Subnational entrepreneurship is observed within states, between states but also transnationally, as a result of the international agenda that many regional governments undertake. The state level is responsible for the majority of policy innovation and activity related to climate change both in the USA (Rabe 2008; Matisoff and Edwards 2014) and in Brazil (Romeiro and Parente 2011). The states of California and São Paulo, in particular, are somewhat unique in this respect. They have both built a reputation of leadership in the development and adoption of climate policies in their respective countries (Biderman 2011, p. 229; Coelho and Guardabassi 2007; SMA 2011), and also internationally. This is perhaps the most relevant similarity between these two states in this study. However, there are a number of other important characteristics shared by both states that warrant further consideration. Both have a population comparable with entire nations, both are responsible for a large share of the national economic production, both face serious air pollution problems and both are significant GHG emitters in their respective countries (see Table 1 for comparison). These factors have contributed to the formulation of California’s and São Paulo’s entrepreneurial environmental and climate action.
While the narrative of the activities undertaken by California and São Paulo here is not exhaustive, there are major and distinct areas in which entrepreneurship can be identified in both states around climate change law and policy. These actions allow us to delineate some general observations about the development of collective climate entrepreneurship at the subnational level. In both states, it is possible to track examples of invention, diffusion and evaluation of policies, which are explored in more detail below.
Establishing ambitious legislation and action plans (invention)
Within the spectrum of innovation, the term invention is used to describe the development of something that is entirely new, that is not used anywhere else in the world (Jordan and Huitema 2014a, b). Since the 1970s, both states have been legislating and implementing innovative and ambitious policies to promote environmental protection.Footnote 2 In California and São Paulo, the governments’ entrepreneurship to invent policies to reduce emissions has been borne through necessity due to the severity of the problem and also lack of response by the national government. Both states have been vocal about the importance of their advocacy roles in relation to this national inaction. With statements like “Washington is asleep at the wheel […] we know we can’t count on leadership there.” (SF Gate 2008) and “Brasilia has been extremely cautious […] but São Paulo leads the way, showing that regional governments must participate in global climate governance” (FSP 2009), California’s and São Paulo’s entrepreneurial intentions were made clear.
Leadership itself constitutes a bond between the two governments. A Memorandum of Understanding (MOU) entered between the two states in 2005 recognises São Paulo and California “are leaders in adopting policies related to climate change”—California by establishing targets and leading governments to adopt policies related to climate change, and São Paulo by seeking recognition as the first subnational government from a developing country to adopt reduction targets. Policymakers often refer to or compare São Paulo’s position in Brazil with that of California in the USA—calling it “the South American ‘California’Footnote 3 or the ‘equivalent to California in Brazil’”.Footnote 4
To date, the most innovative aspect of both states’ efforts to mitigate climate change is the legislation they have passed. California’s flagship climate law, AB32, was introduced in 2006 and was the first programme in the country to take a comprehensive, economy-wide, long-term approach to addressing climate change. It requires California to reduce its GHG emissions to 1990 levels by 2020—a reduction of approximately 15% below emissions expected under a “business as usual” scenario. São Paulo’s flagship climate legislation is Law 13,798 of 2009, which institutes the State Policy on Climate Change. This law established a mandatory state CO2 emission reduction target of 20% on 2005 levels by 2020. Significantly, this was the first binding legislative target to appear in a non-Annex 1 country.
California’s mandatory state-wide cap on emissions was the first of its kind. Its delivery document—the ‘Scoping Plan’ asserts that with AB32 California “is exercising a leadership role in global action to address climate change” (CARB 2008). Similarly, establishing a mandatory and economy-wide GHG reduction target, secured São Paulo’s place at the forefront of climate policy and legislation in Brazil (Setzer 2014). It justified Lucon and Goldemberg (2010) calling São Paulo “the ‘other’ Brazil”.
California and São Paulo’s focus on mitigation reinforces Mintrom and Vergari’s (1996) assertion that entrepreneurship takes place where there are unfulfilled needs and where there are new possibilities offered by the evolving historical context (Doig and Hargrove 1987). Focusing primarily on the energy and transport sectors, the states can make headway in tackling the complex policy problems afoot, without taking on too much risk (though AB32’s scope has expanded beyond these to become more economy-wide). In the long-term, responses will likely need to evolve to tackle a broader array of sectors and to work more concretely to understand the risks and adaptation responses required.Footnote 5
The development or ‘invention’ of AB32 and Law 13,798 can be understood as ‘inherently disruptive processes’ (Jordan and Huitema 2014a, p. 718) in their respective territories. These two acts were sponsored by civil society organisations to get them on the legislative roster—moving them from incubation to enactment (following Weissert 1991). Both received bi-partisan support and both deliver medium-term goals, which will be realised several electoral cycles into the future. Furthermore, both laws experiment and innovate with new and established policy measures, and try to bring diverse policymakers together. In short, the legislative acts passed by California and São Paulo fulfil many of the entrepreneurial characteristics outlined in the literature.
Working with local authorities, other subnational governments and the national government (diffusion)
An important aspect of subnational entrepreneurship is coordinating and collaborating action with other levels of government. Such coordination with local authorities, other subnational governments and the national government constitutes an opportunity for policy diffusion. Diffusion refers to the process through which inventions circulate and enter into common use, via processes of learning, transfer and adoption (Jordan and Huitema 2014a, p. 720). Diffusion to municipal/local authorities, as well as with other subnational governments and the national government, can be viewed as a challenge that subnational governments face when implementing their own climate policies—in taking their policies from invention to evaluation, diffusion can play a very significant role. In these examples, we see three types of policy diffusion at work. Firstly, with local authorities within the states—as often the implementation of state policy relies on local government (Anderton 2012), secondly with other states and thirdly with the federal government. The “International agenda (diffusion)” section will also explore policy diffusion but considers the international dimension.
Diffusion of subnational climate policy and legislation often directly impacts areas of jurisdiction that are within the purview of local authorities. In implementing AB32, a raft of supporting legislation was introduced to enable emission reduction in particular sectors. Taking SB375 as just one example, whereby California identified that transformational steps were needed to decouple transport emissions from sprawl. To do so, the state set to make a link between transportation funding, land use development and climate change. This development saw the Californian government becoming involved with issues of land use development, a ‘sacred’Footnote 6 area of policy traditionally overseen at the local (city or county) level. While SB375 was initially met with resistance from some cities and counties, it eventually received support from both the League of Cities and the California State Association of Counties. Furthermore, the state and Metropolitan Planning Organisations started working together to navigate their way through the changes resulting from SB375 and to adopt measures to bring about emission reductions, which can be considered an innovative development (Anderton 2012). That these levels of government are collectively working together to adopt and implement policy in collaboration demonstrates diffusion in action.
In Brazil, coordination between subnational and national action is prescribed by the 2009 National Climate Change Law (Law 12,187), which establishes implementation through sectoral plans, including transport and energy, directly affecting subnational policies. São Paulo’s climate change law also promotes decentralisation of climate policy-making from the regional to the local level. Gradually, there have been some attempts to coordinate São Paulo’s state policy with the implementation of other municipal climate policies, particularly in the city of São Paulo. For example, technical staff from both the city and state share information and data, and communication was facilitated after the state government established the GHG emissions public registry system. Nevertheless, the situation that prevails is still one of weak coordination between the states and local authorities, a factor that contributes to insufficient or inefficient implementation efforts of climate policies (Puppim de Oliveira 2009; Setzer, 2013).
Diffusion of subnational climate policy and legislation to other subnational governments is observed in opportunities for inter-state collaboration. California has engaged in a number of activities in collaboration with other US states concerning climate change.Footnote 7 Perhaps the most prominent example is the Western Climate Initiative (WCI), formed in 2007 by a coalition of state governorsFootnote 8 looking to develop a multi-sector market-based mechanism to reduce GHG emissions. With the passage of AB32, California’s cap-and-trade programme linked with partner schemes allied with WCI, and more recently, the programme linked with schemes in Québec and Ontario. The collaboration initially witnessed through the establishment of the WCI was seen as a significant subnational response to federal inaction both in Canada and the USA. The developments that have been achieved since, both within California, but importantly through the transnational linkages that have been made through bringing the trading schemes together, represent a significant example of policy diffusion. The subnational cap-and-trade scheme has become an interesting test bed example of the ways in which subnational governments can work together to achieve scaled responses to tackling climate change.
Yet as Jordan and Huitema (2014b) noted, invention does not always necessarily lead to improvement, and the same may be true of diffusion in this context. The ABC—‘Anyone But California’ rule was highlighted by a participant explaining that while some states will certainly emulate (parts of) what California, there are other states that “want to know that someone who’s not so different as California has also done something before they are interested in trying”.Footnote 9 This suggests that innovative entrepreneurial activities do not guarantee diffusion; they may be too ‘radical and disruptive’ (following Fagerberg 2005 in Jordan and Huitema 2014b).
Furthermore, where the appetite for the scaling up of climate action is present, it is conceivable that state-based or led initiatives could lead to diffusion to the national level. There are certainly examples in both cases where state action has been diffused to the federal government and as a result becomes applicable to all states. California has been described as a ‘super-regulator’, particularly around vehicle emission standards—typically California enacts ambitious standards that the federal government follows suit on years later (Carlson 2008). Similarly, São Paulo has been described as a standard setter in Brazil. In relation to the national climate policy, São Paulo’s Climate Law has arguably triggered action at the national level (Romeiro and Parente. 2011; Lucon and Goldemberg 2010). The same argument that São Paulo’s legislation played a key role in advancing the national policy was made by a number of relevant actors interviewed at the state and at the federal level.Footnote 10 However, the potential for scaling up also depends on the national level’s support for climate-related activity. If climate change is not considered a priority of an administration, it is unlikely that climate policies coming from the states will be diffused to the national level. In this case, states will remain reliant on entrepreneurship at and diffusion between subnational entities.
International agenda (diffusion)
Undertaking an international climate agenda is a key component of subnational entrepreneurial strategy. It can involve the establishment of bilateral or multilateral partnerships, participation in transnational networks and engagement in the international climate regime (Setzer 2013). Subnational governments use these opportunities to promote the diffusion of their policies and actions, be it establishing technical, scientific, technological and financial exchanges, presenting their leading climate action to a wide international audience or engaging in the international debate.
Through their respective international agendas, California and São Paulo are vocal about their diffusion activities, sharing their domestic achievements and seeking to promote their reputation as climate leaders. Before his re-election into office in November 2014, Governor Brown stated: “California has the most integrated response and strategy to deal with climate change of any political jurisdiction in the world […] What happens here doesn’t stay here, it goes all around the globe” (Thompson 2014). In São Paulo, the climate law was promoted as having “no precedent in the developing world and stands as the most far-reaching climate policy initiative on the subnational level in a developing economy” (Lucon and Goldemberg 2010, p. 348).
Both California and São Paulo have a history of establishing bilateral or multilateral partnerships with other national or subnational governments and international organisations. For instance, for over 20 years, California has maintained such partnerships with Bavaria to promote renewable energy technologies and environmental management systems and with North Rhine-Westphalia to advance clean energy technologies, especially hydrogen and fuel cells (Ralston 2013). In São Paulo, both the state environmental agency and the state Secretariat for the Environment have signed agreements with a number of international organisations, including the United Nations Development Programme (UNDP), the World Health Organisation, the World Bank and the German Federal Environment Agency (UBA), amongst others.
Bilateral partnerships have also been established between California and São Paulo. The first partnership was established in 2005, during COP-11 in Montreal, with an MOU entered into between São Paulo’s environmental secretariat and California’s Environment Protection Agency. The MOU aimed to promote climate change mitigation with a focus on transportation and technical cooperation in the areas of renewable energy sources, environmental improvement, climate change and biodiversity. This agreement stated that both states had the intention to “play leading roles in the global effort to reduce greenhouse gas emissions” (CalEPA 2005). The two states have also worked together to promote the importance of the subnational government in advancing climate change responses globally. In 2009, at COP-15 in Copenhagen, São Paulo Governor José Serra and California Governor Arnold Schwarzenegger organised a joint side-event.
Indeed, California and São Paulo regularly attend UNFCCC conferences, and the leadership role they play in climate policy-making opens doors for their participation. California has actively participated in many events taking place alongside the formal international negotiations since 2005. For example, in 2006 in Nairobi, then-CalEPA Secretary Linda Adams reported to the Plenary on behalf of convened states and regions calling on the delegates to formally recognise subnational governments and to open up the negotiations to actors below the national level. In São Paulo state officials justify participation on the basis that “it is crucial that we go [to international meetings] and present what we are doing…. If we don’t, other regions won’t know that we have a model that can be followed.”Footnote 11 São Paulo’s officials also want to influence the Brazilian position and eventually the outcome of international environmental negotiations (Setzer 2015). Representatives from the state of São Paulo speak as governmental representatives, as they have robust technical knowledge and experience in environmental policymaking. São Paulo’s international advisor gives a clear account of this motivation:
We want to promote the state of São Paulo as an international reference. It is a matter of image. But it is also important for us to have our own interests incorporated into the international legal frameworks. We don’t want to be mere policy implementers. We want to make clear what is good for us and to inject São Paulo’s view in the international debate in order to satisfy our own interests.Footnote 12
Finally, participation in transnational networks has been central in establishing the entrepreneurship of both these governments and in facilitating the international platform for such events. California is a founder of R20, and São Paulo is a founder of the Network for Regional Governments for Sustainable Development (nrg4SD), and the two states are both active members of The Climate Group (TCG). These networks explicitly advocate that subnational governments are laboratories for future national policy, and that they should push their respective national governments into more rapid actions and stronger commitments to fight climate change (R20 2013; nrg4SD 2011; TCG 2016a). Following the Paris Climate Agreement in 2015, California hosted the first Subnational-Clean Energy Ministerial event in June 2016—a ministerial level summit for cities, states and regions, offering the opportunity to exchange experiences and information (TCG 2016b). Such activities demonstrate that diffusion is an important element of subnational climate entrepreneurship.
Implementation and beyond (evaluation)
It is important to note that developing and enacting legislation and promoting the diffusion of the lessons learned is only the beginning. In addition to these activities, subnational governments need to be concerned with the implementation of the law and policies created. While the approval of the laws in California and São Paulo was a successful inventive effort, which involved governmental and non-governmental stakeholders across different organisations, the implementation of these instruments requires unprecedented levels of cooperation and coordination within and beyond each government’s structures.
In California, AB32 established a Climate Action Team, a cross-administration group, and required that “every agency, department and division will bring climate change considerations into its policies, planning and analysis” (CARB 2008). Since its enactment, the law continues to enjoy bi-partisan, cross-party and long-term support. The initial implementation measures have been facilitated through rafts of supporting legislation, and it has also survived formal attempts to halt its progress. Ahead of the 2010 state election, proposition 23 attempted to suspend AB32, but it was voted down, highlighting broad-base support for the bill and a major triumph for climate change policy in the USA—and ensured implementation of the Scoping Plan would progress as planned towards meeting the 2020 and 2035 reduction targets (Anderton 2012). More recent developments include the introduction of the cap-and-trade scheme and Executive Order B-30-15, which established an emission reduction target of 40% below 1990 levels by 2030. The case of California indicates that, with collective entrepreneurship, the passage of legislation can sustain continuing policy change (Mintrom 1997).
In São Paulo, the implementation of the state’s climate law is generally taking a slower pace. The state developed only a few strategies, including a biofuels programme and the Climate Protocol. Both these initiatives are voluntary and established in partnership with businesses. The Climate Protocol, for example, is based on a progressive system of points attributed through the information provided by the companies and does not establish mandatory reduction targets. The case of São Paulo suggests that, while subnational climate entrepreneurship can lead to initial important achievements, such as the passage of ambitious legislation, not even the historical entrepreneurship of the state and the hard work of policy entrepreneurs might be sufficient to sustain continuing policy change. As Mintrom (1997) also recognises, policy entrepreneurs, like other actors in the policy-making process, must be aware of the constraints imposed by election cycles and interest group opposition to their proposals.
Yet, innovative mechanisms can be established to address the challenge of implementing ambitious commitments. In the transnational climate governance literature, scholars have described the use of self-monitoring and self-verification as means for promoting evaluation of climate action adopted by subnational governments (Bulkeley et al. 2012). The cases of California and São Paulo suggest that litigation can constitute another option to assess the consequences of a given policy innovation and, moreover, offer an option to enforce legislation where non-compliance becomes an issue. Subnational governments can be involved as plaintiffs or respondents in court cases dealing with climate legislation development and enactment. In fact, climate change litigation has been understood as a catalyst for action (Fisher 2013, p. 241). In some cases, climate litigation can promote legal change and help change social and business norms in ways that motivate action by governments and other key stakeholders (Peel and Osofsky 2015).
Subnational climate litigation, in particular, can be used by subnational governments in response to a dearth of national climate legislation, as well as against subnational governments, to pursue or contest the implementation and enforcement of climate legislation. Subnational climate litigation can constitute a key tool in ensuring that the policies and laws that are developed are capable of and are used for delivering emission reductions, thus, making subnational policies effective or impactful, fulfilling the third pillar of Jordan and Huitema’s (2014a, b) framework. Through subnational climate litigation, Osofsky (2007, p. 13) argues, ‘[states and localities] help to move the dialogue on climate regulation forward’.
In California, litigation has been increasingly utilised as a tool to navigate issues arising as climate change policy develops. The case of Massachusetts v. EPA (2007), in which the state of California acted as one of the petitioners, was significant across the USA, because it ruled that petitioner states have standing to bring action and also that the EPA has the authority to regulate GHGs under the Clean Air Act. Litigation has subsequently been used in California. Cases such as People of California vs. County of San Bernardino (2007) and People of California vs. City of Pleasanton (2009), both addressed the failure of the local governments to analyse GHG impacts in their general plan updates. But the state has also been legally challenged, by both industry and by civil society,Footnote 13 for the policies and laws it has put in place to address the issue.
In São Paulo, climate litigation is incipient, but it could become, like in California, a relevant tool to navigate the policy and legal responses that are being developed to tackle reduce emissions. Particularly, since the Brazilian legislation provides for the polluters pay principle and a ‘strict liability’, meaning that it is unnecessary to demonstrate that the defendant meant to cause harm. One of the most interesting cases taken to the state Court of Justice is a class action filed by the state Prosecutor’s Office against 40 airplane companies operating in the international airport of São Paulo for the emissions and pollution caused during landing and departures. In its decision, the state court acknowledged the environmental damage resulting of airplanes landing and departure, calling the companies to be liable for reforestation of the area around the airport.Footnote 14 Moreover, the state public prosecutors are entitled by the constitution to defend environmental interests and call for the enforcement of existing legislation which is not being implemented, so it might be a matter of time until they call the state in courts to inquiry the state on the achievement of the reduction targets established by the state climate law.
Therefore, litigation can constitute a mechanism in subnational climate entrepreneurship to ensure that climate laws become effective. Whether lawsuits are used against subnational governments when targets and goals established in legislation are not met, or whether they are used by subnational governments against big emitters or the national government, litigation can help to ensure that challenges to implementation are held to account. After all, climate policies can only be ‘impactful’ if they are implemented and lead to emission reduction. Holding entities that prevent this to account through litigation will probably become more important in the coming years.