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Prospects for Climate Policy under the Incoming Biden Administration

It is now more than two weeks since the November 3rd U.S. election, and 12 days since the Biden-Harris ticket was declared the victor in the electoral college by all of the major news media, but President Trump still refuses to concede, citing (totally discredited) claims that the election was stolen from him by widespread voting fraud. While litigation continues, as well as the war of words, in my most recent podcast, recorded yesterday and released today, we examine the implications of the Presidential and the Congressional elections for climate change policy – both domestic and international.

Usually in my podcast – “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program – I talk with well-informed people from academia, government, industry, or NGOs. But, as I wrote in my blog last week, I worry that advocates and other well-informed people may engage in wishful thinking when making predictions about the next administration’s future climate policy initiatives. It is better for this purpose that I engage with people who are knowledgeable and make it their business to examine such questions objectively – I’m talking about practicing journalists, and not ones from the opinion pages, but rather reporters.

I was therefore delighted to welcome someone whom I greatly respect and with whom I have had the pleasure of working – from my perch in academia – for many years, Coral Davenport, who covers energy and environmental policy for The New York Times from the newspaper’s Washington bureau. You can hear our complete conversation here.

Coral Davenport joined the New York Times in 2013, having first covered environment for Congressional Quarterly, then Politico, and then the National Journal, which is where she was when she and I first spoke. I should note that she began her ascendency in the profession of journalism at the Daily Hampshire Gazette in Hampshire County, Massachusetts, fresh out of Smith College.

Our conversation in the podcast is wide-ranging and nearly comprehensive on the prognosis for climate change policy during the next two to four years, including: how the climate issue may have affected the election outcome; the international dimensions of climate change policy, including the Paris Agreement; the outlook for major climate legislation in the Congress; other, non-climate legislation that can have significant impacts on greenhouse gas emissions, such as economic stimulus packages and infrastructure bills; and regulatory approaches to climate change, including executive orders (Oval Office directives) and rulemaking, as well as the court challenges they may face. That is a great deal of territory, but all of it is covered!

At the outset of our conversation, Coral Davenport credits President-elect Biden with tapping into voter sentiment on climate change, and using it to his advantage during the campaign.

“This is the first presidential election with climate change emerging as a top-tier issue, and a lot of that was because Biden as a candidate chose to do that. He chose to bring it up in a way that no other candidate ever has,” she says. “It’s clear that the political calculus had changed on that [issue] and campaign advisers saw it as something that would at least not drive away voters, and could attract and excite other voters.”

Despite the Biden victory, Coral expresses skepticism that the new administration will muster the support that it needs, both from the left and the right, to pass meaningful energy and climate legislation in the near-term. She notes, however, that the president is expected to re-commit the United States to the Paris Agreement immediately, which will be one step toward reestablishing U.S. credibility on the issue.

“The U.S. has a long way to go to build back its credibility on the world stage on climate, and I think that the Biden Administration will be received with open arms in the international climate community,” she says. “The Biden Administration, I know from interviewing people on the transition [team] and during the campaign, anticipates from day one starting to move forward aggressively with executive authority to put back in place at least some of the big climate regulations that the Trump Administration rolled back.”

For example, she cites the incoming administration’s likely move to reinstate aggressive vehicle fuel economy standards, which were scaled back by the Trump Administration.

“Trump didn’t eliminate it, but he rolled it so far back that essentially he basically canceled it out. We do expect to see a Biden Administration come in and reinstate it very quickly, probably with some new stronger terms. That one is actually pretty straightforward. The federal government has imposed fuel economy standards for decades. And I don’t think it’s ever been questioned that it has the legal authority to do that.”

Coral also expresses some cautious optimism that Congress might agree on a Clean Energy Standard, which would mandate a percentage of zero-carbon sources in the U.S. electricity grid, and for the possibility of green energy components to be folded into a COVID-19 economic relief package and an infrastructure funding bill.

All of this and much more is found in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” I hope you will listen to this latest discussion here. You can find a complete transcript of our conversation at the website of the Harvard Environmental Economics Program.

My conversation with Coral Davenport is the 17th episode in the Environmental Insights series, with future episodes scheduled to drop each month. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the New York Times.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

Prospects for Energy and Climate Change Policy under the New U.S. Administration

In my previous blog post, earlier this week, I offered my personal views regarding “What Do the 2020 U.S. Election Results Portend for Climate Change Policy?” Today, I’m pleased to turn to the views of someone else, Jason Bordoff, a well-informed academic lawyer, who spent considerable time in important climate-policy positions in the Obama administration, and who I assume (and hope, but no hints have been forthcoming from him) will be a candidate for key energy-climate-policy positions in the Biden-Harris administration.

My conversation (interview) with Jason is the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA). As you know, in this webinar series we feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. Jason Bordoff has had significant experience in three of those realms: academia, government, and NGOs. A video recording and transcript of the webinar are available here.

The ultimate professional compliment that I can offer someone after having read something they’ve written is to think to myself, “Gosh, I wish I had written that.” There are two people about whose work I’ve thought that regularly, and neither is an economist like me. One is a political scientist – David Victor at the University of California, San Diego, with whom I engaged recently in my podcast, as described in a previous post at this blog. The other is a lawyer, Jason Bordoff, my guest in yesterday’s webinar

Jason is the Founding Director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, where he is Professor of Professional Practice. In the Obama administration, from 2009 to 2013, he served as Special Assistant to the President, and Director for Energy and Climate Change at the National Security Council, and before that, he was at the National Economic Council and the Council on Environmental Quality. Prior to joining the administration, he was the Policy Director of the Hamilton Project at the Brookings Institution, which is where, I believe, we originally met, when I was commissioned to write a proposal – intended for the incoming Obama administration – for a U.S. cap-and-trade system to address climate change. So, it was a great pleasure for me to welcome Jason to our series, “Conversation on Climate Change and Energy Policy” (with both of us displaying our relatively recent COVID beards).

In our discussion, Jason maintains that the incoming Biden-Harris Administration will have the opportunity to both lift the nation out of recession and combat global climate change by crafting a thoughtful economic stimulus plan containing a significant green energy investment component.

“There is a need for fiscal stimulus and smart government investments that help the economy recover, particularly when the cost of government borrowing is so low. Now is the time to make investments that both help the economy today and help to deliver economic returns in future investments in infrastructure.”

He uses the metaphor of a Venn diagram to illustrate the way he looks at the new administration’s challenge when it assumes power in January.

“If you take a circle of things that are good fiscal stimulus to support economic recovery and a circle of things that are good to advance clean energy, there is certainly overlap with, for example, investment and support for renewable energy, and building infrastructure that will support a transition toward electrification of the transport sector.”

Jason Bordoff admits that President-elect Biden’s proposed $2 trillion of investments in clean energy won’t be an easy sell, particularly if Republicans hold the Senate. However, he notes that during the campaign, President-Elect Biden called for significant increases in funding for research and development on clean energy technologies including grid-scale energy storage, small modular nuclear reactors, and capturing carbon dioxide from power plants. A number of Senate Republicans, including Senator Lisa Murkowski (R-AK) and Senator Lamar Alexander (R-TN), have called for the same. Indeed, Jason notes, during the past four years, despite Trump administration proposals for deep cuts, federal budgets for clean energy innovation actually increased by 25 percent, due to broad bipartisan support.

“But as difficult as it may be to move forward on climate legislation, I think the economy simply needs a lot of help from Washington, and I think both sides of the aisle are going to have to come together,” he remarks, pointing to likely bipartisan support for wind energy projects in the Midwest, and carbon capture and nuclear power in other parts of the country.

Aside from the stimulus package, Bordoff notes that the Biden-Harris Administration will have a number of other policy tools at their disposal to address climate change, including rolling back some of the Trump Administration’s Executive Orders, issuing new Executive Orders, and promulgating smart and effective regulation of local pollution and greenhouse gas emissions.

“There is that executive authority agenda, and still, hope springs eternal that there may be an opportunity at some point to work across the aisle on legislation,” he says, citing recent remarks by Senators Sheldon Whitehouse (D-RI) and Murkowski in which they spoke about the possibility of establishing a national carbon price as one part of comprehensive energy legislation. “I think a well-designed carbon price can do a lot more than many people appreciate, complemented by a range of other tools, to address our market failures.”

Beyond the domestic climate change agenda, Bordoff also emphasizes the need for the United States to reengage with its allies on climate policy, beginning with Biden’s promise to rejoin the Paris Agreement shortly after he assumes office.

“One of the things that really gets me excited about the potential to make progress on climate in the Biden-Harris Administration is that President-Elect Biden has such deep experience in international affairs and takes so seriously the need to rebuild American leadership and cooperation with our allies in the world. “This is the most global of problems. Every ton [of CO₂ emissions] contributes equally to the problem, and 85 percent of the emissions come from outside the U.S., so we are not going to solve this problem unless we engage in and elevate the importance of climate change in all of our matters of foreign policy and diplomacy.”

Finally, following our one-on-one discussion, Jason Bordoff fielded questions from a number of the 200 participants viewing the Forum, eliciting thoughts on issues ranging from environmental justice to international trade. All of this and more can be seen and heard at this website. I hope you will check it out.

Previous webinar in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” and Joe Aldy reflecting on “Lessons from Experience for Greening an Economic Stimulus.”

The next HPCA Conversation on Climate Change and Energy Policy will take place in January. Please register in advance for that event at the HPCA website.

What Do the 2020 U.S. Election Results Portend for Climate Change Policy?

In the November 3^rd U.S. election, the Democratic team of Joe Biden and Kamala Harris defeated incumbent Republican President Donald Trump and Vice President Mike Pence, signaling a major change in the executive branch of the U.S. government. At the same time, it now appears that Republicans are likely to maintain their majority control of the Senate, pending a pair of January 5^th runoff elections for the two Georgia Senate seats. If the Democrats take both seats, the Senate would be tied 50-50, with the Democratic Vice President (who serves as president of the Senate) breaking the tie, thereby turning Senate control over to Democrats. In the House of Representatives, Republicans are likely to gain a relatively small number of seats, but Democrats will maintain their control of that body. More important for the long term, Republicans managed to maintain or flip enough state legislatures to continue to dominate the once-a-decade redistricting process.

There will be numerous changes — many rather significant, and some quite dramatic — in U.S. climate change policy under the Biden administration. But in a variety of ways it will be an uphill battle, just to return to the pre-Trump status at the time President Obama departed the White House, let alone to move beyond that point. The details matter, so please read on.

Significant Changes in Policy Priorities and Norms of Conduct

Mr. Biden and Ms. Harris will be inaugurated on January 20^th, 2021, and will immediately face an unprecedented set of national challenges. As the Biden-Harris transition website indicates, the greatest challenges – and presumably top policy priorities – are: the pandemic, the economic recession, racial justice, and climate change (listed in that order).

The failure of Mr. Trump to be re-elected to a second term brings a dramatic change in leadership at the very top. For the first time in four years, honesty and civility will be hallmarks of behavior, as will fundamental trust in expertise, including in the realm of science. The dozens of political and behavioral norms that have been abandoned by President Trump and his administration will be respected once again. Democratic norms will be restored, racism denounced, and diplomatic relationships will be reestablished with allies. There will be a turn away from xenophobia and hostility toward immigrants, and perhaps some movement toward free trade.

Others have greater expertise than I do to comment on anticipated changes in norms, as well as broader legal and policy issues. I focus in this essay on anticipated changes in public policies regarding climate change, both in the international and domestic domains. Four years ago, it was rather straightforward for me to predict what the newly-elected Trump administration would bring in the climate change realm, as I discussed in the New York Timesand in this blog in November, 2016. This time, however, it is a bit less obvious, because of the moving parts.

I caution readers to beware of advocates on either side making predictions at this very early date about the new administration’s future climate policy initiatives. Predictions from those who advocate particular policies are likely to be infected with some degree of wishful thinking. That may be true not only of professional environmental advocates, but also of academics, like myself, who would like to claim some degree of objectivity. The best I can offer is that I have “no skin in the game,” and so I will try to offer what I hope is an objective assessment of what I honestly believe is most likely to emerge over the next two to four years.

International Dimensions of Climate Change Policy

Readers of this blog probably do not need to be reminded that because climate change is a global commons problem, international cooperation is necessary in order constrain (if not suppress) free-rider incentives. On January 20^th (inauguration day) or shortly thereafter, Mr. Biden is likely to initiate the process of rejoining the Paris Agreement (from which Mr. Trump withdrew the United States on November 4^th, the earliest date permitted by the Agreement). Thirty days after the necessary paper work is filed with the United Nations, the United States will again be a Party to the Agreement. That’s the easy part. The hard part is coming up with a quantitative statement of how and how much U.S. emissions of greenhouse gases (GHGs) will be reduced over time.

This “Nationally Determined Contribution” (NDC) will need to be sufficiently ambitious to satisfy (at least to some degree) both domestic green groups and some of the key countries of the international community. This essentially means that the NDC will need to be at least as ambitious as the Obama administration target of a 26-28 percent reduction in GHG emissions by 2025, compared with 2005. And it will need to compare favorably with the targets now being announced by other major emitters. For example, the European Union is coming close to enacting a new target to cut its emissions 55% below their 1990 level by 2030. And China recently said it will achieve carbon neutrality (zero net emissions) by 2060.

If significant ambition is one necessary condition for the new Biden NDC, the other necessary condition is that it be credible, that is, truly achievable given existing and reasonably anticipated policy actions. The only way that both of these necessary conditions can be achieved is with aggressive new domestic climate legislation.

Of course, the Paris Agreement is not the only possible avenue for international action on climate change, and the administration’s participation in that key agreement may be complemented by bilateral agreements, as well as plurilateral efforts via the G7 or G20.

Domestic Climate Legislation

With a Republican-controlled Senate – or even with a Democratic-controlled Senate with the one-vote margin, which is the best Democrats can hope for – meaningful and ambitious climate legislation will be difficult, if not impossible. The “budget-reconciliation process,” whereby only a simple majority is needed to pass legislation, rather than the 60 votes required to cut off Senate debate, will be available only if every Democrat supports the given legislation, and only for climate measures that are connected to the tax code or mandatory spending.

Under these circumstances, it will be challenging, to say the least, for Democrats to enact President-Elect Biden’s climate plan, including its $2 trillion in spending over four years with the goal of making all U.S. electricity carbon free in 15 years. Keep in mind that the Obama administration’s major climate legislation – the American Clean Energy and Security Act of 2009 (the so-called Waxman-Markey bill) – failed to receive a vote in the Senate, despite the fact that Democrats (and independents who caucused with Democrats) then held a total of 59 seats. On the other hand, climate change is now taken more seriously by the public and receives considerably greater attention in political circles than it did twelve years ago. That said, it is fair to say that the prospects over the next two to four years for comprehensive climate legislation – such as a truly meaningful carbon-pricing system – are not very good.

But other legislation that would help reduce GHG emissions in the long term appears more possible. That includes a post-COVID economic stimulus bill, which might have a green tinge, if not a fully green hue. The Obama administration’s stimulus package enacted twelve years ago in response to the Great Recession included some $90 billion in clean energy investments and tax incentives. Another candidate will be a future infrastructure bill, something both parties seem to recognize is important to upgrade aging U.S. infrastructure. This could include funding for improvements in the national electricity grid, which will be necessary to facilitate greater reliance on renewable sources of electricity generation.

Finally, there are possibilities for bipartisan climate legislation, although with stringency and scope much less than what Biden’s climate plan calls for. The key approaches here might involve tax incentives, that is, nearly every politician’s favorite instrument – subsidies. This may fit well with President-Elect Biden’s moderate approach to governing and his stated desire to work with both parties in Congress. Specific bipartisan options could include policies targeting wind and solar power, carbon capture and storage/utilization, nuclear power, technology initiatives via the government laboratories, and even an electric vehicle rebate.

But such modest, bipartisan initiatives are unlikely to satisfy either the demands of domestic climate policy advocates or international calls for action. Because of this, the new administration – like the previous Obama administration – may have to opt for regulatory as opposed to statutory approaches.

Regulatory Approaches

The new President, under existing authority, could “quickly” take actions through executive orders (Oval Office directives) in a number of areas to reverse many of Trump’s regulatory rollbacks. Will Democrats use the Congressional Review Act, which allows the Congress to nullify a rule within 60 legislative days of its adoption? Republicans used this at the end of the Obama administration, but the law then prohibits Congress from adopting a regulation that is “substantially the same” in the future.

More generally, new oil and gas leasing on federal lands could again be prohibited, and the White House could attempt to block the Keystone XL pipeline from being completed. More promising, the President could direct that the Social Cost of Carbon (SCC) be revised, presumably returning it the Obama administration’s use of global (not just domestic) damages and a 3% (rather than 7%) discount rate in the calculations, thereby increasing the SCC from about $1 to about $50 per ton, and directing federal agencies to use the revised SCC in their own decision making.

Presumably the new administration will move to reinstate and move beyond the Obama administration’s ambitious Corporate Average Fuel Economy (CAFE) standards. In addition, EPA could reverse the Trump administration’s attempts to deny California its waiver under the Clean Air Act to put in place more stringent air-quality regulations than are required under federal law.

Also, there is the possibility of using the authority of the Securities and Exchange Commission (SEC) to use financial regulation of publicly-traded companies to raise the cost of capital for fossil energy development, or to set standards for disclosure of climate-related corporate information. Likewise, the Commodity Futures Trading Commission (CFTC) has itself begun to explore options via its Market Risk Advisory Committee.

Regulatory approaches under existing statutory authority through rulemaking often appear to be an attractive approach, but using new regulations under existing legislation rather than enacting new laws raises another problem – the courts. Rulemaking entails lengthy notice and comment periods, extensive records, and inter-agency consultation, and the rules are subject to potential litigation. The Obama administration promulgated its Clean Power Plan after the Senate failed to deliver on the administration’s comprehensive climate legislation. Note that the Clean Power Plan was subject to a stay from the U.S. Supreme Court even before Trump entered office. Then Trump arrived, and killed the regulation outright.

The real challenge to the regulatory approach is that new regulations are much more likely to be successfully challenged in federal courts in 2021 than they were during the Obama years. This is partly because there are now more than 200 Trump-appointed federal judges. But more importantly, the Supreme Court now has a 6-3 conservative majority, which is very likely to favor literal reading of statutes, giving executive departments and agencies much less flexibility to go beyond the letter of the law or to interpret it in new “innovative ways.” In particular, it is possible that the newly-constituted Supreme Court will move to modify or even overrule the critical Chevron Doctrine (1984), under which federal courts defer to administrative agencies when Congress was less than explicit in a statute on some issue (such as whether carbon dioxide can be regulated under particular sections of the Clean Air Act of 1970, as amended in 1990).

There is also talk of a “whole of government” approach to climate change, in which the White House pushes virtually all departments and agencies to put in place changes that are supportive of decarbonizing the economy. This would be beyond or instead of the focused statutory and regulatory policies described above. Of course, the critical question is what such an approach could actually produce in terms of short-term emissions reductions and/or long-term decarbonizing of the economy.

Sub-National Climate Policy

Even if less than what is hoped for can be accomplished with climate policies at the Federal level over the next two to four years, surely the new administration will not be hostile to states and municipalities taking more aggressive action. Indeed, as I have written about previously in this blog and elsewhere, climate policies at the state level (California) and regional level (the Regional Greenhouse Gas Initiative in the northeast) have become increasingly important, particularly during the four years of the Trump administration. Bottom-up evolution of national climate policy may continue to evolve from the Democratic-leaning states in the recent election – the Northeast, Middle Atlantic, Upper Midwest, Southwest, and West Coast (and possibly Georgia!) – which together represent more than half of the U.S. population and an even larger share of economic activity and GHG emissions.

The Path Ahead

The new administration may find creative ways to break the logjam that has so far prevented ambitious national climate change policies from being enacted (or, if enacted, sustainable). My greatest source of optimism is that the Biden-Harris team, in sharp contrast with the Trump-Pence administration, gives every indication that it will embrace scientific and other expertise across the board – whether that means the best epidemiologists and infectious disease experts designing an effective strategy for COVID-19, or the best scientists and economists designing sound climate policies that are also politically feasible.