importance of controlling for
the average in-state electricity price. A higher electricity price may be correlated
with decreased emissions, as it might encourage end users such as households
and businesses to either conserve electricity or to invest in more efficient
technologies. Alternatively, higher electricity prices could put pressure on
policymakers to rely on more generation from fossil fuels, having a positive effect
on emissions.
Data availability. The data sets generated and analysed during the current study
are available in the Pangea repository. Effectiveness of State Climate and Energy
Policies in Reducing Power Sector CO2 Emissions Dataset (PANGAEA, 2017);
https://doi.pangaea.de/10.1594/PANGAEA.880333.
Nature Climate Change | www.nature.com/natureclimatechange
NaTUrE CliMaTE CHanGE
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