The bumps ahead for Joe Biden’s plan to decarbonise America

Source: By The Economist • Posted: Monday, April 12, 2021

The green and the blue

IN 2020 LOCKDOWNS caused the largest single-year drop in America’s greenhouse-gas emissions on record: some 10%. Even then, for every American 16 metric tons of carbon dioxide were released into the atmosphere. By 2050 President Joe Biden would like that number to be net zero.

Getting there within three decades seems daunting. Every sector, not just electricity generation, would need decarbonising. Other things like cars, buildings, farms and factories (which together produce three-quarters of today’s emissions) would need to go the same route. Action so comprehensive could only come from Congress, which has long been deadlocked. On March 31st Mr Biden unveiled his effort to right this state of affairs.

In total his American Jobs Plan would cost more than $2trn over eight years. Half of this is devoted to matters like fixing roads and bridges, establishing universal broadband and removing lead pipes that carry water. The $1trn or so of climate-specific spending is roughly half the size of the clean-energy plan Mr Biden released during his campaign. It appears to have been slimmed down so that its costs could eventually be covered by a corporate-tax increase. Still, if passed it would be the most far-reaching climate bill ever enacted. It aims to decarbonise the economy by 2050, and to make electricity carbon-free by 2035.

The plan is heavy on incentives. Tax credits for clean-energy, which helped nurture the wind- and solar-energy industries, would be extended for ten years. Subsidies would be doled out to retrofit 2m buildings, put up high-voltage power lines, and incentivise technologies such as direct-air capture of emissions and floating offshore wind turbines.

The president’s plan proposes $174bn in spending on electric vehicles, to subsidise production and sales as well as to establish a network of 500,000 charging stations across the country by 2030 (six times the current number in America). To make alternatives to driving more attractive, $165bn would be spent to modernise public transport and rail networks. And $180bn would be ploughed into basic-science research, much of it climate-focused.

Though Mr Biden opposed the sweeping Green New Deal during his campaign to be president, his plan retains much of its ethos—of advertising large clean-energy investments as boons for organised labour and racial equity. “If we really want to build back millions of good-paying union jobs, jobs that were threatened during the pandemic, then this is the future for us,” says Gina McCarthy, the White House national climate adviser. Jobs programmes reminiscent of the original New Deal, like creating a civilian climate corps or putting former fossil-fuel labourers to work capping abandoned mines, are scattered throughout. The proposal includes a pledge that 40% of the clean-investment benefits will go to previously disadvantaged communities; exactly how is unexplained.

To succeed, Mr Biden will need a stick amid the feast of carrots. Achieving carbon-free electricity generation by 2035 would mean cutting emissions by 7% of current levels every year. That is unlikely to happen through subsidies alone. Mr Biden did not opt for a (politically unpopular) carbon tax. Instead, he proposed a federal clean-electricity standard that would become increasingly stringent over time.

That decision could dent the plan’s prospects. Because the package is unlikely to attract the ten Republican senators needed to surmount a filibuster, it is almost certain to be pushed through using “reconciliation”, a filibuster-free budgetary process. Reconciliation rules require that provisions be mainly budgetary and not merely regulatory. Some argue that the clean-electricity standard can be written in such a way as to pass this restriction, though it is not certain. If the linchpin of Mr Biden’s plans were ruled inadmissible, a scramble to replace it would ensue.

Shepherding the plan through Congress will be a delicate operation. The progressive wing of the Democratic Party is guardedly enthusiastic. Senator Edward Markey from Massachusetts, the main promoter of the Green New Deal in the Senate, supports Mr Biden’s initiatives, while also pushing a far more expansive plan to spend $10trn over a decade and create 15m jobs. “Many of my Republican colleagues have chosen to bury their heads in the sand on this crisis,” he says. “I’ll make sure the bill isn’t watered down just to secure the pretence of some bipartisanship.”

Without Republican votes, unanimity among Democrats would be needed to pass the law. Conservative Democrats will want concessions: Senator Joe Manchin from West Virginia, for example, may demand a heavy price to accede to setting a death date for the coal industry within 15 years. The 30-year journey will not begin easily.