Tag: Paris Climate Agreement

The Future of European Climate Change Policy

In my previous blog post, on January 14th, I offered my personal views regarding “International Climate Change Policy & Action in the Biden Administration.”  Today, I’m pleased to turn to a parallel assessment of future European climate change policy by Ottmar Edenhofer, a greatly-accomplished German economist, admired by academics, as well as leaders in government, industry, and non-governmental organizations.

Professor Edenhofer’s presentation, “The European Green Deal – Reform or Regulatory Tsunami?” and our subsequent discussion 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.  A video recording (and transcript) of the entire webinar is available here.

Ottmar Edenhofer is Professor of Economics at the Technical University of Berlin, the Founding Director of the Mercator Research Institute on Global Commons and Climate Change, and Co-Director and Chief Economist of the Potsdam Institute for Climate Impact Research.  He has been a major contributor to scholarship on the economics of energy and climate change, and served as Co-Chair of Working Group III of Fifth Assessment Report of the Intergovernmental Panel on Climate Change, where I had the pleasure of working under his leadership.  He is a key advisor of the German Government, as well as the European Union.  He holds a Ph.D. in economics and a B.A. degree in philosophy (a pairing of degrees which –  I’m delighted to say – he and I share).

In his presentation and the discussion that follows, Ottmar Edenhofer offers a frank assessment of the European Green Deal’s potential to significantly address the impacts of global climate change. 

“It’s a very good time to talk about the European Green Deal because now the prospects that United States and Europe could work closer together on climate change or climate policy and energy policy are very good,” Ottmar notes, referring to the change in U.S. administrations and recent remarks by European Commission President Ursula von der Leyen reaffirming the European Union’s (EU’s) intent to reduce its target for emission reductions from 40 percent to 55 percent by the year 2030 and to achieve net carbon neutrality by the year 2050.

Calling it a “huge task,” Edenhofer outlines the actions that would need to occur to achieve such ambitious goals, including enhanced efforts to decarbonize the power sector, accelerated electrification for end-users, increased investments in bio-energy and semi-synthetic fuels, and advancements in carbon dioxide removal technologies. Using the EU’s climate policy impact assessment as a framework, he walks us through three different policy scenarios, ranging from one that relies heavily on regulation to one structured primarily around carbon pricing.

Characterizing the heavily regulatory approach as a “high-risk scenario,” he instead promotes the idea of an “intermediate step” in a which a mix of policy measures and carbon pricing are deployed to move toward the goal of a 55-percent carbon emissions reduction, and toward a longer-term strategy of using carbon pricing alone as the primary driver in CO2 reduction efforts.

“The crucial question therefore is, how can we design this intermediate step, and this is really the most important debate around this reform proposal,” he says, noting that several issues would need to be addressed.  “The intermediate step has to address the distributional issues and guarantee the stability and manage the political economy challenge between the sectors.”

Professor Edenhofer suggests that the intermediate step that may gain the political support necessary to succeed would be one that would allow for two separate emissions trading systems – one for the energy and industry sector, and the other for transportation and buildings.

“Meanwhile we could define gateways between these two systems. “Creating such gateways might have a two-fold effect – the first one is that market participants already anticipate that there are gateways and they anticipate these enterprise expectations, and this could lead to a convergence of the different prices across the sectors. And secondly, this is a starting point to manage the division of labor among the sectors, and this could be a credible pathway toward a carbon-price scenario when we have one ETS with one credible CO2 price scenario.”

In his presentation, Edenhofer also acknowledges the role that fiscal federalism could play in affecting the future direction of climate policy in Europe. While arguing that carbon pricing could generate roughly 800 billion euros between now and 2050, he notes that the funding base would shrink over time as emissions decrease, and therefore would not serve as a stable revenue source.  He has answers for this challenge as well.

After his presentation, Professor Edenhofer responds to questions from the virtual audience of more than 200 people. One question focuses on the impact of the new Biden-Harris Administration in Washington on global efforts to address climate change.

“The good thing is they are back in the Paris Agreement.  The announcement alone that the U.S. is committed has already helped.”

All of this and much more can be seen and heard in the full webinar here.  I hope you will check it out.

Previous webinars 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,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” and Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration.”

The next bi-monthly HPCA Conversation on Climate Change and Energy Policy will take place in March.  You can register in advance for that event at the HPCA website.

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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:

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

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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.

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