Climate Policy Diffusion Across US States

IMF Working Papers, September 13, 2024

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State-level climate policy is effective in accelerating the adoption of solar energy.
State policies generate positive spillovers to other states by increasing the likelihood that neighboring states adopt climate policy.
By proportionally attributing spillover effects, many US states achieve more climate benefits through spillovers to other states than within their own jurisdiction.
Climate policies in the energy sector are distinct from other climate policies in two ways:
- They have a significant effect on solar capacity growth.
- They diffuse more broadly across states.

Uses comprehensive data from US states on climate policy and policy outcomes.
Subject areas: Climate change, Climate policy, Environment, Greenhouse gas emissions, Renewable energy.
Keywords used in the study: Climate change, climate policies in the energy sector, Climate policy, Global, Greenhouse gas emissions, policy diffusion, policy evaluation, policy outcome, Renewable energy, spillovers, state policy, subnational.

Subnational (state-level) action on climate can be effective not only within the state that implements policies but also by inducing policy adoption and benefits in neighboring states.
Energy-sector climate policies are particularly effective at expanding solar capacity and have broader diffusion patterns compared with climate policies targeted at other sectors or GHG reductions generally.
The presence of measurable spillovers suggests that assessments of state climate policy benefits should account for cross-state effects rather than restricting evaluation to within-jurisdiction outcomes.