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Recalibrating Our Expectations

Now that we have all had a chance to digest the results of the election, it is time to take stock of our goals and priorities for the near future given the realities on the ground. Even if Democrats pick up the two Georgia runoff election Senate seats, that would bring the Senate to a 50-50 tie with Vice President Elect Harris in the role of tie breaker. With this razor thin margin - at best - goes any hope of a massive climate legislation agenda of the scope proposed by President Elect Biden or the House Select Committee on the Climate Crisis. The fact is that anything so ambitious would have required eliminating the filibuster, and that kind of aggressive action is impossible with such an infinitesimal majority in the Senate. Moderate Democratic Senators like Joe Manchin of West Virginia would be an insurmountable hurdle for aggressive legislative action.

So now is the time to recalibrate our expectations. There will be no multi-trillion dollar green stimulus. There will be no nationwide renewable power mandate. There will be no nationwide push for zero emission vehicles, and there will be no major national climate justice initiatives. There is a chance that some aspects of these far reaching climate action policies might be shoehorned into future budget bills as riders, but they will be significantly watered down from what many, including those of us at Rebuild Climate had hoped for.

That said, there is a lot that President Elect Biden will be able to accomplish without help from Congress. Using his significant executive powers he will be able to undo much of the damage that Trump has wrought, and he will undoubtedly take climate action further than the Obama administration did. This is mostly a function of the fact that climate action has become a much higher priority for Democratic voters than it was during the Obama years. Since Obama left office, we have seen the release of the IPCC’s 1.5C report, Greta Thunberg and Fridays for the Future, the Sunrise Movement and of course the Green New Deal. Combined, this explosion of demand for meaningful climate action has made climate a top priority for the Biden administration.

There is a limit to how much can be accomplished by executive action alone. Remember that Obama’s signature Clean Power Plan was eviscerated in the courts, and that was before Trump packed the court with judges that are extremely hostile to regulation. So Biden will have to tread lightly in order to avoid having his plans reversed in the courts.

A lot of what happens in the next two to four years is going to depend on what kind of Republican party emerges after Trump leaves office in January. Trump will be out of power, but it remains to be seen whether he will still exert his stranglehold over the party. There are some Republicans that have been arguing that their party should start to pay attention to the majority of younger GOP members who are concerned about climate change. If those Republicans emerge from the Trump years in control of their party’s climate agenda, there is a chance that Senate Republicans will be in a mood to do something meaningful.

One of the candidates for meaningful, bipartisan legislation on climate change is putting a price on carbon. Several bills that would put a meaningful price on carbon were introduced in the current Congress. Any of these would go a long way toward reducing GHG emissions. Unfortunately, this policy approach is currently out of favor in a large swath of the climate action community, especially on the left. Many feel that it doesn’t move the needle fast enough. Others feel that it is a regressive tax that puts the burden unfairly on lower income households. And others are suspicious of any policy that relies on market forces. Some of these beliefs are based on observations of previous carbon pricing policies put into places by other nations. However, not all carbon pricing policies are created equal. All of these shortcomings can be addressed with a well crafted carbon pricing policy.

Of the four carbon pricing bills that have received bipartisan support is the Energy Innovation and Carbon Dividend Act (H.R. 763). This carefully crafted piece of legislation, should go a long way to allaying the fears and concerns of left leaning climate activists. Several economic studies have shown that H.R. 763’s price on carbon starting at $15/tonCO2e and increasing by $10/tonCO2e each year would reduce carbon emissions by at least 40% in ten years. That is in line with the timeline prescribed under a 1.5-2C scenario. The revenue collected with this fee is returned to U.S. households in equal shares through a dividend. This amounts to a progressive tax. Households in the lower 3 out of 5 quintiles would break even or come out ahead. To answer the concerns of those that are leary of relying on market forces, the price on carbon would increase by $15/tonCO2e on any given year that the carbon emission reduction targets aren’t met, and if after 10 years the target emission reductions aren’t met, the EPA is given full authority to regulate CO2 emissions. So this bill demonstrates that there are ways to construct a price on carbon policy that address all of the major objections of left leaning climate activists and policy makers.

Would putting a price on carbon get us all the way to net-zero on its own? No. But putting a price on carbon now would get us closer to the necessary emissions reductions than any other single policy measure. With some luck, putting a price on carbon now will buy us enough time for the politics of climate change in this country to evolve, and when it does, we can put in place a more comprehensive policy framework that would get us to net-zero by 2050.

As it turns out, the United States is soon to be on the wrong side of the carbon pricing debate. In 2023, the European Union which has already imposed a price on carbon will start imposing a border carbon adjustment (tariff) on goods entering the EU from countries without an equivalent price on carbon. This policy of a border carbon adjustment is necessary to avoid putting their manufacturers at a trade disadvantage. This same policy is embedded in the Energy Innovation and Carbon Dividend Act. The U.S. then has two choices: let the E.U. collect a tax on U.S. exports in which case the E.U. keeps the revenue, or impose our own price on carbon, in which case our own citizens keep the revenue.

Another area with potential for bipartisan cooperation is the funding of new clean technologies. The International Energy Agency released a report in July of this year examining over 400 technologies that will be needed to achieve net-zero. Their analysis shows that very few of these are ready for prime-time. The United States contributes 15% of global carbon emissions. So while eliminating our contribution is critical to getting to global net-zero, one could argue that where the United States could play a more critical role is as a renewable energy innovator. Certainly in solar panel technology, the United States played a key role in getting the technology to the point where it was commercially viable. It is only in the fairly recent past that China’s manufacturing prowess wrested the mantle of leader in solar technology.

When I started Rebuild Climate six months ago, the premise was that Trump’s mishandling of the pandemic and the resulting economic crisis would pave the way for a dramatically changed political landscape which would enable massive investments in the transition to a renewable energy economy. The outcome of the election has not supported this thesis. That does not mean that there is no role for Rebuild Climate to play. On the contrary, President Elect Biden will be pulled in many different directions by the broad coalition of interests that were responsible for his victory. We at Rebuild Climate need to keep the pressure on the Biden administration to follow through on their climate agenda. Additionally, while the next Congress will not be nearly as climate friendly as the one we worked so hard for, there is still crucial work that can be accomplished if we keep the pressure on Congress to work on bipartisan solutions.

Over the next few weeks Rebuild Climate will be rolling out new initiatives that reflect the post-election realities. There is still so much valuable work to be done. It's simply a matter of recalibrating our focus so that we make as much progress on climate as possible in as short a time as possible.

Stay tuned!

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