Over the past century, particularly in recent decades, scientists have documented increases in global temperature and sea levels, decreases of sea ice in the Arctic, and melting of continental ice sheets and mountain glaciers. There is increasing evidence that human activities are at least partially responsible for some of these effects. This is based upon the combination of two conclusions. First, global temperature increases are linked in some manner to the measurable increases of greenhouse gas (GHG) concentrations in the atmosphere. Second, human activities (e.g., fossil fuel combustion, industrial processes, and deforestation) have contributed to the increased concentration of GHG emissions in the earth's atmosphere. The link between GHG emissions and climate change has motivated efforts to achieve reductions of emissions. In 1992, the United States ratified the United Nations' Framework Convention on Climate Change (UNFCCC), which called on industrialized countries to initiate GHG reduction. However, in early 2001, President George W. Bush rejected the UNFCCC 1997 Kyoto Protocol, which called for legally binding commitments by developed countries to reduce their GHG emissions. Over the past decade, the federal government has promulgated or proposed a variety of voluntary and regulatory actions that, while not specifically seeking to reduce GHG emissions, may have yielded emission reductions as a byproduct. In the 110 th Congress, Members introduced multiple bills to address climate change issues in some fashion and enacted several pieces of legislation that contained climate change provisions. In recent years, there has been some congressional support for a mandatory reduction program. For example, the Senate version of the Energy Policy Act of 2005 included a "sense of the Senate" Resolution stating: It is the sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that, No. 1, will not significantly harm the U.S. economy and, No. 2, will encourage other action and key contributors to global emissions. Members in the 110 th Congress introduced multiple bills that would have established some type of a mandatory emissions reductions program. One of these proposals—the Lieberman-Warner Climate Security Act of 2008 ( S. 2191 / S. 3036 )—was reported by the Senate Environment and Public Works Committee (December 2007) and debated in the Senate in June 2008. In the absence of action by the federal government to establish a national program that directly addresses GHG emissions, a number of states (and local governments, whose activities are not covered in this report ) have taken action in this arena. States' efforts cover a wide spectrum, from developing climate action plans to setting mandatory GHG emission standards. Arguably, early state actions were largely symbolic. In the late 1980s, Vermont and Oregon were the first states to set GHG reductions goals, but during the subsequent decade (1990-2001), both states increased their GHG emissions: Vermont by 18% and Oregon by 30%. However, a majority of states have more recently begun to develop their own climate change strategies or policies, with an increasing number of states adopting or proposing more significant provisions, including mandatory GHG reductions. The motivating factors for the various states' actions may be as diverse as the actions themselves. Some actions are motivated by projections of climatic changes, such as sea level rise or agricultural impacts. Some states view their GHG policies as economic opportunities. States want to position themselves for a "less-carbonized" future, by promoting, for example, alternative energy supplies, particularly sources available in-state. Other states champion GHG reduction policies because of the possible co-benefits: improved air quality, reduced traffic congestion, and less reliance on foreign energy supplies. Another motivating factor for state action is the possibility of catalyzing federal legislation. This report covers state actions that directly and explicitly address GHG emissions (see the text box below). First, the report describes the different types of state actions, both individual and cooperative efforts, that are either proposed or under way, and highlights several of the more significant developments. Second, the report examines state actions from a federal policymaking perspective, including both the potential effects of state-led actions and their limitations. Mandatory programs to require GHG reductions represent the most aggressive end of the state action spectrum. As with state actions overall, these programs can vary significantly in scope, stringency, and design. Mandatory programs are generating considerable interest and some controversy. This section discusses the different types of mandatory programs and highlights the regional initiatives and individual state actions that are currently in effect or under development. Arguably, the most significant action on the state level in recent years has involved the development of regional agreements to address GHG emissions. As of the date of this report, 23 states have joined—more states are acting as observers—one of the 3 regional partnerships that would require GHG (or only CO 2 ) emission reductions ( Figure 1 ). Except for the partnership between 10 northeastern states, the regional activities are still in their developmental phases. Moreover, the western and midwestern regional partnerships were initiated by state governors and may not be approved and/or implemented by the relevant state legislatures. In addition, the regional agreements may raise legal issues, particularly constitutional concerns. Article I, Section 10, Clause 3 of the U.S. Constitution states that "[n]o State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State, or with a foreign Power.... " In particular, two of the regional agreements include Canadian provinces. However, it is uncertain whether this clause (the "compact clause") will create legal hurdles for any of the agreements. One of the more significant climate change developments at the state level is the Regional Greenhouse Gas Initiative (RGGI, pronounced "Reggie"). RGGI has been under development since 2003, when states from the Northeast and Mid-Atlantic regions began to discuss setting up a cooperative effort to reduce carbon dioxide emissions. Subsequent meetings and workshops culminated in a Memorandum of Understanding (MOU) that was signed in December 2005. RGGI is a market-based effort by 10 states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont—to reduce carbon dioxide emissions from power plants. RGGI would set up the nation's first mandatory cap-and-trade program for carbon dioxide. The initial objective of RGGI is to stabilize current carbon dioxide emissions from power plants in RGGI states, starting in January 2009, followed by a 10% reduction by 2019. A primary strategy of RGGI is to create a program with flexibility, so that in the future other emission sources/sectors, GHGs, or states could be included. Some observers consider RGGI to be a possible test-case for a federal cap-and-trade program, and thus several of RGGI's design elements are generating interest and debate. For example, one specific feature—the emission allocation scheme—is drawing both praise and criticism. In both RGGI's Memorandum of Understanding and its Model Rule, states agreed that at least 25% of emission allowances will be allocated for a "consumer benefit or strategic energy purpose." Since then, all of the states have indicated—either through legislation or rulemakings—that they intend to allocate more than 25% of their state's emissions allowances for various purposes related to those two overarching objectives. This allocation strategy requires power plants to purchase the allowances through an auction, instead of receiving them at no charge. On September 25, 2008, RGGI participants held the first emission allowance auction related to climate change mitigation. Six RGGI states—Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont—sold allowances for the first RGGI compliance period (2009-2011). By many accounts, the auction was successful: the clearing price as $3.07/ton (60% higher than the reserve price); compliance entities received about 80% of the allowances; and states received nearly $40 million in revenues. Although RGGI is one of the more aggressive state programs addressing climate change, the program has received some criticism and may face upcoming challenges. For example, recent emissions data indicate that the RGGI cap—188 million short tons of carbon dioxide—will most likely be higher than actual emissions, when RGGI goes into effect in 2009. The cap was set slightly above (about 4%) the average emission levels observed between 2000 and 2002. RGGI designers anticipated that emissions would gradually increase, so that actual levels would approximately match the cap in 2009. Although emissions increased in 2007 from their relatively dramatic decline of 2006, emissions data from the first half of 2008 are similar to 2006 figures, suggesting that 2008 emission are unlikely to increase further; another estimate projects that 2008 emissions may go as low as 150 mtCO 2 , approximately 20% below the 2009 cap. If actual emissions are below the cap when it goes into effect, the effectiveness of the RGGI program may be impacted. The allowance price might drop to such a low level that facilities would have no financial incentive to make reductions beyond their required allocation. This potential problem may be alleviated by the opportunity for affected sources to bank emission reductions for future use, when the cap will likely be lower than expected emissions. The RGGI program allows unlimited banking. The ability to bank reductions effectively spreads the costs of emission reduction over time. Banking emissions would reduce compliance costs in the future, but also increase the value of current allowances (because they can be sold later). The incentive to make additional reductions would remain. The recent auction sales data support this notion, as the clearing price was above the reserve price. In addition to allocation concerns, a critical design detail—electricity imports from non-RGGI states—is arguably unresolved.