The climate strategy of United States President-elect Joe Biden is based on an ambitious plan to accelerate the low-carbon transition. But, given the political obstacles, it’s unclear how fast it can be implemented. Would this acceleration have a spillover effect on the rest of the world?

The Marathon Petroleum Corp's Los Angeles Refinery in Carson, California, April 25, 2020 (Photo by Robyn Beck / AFP)
The Marathon Petroleum Corp's Los Angeles Refinery in Carson, California, April 25, 2020 (Photo by Robyn Beck / AFP)

The United States formally withdrew from the Paris Agreement on November 4, 2020—the day after the presidential election—as Donald Trump had said it would four years earlier. As soon as the withdrawal came into effect, Joe Biden tweeted: “Today, the Trump Administration officially left the Paris Climate Agreement. And in exactly 77 days, a Biden Administration will rejoin it.” The date is set, but does it herald a historic turning point?

 

 

Indeed, when it comes to climate negotiations, the US has accustomed the rest of the world to repeated flip-flopping: the Kyoto Protocol was adopted under Clinton (1997) but abandoned by the Bush administration (2001); Obama’s Copenhagen commitments (2009) were rejected the following year by Congress; and ratification of the Paris Agreement in 2016 was rebuked by Donald Trump as soon as he became president.

The impact of US return to the Paris Agreement will depend above all on the commitments that the United States is prepared to make to the collective effort, on its political credibility, and on the spillover effect it will have on the rest of the world.

 

What can a Biden administration contribute?

As a candidate, Biden called for a long-term target: climate neutrality by 2050. The goal would be to reduce gross greenhouse gas (GHG) emissions to an amount that could be absorbed by the sinks that remove them from the atmosphere.

This target enjoys consensus among the industrialized countries and has already been adopted by the European Union, the United Kingdom, Japan, and South Korea. Its credibility relies on its breakdown into intermediate objectives that constitute the real benchmarks for climate action. The Biden-Harris administration will have a bit less than a year to lay down the details of its climate policy, as the next COP will be held in Glasgow in November 2021.

In the climate negotiation calendar, the Glasgow meeting will be the most important since the Paris conference held in autumn 2015. It must upgrade the “Nationally Determined Contributions (NDCs)”, i.e. the commitments submitted by individual countries to the United Nations. The current contributions date from 2015 and are far from putting the world on a warming trajectory of less than 2°C, as the United Nations Environment Agency’s “Emissions Gap Report” reminds us.

The Biden administration would be playing a low-profile role if it were to were to reinstate the NDCs that the US had previously submitted. As the aim of that contribution is a 26-28% reduction in emissions by 2025 compared to 2005, the target is hardly restrictive. It could even be reached much earlier due to the impact of Covid-19 on emissions. The return of the United States to the Paris Agreement will therefore have to be accompanied by reassessment of its intermediate goals. But how high should these be set?

 

 

Nathaniel Keohane, an economist who was Barack Obama’s energy-climate advisor, advocates aiming for a 50% cut in emissions between 2005 and 2030. To do so, the effort to achieve for the 2019–2030 period would be of a scale comparable to that targeted by Europe after the current reassessment of its own objectives (see graph below).

 

 

Another good reason to adopt such a proposal is that the objective would be in line with Biden’s campaign plan, which—while it certainly does call for reassessing ambitions—does not mention any figures. This plan sets the bar quite high, by aiming for total decarbonization of electricity production and the elimination of sales of internal-combustion vehicles. Electric power generation and ground transportation together account for half of the country’s emissions.

Once it has been decided how high to set the goals, it will be necessary to agree on the means to reach it.

 

Climate: accelerating green investment

To fulfill its plan, the Biden-Harris administration will have to deal with Congress, particularly the Senate, where, depending on the results of a runoff election to be held in early January, the Republicans will either have a slight majority or a number of votes equal to that of the Democrats.

In the past, the major environmental laws, such as the Clean Air Act, were the result of bipartisan compromises. These latter were still possible in the early days of climate action, when conservatives (Senator McCain) or independents (Senator Lieberman) were committed to it. This was also the case of Biden himself, when as a senator he initiated one of the first climate bills, passed in Congress in 1987 under the Reagan administration.

But during the George W. Bush era (2001-2009), global warming became a marker dividing the political class into two opposing sides. Trumpism has brought this polarization to a crisis point. One of the great political unknowns concerns the future president’s ability to reach the majorities required to push the ambitious laws in his plan through Congress.

As Robert Stavins points out in his forward-looking analysis, it should be easier to find a compromise with Congress on stimulus measures based on tax incentives and subsidies (“nearly every politician’s favorite instrument”), to which will be added federal investments in green infrastructure, mainly in electricity grids and transportation.

Even if these investments do not reach the amounts targeted by the program ($1.7 trillion in federal investments over ten years), they will inject public funds into the low-carbon transition, at amounts far greater than what was achieved under Obama.

While this “Green New Deal” will scale up the wave of investment in renewable energies and low-carbon transportation, it will still be insufficient to reach ambitious emission reduction targets by 2030. To make this possible, rapid and massive disinvestment from fossil fuels is also crucial. And that’s where head-on opposition from the Republicans resurfaces.

 

The mother of all battles: Joe Biden and fossil fuel disinvestment

During his presidency, Obama had started the phase-out of coal in the power sector, although his proposed “Clean Power Plan” could not be implemented due to legal challenges. Despite introducing emission standards for motor vehicles and blocking the Keystone Pipeline expansion project, Obama did not set into motion an equivalent policy on fossil oil and gas.

While Donald Trump was elected on a platform to re-boost coal use, he in no way halted its decline. His policy promoting hydrocarbons, on the other hand, bolstered a strategy seeking to prolong its exploitation for as long as possible (including for Canada’s bituminous oils). That strategy also stimulated hydrocarbon use in transport and a thriving fertilizer and plastics industry.

 

 

Joe Biden’s major challenge will be to accelerate the exit from coal and tackle the exit from oil and gas. This battle will be played out on three levels:

– On the regulatory front, a flurry of executive orders is expected to reintroduce the arsenal of standards and procedures (in particular the calculation of a “social cost of carbon” for federal investments) that were undermined under the Trump administration. From banning drilling in Alaska’s protected areas to regulating vehicle exhausts, these actions will seek to limit the production and consumption of fossil-based oil and gas. The Republican opposition to this is expected to take the form of legal action, which will slow down the initiatives.

– Economic instruments are mentioned in the Biden plan, including the “polluter pays” principle and even a carbon adjustment mechanism similar to the one discussed in Europe. It’s clear that carbon pricing (a tax or quota system) that would raise the price of fossil fuels would be the surest way to end their use faster. But following this path at the federal level would require a hard-to-obtain vote in Congress. In 2010, the Obama administration, which enjoyed a majority in both houses, failed in this because of recalcitrant Democrats… But bottom-up progress still remains possible, as seen by existing mechanisms in California and the East Coast states.

– Support for city and state action will be the next administration’s third weapon. This strategy will be easy to implement in both East Coast and West Coast states, whose climate action has been only partially hampered by the many regulatory and soon-to-be-removed obstacles placed by the Trump administration. The big challenge will be states in between, especially those whose economies are most dependent on fossil fuels: Texas, Wyoming, North Dakota, West Virginia, Oklahoma… These states (which all voted for Trump!) will be the hardest to win over.

In any event, America’s return to the climate negotiations is part of a carefully considered strategy that Biden has developed. It’s based on an ambitious program to accelerate the low-carbon transition. But, given the political obstacles, it’s difficult to say how fast it can be implemented. Can acceleration of that transition have a spillover effect on the rest of the world?

 

Spillover effects on the climate: China, Europe… and the rest

In the short term, climate diplomacy is expected to pick up after the new administration takes office, with Biden having announced his intention to convene a world climate summit in his first year in office.

As Europe’s positions are already known, all eyes will be on China. As the source of just over a quarter of global emissions, its voice weighs heavily. At the United Nations General Assembly last September, President Xi Jinping pledged that China would seek climate neutrality by 2060. The real challenge will be to translate this target into intermediate goals before the Glasgow COP.

During the 2010s, China sharply reduced its emissions growth by curbing the expansion of coal and by developing renewable electricity on a massive scale. However, the NDC it submitted to the United Nations is not very restrictive and allows it to continue a substantial increase in its emissions until 2030. A major step forward for China would be to have its emissions peak occur earlier. But this would require tighter regulations on its thermal power plants, which were unfortunately relaxed in 2018. The Covid-19 crisis combined with the revival of climate diplomacy could encourage leaders to move in this direction.

In the longer term, the most significant spillover effects concern the “rest of the world,” which, once the six top global emitters are removed, has contributed most to the increase in emissions over the last decade (see graph below).

 

 

Figure 1. Data source: J. G. J. Olivier and J. A. H. W. Peters (2020), “Trends in Global CO2 and Total Greenhouse Gas Emissions: 2019 Report. Report no. 4068”, PBL Netherlands Environmental Assessment Agency, The Hague.

 

 

In 2018, the top three GHG emitters (China, the United States and the European Union) were responsible for 47% of global emissions. If India, Russia and Japan are added to the list, 62% of global emissions are accounted for. The “rest of the world,” which is responsible for 38% of global emissions, has contributed most to their increase over the last decade.

And within this group, it is the countries that produce and export fossil fuels that have increased their emissions the most. Since COP-1 (Berlin, 1994), they have been playing for time by slowing down or blocking negotiations. It’s essential to have them join the process again, as it will be impossible to aim for a warming target of less than 2°C without a drastic reorganization of their economies. Politically, this is as complex an objective as, in the American context, dragging Wyoming or North Dakota into the low-carbon transition.

Meanwhile, the least developed countries still account for only a small share of global emissions because of their low per capita emissions. But if they replicate the historical growth paths based on fossil fuels, then tomorrow they will be the world’s biggest emitters. To avoid this, their low-carbon transition should be initiated directly, through a huge investment effort to increase access to energy, which a large proportion of their populations are deprived of.

This is a matter of urgency, because these countries are heavily affected by the economic crisis brought on by Covid-19. The noblest way for United States to accompany its return to the climate agreement would be to propose immediate public debt relief for these countries and to implement a massive green investment program. If Joe Biden were to embark on such a path and make China and Europe partners in it, then the Glasgow conference could become that long-awaited turning point in international climate action.

 

 

The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.

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