Abstract
Carbon dioxide (CO2) emission reduction is seen as the most crucial step in slowing climate change and global warming. The Paris Agreement was signed by 196 countries, including the United States and has a target to lower global CO2 emissions 45% by 2045. The United States is the second highest carbon dioxide emitter in the world, and needs policies in place that help to reduce the impact of climate change. However, not all states have policies, and not all states have been effective with the ones they adopt. This thesis looks at how effective five of the most common climate policies have been in reducing CO2 emissions, by estimating ordinary least squares models and state fixed-effect models. The panel data set includes the climate policies along with other control variables for each of the 50 US states plus the District of Columbia using annual data from 1997 to 2021. Other regression models look at what factors may influence states to enact policies. The results show that the most effective policies are ones that reward firms to decrease pollution, such as cap-and-trade, which sees a 4% decrease in CO2 emissions when a state has adopted it at a 1% significance level. Participation in climate policies is shown to be influenced mostly by politics. When a state has a Democratic governor, policy participation increases 20% at 5% significance level. The United States needs to become united in a goal to combat climate change, and policies that are market-based, such as cap-and-trade, need to be federally enforced for all states.