In the middle of one of the United States’ most contentious elections seasons in living memory, talk of a bipartisan climate policy may seem like an esoteric idea. Climate action appears to cause particularly deep divisions between the Republican and Democratic parties. The presumptive Republican presidential nominee, Donald Trump, refuses to even acknowledge the problem of anthropogenic climate change, while Democratic candidates Hillary Clinton and Bernie Sanders advocate for bolder measures. Yet, according to David Koranyi, Director of the Eurasian Energy Futures Initiative of the Atlantic Council, amidst all the election noise, subtle shifts underneath party lines indicate that a bipartisan policy may be possible after the presidential elections. Koranyi, author of a new strategy paper on US energy and climate policy, believes the adoption of a national carbon fee could be the cornerstone of a grand climate bargain that all parties could subscribe to.
The United States has a mixed record when it comes to climate action. The country has come a long way in the past decade and managed to reduce its carbon footprint by more than any other nation in absolute terms. The Obama Administration – after its unsuccessful attempt in its first term to push through a cap and trade legislation in Congress – turned to executive action to cut emissions.
At the core of its climate agenda is the Clean Power Plan to be administered by the Environmental Protection Agency (EPA) designed to accelerate the decarbonization of the electricity sector, as well as progressively aggravated vehicle emission (CAFE) standards and reinforced regulations to reduce methane emissions.
Despite the toxic election environment and the partisan bickering, we may face a different political environment after the elections in November
Energy market developments aided the administration’s efforts to reduce emissions significantly, as cheap gas has been replacing coal in electricity generation across the U.S. In the absence of more robust federal climate action, states, cities, and local communities have also charged ahead to reduce emissions with significant results. Renewable energy is spreading rapidly across the country. Wind provided 40 percent of Texas’s electricity for 17 straight hours one windy day last December and utility scale solar plants provided 6.7% of California’s electricity in 2015, up from 0.9 in 2012.
Behind the curve
Yet despite all this progress, the US is behind the curve. Per capita emissions are still more than twice that of the European Union average and two and a half times that of China. The country is not on a path to deliver on its 2025 climate goals, let alone the necessary full decarbonization by 2050. The Supreme Court’s stay on the implementation of CPP, a cornerstone of US INDCs in the COP process threatens even the modest U.S. climate commitments made in Paris. Meanwhile, an aging US energy infrastructure threatens blackouts and major production losses across the economy. Without a more coherent policy framework and robust, centralized push for emissions reductions, the U.S. will fail to achieve its climate objectives and risks being left behind.
The politics of climate and energy security is changing fast. Support among the electorate is growing rapidly for climate action on both sides of the aisle
U.S. climate and energy policies have been historically decentralized and patchy due to political and legal constraints. Political gridlock in Washington has made it particularly difficult to tackle the twin challenges of cutting carbon emissions and modernizing the energy infrastructure.
Climate change may emerge as one of the hotly debated topics running up to the November general elections and will influence not only the presidential race, but many congressional seats as well. The two main parties have been on a divergent path in recent years. Despite efforts in the second term of the George W. Bush Administration to adopt a greener agenda, climate action became a bitterly partisan issue. None of the 17 Republican presidential candidates in the 2016 primaries advocated for policies addressing climate change. Meanwhile all Democratic candidates consider climate as one of the most important economic, environmental and national security challenge, and promote bolder policies ranging from a more incremental approach (Hillary Clinton) to the more radical (Bernie Sanders).
But despite the toxic election environment and the partisan bickering, we may face a different political environment after the elections in November. The politics of climate and energy security is changing fast. Support among the electorate is growing rapidly for climate action on both sides of the aisle, even if voters still rank the problem relatively low on their priority list.
According to a recent University of Maryland survey, even the majority of GOP voters are in favor of stricter fuel efficiency regulations, tax incentives for upgrading efficiency of homes and business, renewable portfolio standards, and even CPP if it is accompanied by assistance to unemployed coal workers and carbon sequestration technology.
A carbon fee would also help revive the commercial prospects of nuclear power to provide essential zero-carbon baseload power generation capacity
There is also increasing recognition of the necessity to invest into America’s decaying infrastructure, including in the energy sector. Ever more clean energy related jobs are created in electoral districts, including in many traditionally conservative ones, influencing electoral calculations of congressional candidates. More and more conservative businessmen are pressuring the GOP and its candidates to adopt more progressive positions in climate. Last fall, eleven Republicans signed a House resolution that called for climate action and a bipartisan climate caucus was formed.
Indeed, some cooperation is already taking place between the parties on energy issues. Renewable energy tax credits were extended for another six years under a budget deal in December 2015; and a bipartisan energy bill on grid modernization, expedition of LNG export licensing and energy efficiency improvement has recently been adopted by the Senate. This could constitute a solid foundation for future efforts to address climate and energy policy challenges.
A possible bipartisan political compromise to design and implement a more robust federal climate and energy policy would require flexibility and pragmatism from both sides. A progressively increasing, possibly revenue neutral economy-wide national carbon fee could be at the heart of a grand bargain. Such a carbon fee could be introduced as part of a comprehensive tax reform long demanded by Republicans.
A market-friendly, transparent, all across the board carbon fee would serve as the central price signal and policy tool, enabling the scrapping of the politically controversial CPP and the phasing out of all energy subsidies for both renewable and fossil fuels beyond 2021. It would propel energy efficiency investments and enhance the competitiveness of carbon capture and sequestration techniques that could provide a long-term future for gas. A carbon fee would also help revive the commercial prospects of nuclear power to provide essential zero-carbon baseload power generation capacity.
The idea of a carbon fee or carbon tax as the cornerstone of climate action is gaining ground internationally and in the U.S.
While Democrats will have to let go renewable subsidies and the CPP, Republicans may want to consider compromising on the revenue neutral nature of the introduction of a carbon fee, and allow for some of the proceeds to be used to both accelerate and ease the pain of the transition. Revenues from the carbon fee could be used to:
- Provide effective assistance to those whose livelihood is disrupted by the energy transition through early retirement schemes, education, and job training programs.
- Provide targeted subsidies to those struggling to pay their energy bills.
- Boost public funding for energy technology R&D, and early deployment in line with the goals of Mission Innovation.
- Boost energy efficiency across the US economy.
- Renew the crumbling transportation infrastructure of the United States, with special regard to urban mass transportation systems, intercity high speed rail networks, and investment into bridging gaps left by the private sector in an emerging national infrastructure catering to electric vehicles.
The idea of a carbon fee or carbon tax as the cornerstone of climate action is gaining ground internationally and in the U.S. It is strongly advocated by the World Bank and the IMF globally and by bipartisan organizations such as the Citizens Climate Lobby, Partnership for Responsible Growth or the Bipartisan Policy Center in Washington, D.C. Different approaches and design options have been thoroughly explored by a series of excellent studies by the World Resources Institute among many others.
A critical, and politically sensitive question is a potential loss of competitiveness and jobs particularly in energy intensive industries should the U.S. chose to unilaterally introduce a national carbon fee. Though more than 80 countries pledged to implement some form of carbon pricing, in the current, increasingly isolationistic atmosphere that may be a tall order. On the other hand, the introduction of a carbon fee by the US could help put pressure on other countries to introduce carbon pricing in one form or another, and could eventually lead to an agreement on a global carbon floor price.
Though the odds are still against it, with heightened awareness in the electorate and growing realization on the Republican side of the costs of inaction both politically and economically, a political space may open up after the elections in November and pave the way for a constructive, bipartisan dialogue on a new US climate and energy policy framework.
David Koranyi is Director of the Eurasian Energy Futures Initiative of the Atlantic Council. This article is based on his new Strategy Paper, A US Strategy for a Sustainable Energy Future, published on 4 May by the Atlantic Council, in which he presents a three-pillar strategy for a new US energy policy which focuses on preventing the catastrophic consequences of climate change by accelerating the modernization of its energy sector without creating major disruptions to the American lifestyle.