Who Pays for Environmental Policy? Business Power and the Design of State-Level Climate Policies

• Published date: 01 September 2024
• DOI: http://doi.org/10.1177/00323292231195184
• Author: Joshua A. Basseches
• Date: 01 September 2024
• Subject Matter: Articles

Who Pays for Environmental

Policy? Business Power and

the Design of State-Level

Climate Policies

Joshua A. Basseches

Tulane University

Abstract

To what extent and through which means do private actors shape public policy?

Research into these questions has been complicated by actors’tendency to obscure

or misrepresent their policy preferences and by the diff‌iculty of operationalizing pol-

icy substance. This theory-building study uses qualitative methods and triangulation of

multiple sources of evidence to mitigate these challenges. Confronted with puzzling

patterns of variation in the design of state-level climate and renewable energy policies,

I show how a two-dimensional framework attentive to the economically motivated

preferences of business actors explains policy design. Drawing on policy texts, archival

documents, and 111 policy-focused interviews, I f‌ind business preferences were frag-

mented, but that a single type of private actor, investor-owned utilities, ultimately

prevailed in achieving their preferences in every case . I theo rize the sources of

their unmatched inf‌luence, and f‌ind that their distinctiveness is precisely what

makes them powerful. My f‌indings have implications for the study of business

power and understanding obstacles to equitable climate policymaking.

Keywords

business power, public policy, climate and renewable energy, US states

Corresponding Author:

Joshua A. Basseches, Department of Political Science, Tulane University, 6823 St. Charles Avenue,

New Orleans, LA 70118, USA.

Email: jbasseches@tulane.edu

Article

Politics & Society

2024, Vol. 52(3) 409–451

© The Author(s) 2023

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/00323292231195184

journals.sagepub.com/home/pas

To what extent and through which means do private interests shape public policy?

These are persistent questions in political science and political sociology.

1

Yet

research into these questions faces at least two challenges. First, business actors

can strategically obscure or misrepresent their true policy preferences, making it dif-

f‌icult for researchers to accurately assess whether policy conformed to them.

2

Second, there is the challenge of operationalizing the substance of policy itself,

given its many cross-cutting provisions and effects, playing out both short-term

and long-term.

3

Overcoming both challenges is necessary to determine the

all-important question of inf‌luence: who got how much of what they wanted from

a given policy, and at whose expense?

4

In this article, I show how these challenges can limit our understanding of how state-

level climate and renewable energy policies are designed and implemented, but I also

show how they can be overcome through a policy-focused and preference-focused

two-dimensional framework of analysis. I f‌irst identify the puzzling aspects of varia-

tion and uniformity in the design of two policy types: economy-wide greenhouse

gas (GHG) policies, which aim to cap a state’s total GHG emissions at specif‌ied

levels, and renewable portfolio standards (RPS) policies, which require that specif‌ied

percentages of a state’s electricity load be generated from specif‌ied renewable sources,

according to specif‌ied timelines.

5

I show how we cannot fully understand substantive design choices among these pol-

icies without making two conceptual and analytical moves: (1) identifying the “true

preferences”

6

of the business actors with a stake in how these policies are designed

and (2) reconceptualizing policy outcomes to be two-dimensional, so we are no

longer trying to assess whether a policy in its totality is a “win”for one interest

group or another but rather looking at each substantive provision in terms of its distrib-

utive effects.

7

This is important since a single law often resembles a “Christmas tree,”

with different “ornaments”added on account of different stakeholders.

8

In thinking

about climate policy particularly, it is important not only to assess policy design in

terms of environmental strength but also in terms of who pays; that is, how are the

short-term costs of the transition to a clean energy economy distributed among

stakeholders?

9

In what follows, I examine three states that have adopted both GHG and RPS pol-

icies. They are the three that Selin and VanDeever name as climate policy leaders

among the f‌ifty: California, Massachusetts, and Oregon.

10

All have adopted the full

menu of policy tools that the literature frequently discusses: GHG policies, RPS poli-

cies, net metering, public benef‌it funds, climate action plans, and so on.

11

I show how

these states’GHG and RPS policies vary and converge in their design.

When it comes to the GHG policies, they vary in terms of their environmental

strength, with California’s being stronger than Massachusetts’s and Massachusetts’s

being stronger than Oregon’s. When it comes to the RPS policies, they are all

similar in terms of who pays; while each has its own distinct provisions, one type of

business actor, investor-owned utilities (IOUs), never pays, while costs/risks are con-

sistently shifted onto electricity consumers of all kinds—households and corporations.

I review what the relevant literature has to say about why this is the case and f‌ind no

satisfying answer. I argue that the literature’s shortcomings are due to both the

410 Politics & Society 52(3)

“problem of preferences”and the unidimensional conceptualization of the policy

outcomes.

12

I then devise a method to mitigate the problem of preferences and to determine

the “true”preferences of the business actors with a stake in these policies’design.

I also reconceptualize the policy outcomes to be two-dimensional, considering

both environmental strength and the question of who pays. In doing so, I

follow Mildenberger’s approach of “disaggregate[ing] policy content”and pro-

viding a “distributive-institutional account of climate politics.”

13

Applying my

framework to the two policies in the three states, the sources of variation and uni-

formity become clear.

The GHG policies vary in environmental strength because the true preferences of

IOUs varied, as did their level of mobilization in pursuit of those preferences. The

RPS policies exhibit similar distributive qualities because IOUs in all three states

did not care about the environmental strength of the policies, but rather, about who

would pay for them; specif‌ically, IOUs wanted to ensure that they would not pay.

What emerges from this analysis is that IOUs are unique among corporate actors in

the climate policy space, both in terms of the more sophisticated bases of their prefer-

ences and their ability to achieve their preferences in policy design. I conclude by

exploring why IOUs are so inf‌luential, drawing on the literature on regulatory

capture, and how this new way of thinking about business preferences and power

might be applied elsewhere.

Empirical Background and Puzzle

For decades prior to the recent enactment of the Inf‌lation Reduction Act, the US federal

government took a hands-off approach to climate change.

14

Instead, many states took

matters into their own hands, acting as “laboratories of democracy,”as Justice Brandeis

famously envisioned. The two most signif‌icant and prevalent state-level policy instru-

ments are GHG policies (adopted by twenty-three states) and RPS policies (adopted by

thirty-seven states).

15

However, these policies differ across the states that have adopted

them.

As Table 1 shows, the GHG policies vary in the degree to which they require report-

ing/verif‌ication of GHG emissions (a prerequisite to achieving measured reductions),

the degree to which their targets are enforceable, and the degree to which they are

accompanied by supportive regulations to ensure their targets are met.

16

The RPS pol-

icies, for their part, vary on an even greater number of dimensions; they are “never

designed the same way in any two states.”

17

In addition to the targets and timelines,

varying dimensions include voluntary versus mandatory targets, the very def‌inition

of an “eligible renewable resource,”the eligibility of electric generation facilities by

geographic location and the date they commenced operation, and acceptable compli-

ance methods.

18

In twenty states, certain utilities are exempted from the RPS altogether, and

several states have questionable resource eligibility requirements. For instance,

Pennsylvania’s RPS has been dubbed “the dirtiest RPS in the nation,”

19

counting

energy produced from “waste coal.”While some states impose stringent penalties

Basseches 411