Climate Change Policy Formation in Michigan

Like 30 other states in the U.S., Michigan recently began addressing the problem of climate change through comprehensive mitigation action planning. The Michigan climate initiative involved combining a stepwise, fact-based, stakeholder decision process and technical analyses to formulate a consensus-based climate action plan. This paper reports on the results of work conducted by policy analysts and facilitators of the policy-making process in response to state government and stakeholder decisions on three key aspects. First is the choice of policy actions used to establish a comprehensive portfolio of actions and economy-wide greenhouse gas (GHG) goals and targets. Second is the design of policy instruments to use to implement these specific GHG mitigation actions. Third is the decision on whether the state should pursue its target for net GHG reduction through sector based policies and measures, a regional cap and trade program, or both combined. We summarize the results of applying a formal model for analyzing the implications of alternative environmental policies and instruments. The model was applied to data on the financial costs/savings and applicability of a spectrum of GHG reduction options developed by a consensus of stakeholders from all segments of the Michigan population. We conclude that a combination of sector-based measures and market incentive-based policies could attain a low cost, high co-benefit solution if Michigan joined with other Midwestern States in developing the cap and trade aspect of its climate action plan.