Greenest Nation

This is a trick question. What big country is, by most measures, greener than Japan and Germany and produces more geothermal energy than all of Europe combined? It might help to know that this nation is also a pioneer in environmental stewardship, having passed many of the world's toughest regulations on vehicle emissions, energy efficiency and nature conservation.

It couldn't possibly be the United States. By now all the world knows that America, with its cheap gas, plentiful coal and eight years of a Kyoto-treaty-bashing president in the White House, is the world's biggest environmental villain. After all, America emits 50 percent more greenhouse gases than the European Union for each dollar of GDP. Per capita it's even worse: 20 tons of carbon dioxide for each American per year versus just 8.4 for a citizen of Europe.

And yet, if you were to answer the United States, you'd be more right than wrong. The statistics for the country as a whole obscure tremendous differences among the individual states—several of which, on their own, would rank as major "green" countries in their own right (which gets us to the trick). California, with its 37 million people, emits 20 percent less CO2 per dollar of GDP than Germany. It generates 24 percent of its electrical power from renewable fuels like wind and solar, compared with only 15 percent in Germany and 11 percent in Japan. It also has the world's largest solar-power plant (550 megawatts in the Mojave Desert), the largest wind farm (7,000 turbines at Altamont Pass) and the most powerful geothermal installation (750 megawatts at The Geysers north of San Francisco). Although California isn't immune to the economic crisis—its finances are on the brink of collapse, which could translate into growing support for those who argue that green measures cost jobs—its green accomplishments put it at the head of the pack. If California were a country, its economy would rank as the world's 10th largest and could lay claim to be one of the world's greenest.

The significance of California's green credentials goes beyond Trivial Pursuit. With a new U.S. administration that has pushed energy security, climate change and a job-creating "Green New Deal" to the top of the policy agenda, experts believe that America could emerge as the world's green leader—out-innovating and out-competing Europe and Asia in environmental policy and technology. Not only has Barack Obama moved quickly to unblock states' initiatives—most notably California's plan to introduce some of the world's strictest limits on auto emissions, which Bush had used his federal powers to obstruct—but Obama also comes in with an extremely ambitious agenda of his own, including a pledge to cut America's CO2 emissions by one third by 2020 and 80 percent by 2050. If Obama's 2020 target becomes policy, it will require the United States to cut emissions from current levels by more than twice as much as the European Union—even more if the faster growth of the U.S. population is taken into account. More than $80 billion of the $787 billion economic-stimulus bill signed by Obama last week goes to spending and tax breaks for green projects, including $20 billion for renewable energy, $22 billion for conservation and efficiency measures and $17 billion for public transport. With Washington turning into an ally of America's green states and fast-growing clean-tech industry, the United States could start giving the European Union, Japan and other green leaders a run for their money. "What hasn't been happening in Washington, D.C., has obscured what's been happening all over the country," says Nicholas Parker, chairman of San Francisco–based Cleantech, an industry advisory group. "Watch out for the Americans—they're coming."

Indeed, California may be the greenest state in the Union, but it's not the only one. New York, with a population of 19.5 million, has even lower emissions (though that has a lot to do with much of its population living in one big city with close-knit public transport). All told, 11 U.S. states are already cleaner than Germany. America clearly has too many emissions-spewing "brown" states like energy-guzzling Texas and Florida, and Rust Belt–industrial Pennsylvania and Michigan. But neither is Europe evenly green. Twenty-three of the 27 EU members score worse than California, and several, such as Poland and the Czech Republic, spew out more emissions per dollar of GDP than big U.S. polluters like Pennsylvania. Look behind America's overall numbers and public image—no doubt dragged down by the obstructionist environmental policies of ex-president George W. Bush—and a much more progressive picture emerges. "Despite all the hollowing-out of environmental policy in Washington, there has been tremendous leadership at the state and municipal level," says Amory Lovins, director of the Rocky Mountain Institute in Boulder, Colorado.

California may have gotten recent headlines with Washington's permission to set de facto emissions standards for the nation (still subject to formal approval from the Environmental Protection Agency), but other states have moved just as aggressively. On Jan. 1, 10 Northeastern states, including New York and Massachusetts, started their own regional carbon-trading system, with the aim of cutting the region's CO2 output from power generation—roughly the same as Germany's—by 10 percent by 2020. Utilities in those states now have to buy a permit for each ton of carbon they emit; the states will, in turn, invest the proceeds in efficiency projects that cut power use. Seven Western states, including California, have joined with four Canadian provinces to launch their own cap-and-trade system by 2012. Both groups of states have bypassed Washington and entered talks with the European Union with the aim of creating a global carbon-trading regime. Last year the United States soared past Germany as the world's biggest generator of wind power, thanks to a surge in wind-farm investment led by Texas, where 5,000 megawatts have been installed in the past three years. Iowa, the third-biggest U.S. producer of wind power after Texas and California, now generates more than Japan.

If America now moves forward, as seems likely with the change of power in Washington, it would be a return to the environmental leadership of the 1970s and '80s. During the latter, for example, 90 percent of the world's wind-power installation took place in just one U.S. state: California. The 1970 Clean Air Act, the 1972 Clean Water Act and the 1980 Superfund Act (which forced companies to clean up toxic waste) were revolutionary at the time and only later adapted by other countries. California invented the vehicle-emissions regulations that were later copied in Europe and elsewhere. U.S. companies like Du Pont first commercialized substitutes for ozone-depleting coolants and aerosols. And America invented and set up the world's first cap-and-trade program to cut the sulfur and nitrogen emissions that cause acid rain. At international conferences on the environment, America pushed while big European polluters like Germany routinely dragged their heels in the name of saving jobs and profits.

It wasn't until Ronald Reagan slashed energy regulation in the 1980s that the roles reversed. But even today, the United States still leads in several areas of environmental policy, such as land conservation, biodiversity protection and clean-water laws. And unlike Europe, where environmental offenders often get away with a slap on the wrist, the United States has strict penalties for companies caught flouting regulations—including the threat of jail time for corporate officers and punitive class-action damages, says Andreas Kraemer, head of Ecologic, a Berlin-based green-issues think tank.