Good climate policy is also good economic policy – ITEP
As Congress moves towards a bipartisan infrastructure package – with a planned $ 3.5 trillion follow-up spending bill that follows suit – a “No climate, no deal” demand.
This ultimatum from climate activists recognizes the existential threat posed by climate change, underscored by recent fires on the West Coast so extreme they have created their own climate and flooding that has filled New Town subway stations. York. He also recognizes that climate action is long overdue and that the next reconciliation bill – which can be passed with the approval of just 50 senators plus Vice President Kamala Harris – is our best way to reduce emissions before it’s too late, especially since the package contains no money for clean energy tax credits and only 10 percent of the funding for electric vehicles that President Joe Biden has initially proposed. To mitigate climate damage, Congress must act immediately to meet the ambitious but essential goal of achieving net zero emissions and preventing global temperatures from rising more than 1.5 ° C above pre-industrial levels.
Since Senate rules governing the reconciliation process require action to have a direct impact on the budget, many of the proposals are structured as tax code changes. The centerpiece of these is a Federal Clean Energy Standard (CES), which would provide subsidies to utility companies that are rapidly moving away from producing fossil fuels or gas to invest in clean technology and would impose penalties on those who do not.
By subsidizing innovation and investment in clean energy while penalizing the status quo, CES can help America’s energy sector move quickly away from fossil fuels, coal and gas to avoid the worst effects of the crisis. climate. The good news is that we know these policies can work: 31 states plus Washington, DC and Puerto Rico have already implemented renewable energy portfolio standards, with 11 of them setting 100% clean energy as their future goal. . Research shows that half of the growth in renewables since 2000 is associated with these national standards.
In addition to these credits and penalties, Biden and Democrats in Congress have proposed ending fossil fuel subsidies, the bare minimum for any climate legislation. It makes no sense to try to decarbonize our network while providing at least $ 20 billion a year in tax freebies to the worst offenders. More broadly, corporations and the richest 1% are responsible for the vast majority of global carbon emissions, which means that until Congress ends the dizzying series of tax loopholes for businesses and corporations. wealthy, the tax code effectively helps finance carbon-intensive business models. and lifestyles.
At the same time, Democrats are considering a border carbon tax, similar to the proposal accepted by the European Union last month. The tariff would apply to imports of carbon-intensive products like aluminum, steel and iron, with the tax amount corresponding to the additional cost of complying with national climate policies. The goal is twofold: 1) to encourage companies in other countries with less stringent climate regulations to invest in cleaner production infrastructure, and 2) to discourage US companies from moving their production facilities – and jobs – to the world. abroad so that they can avoid national regulations and continue to pollute. .
While this plan would put real pressure on foreign companies, it would also be administratively difficult to accurately assess the emissions of these companies, let alone determine the appropriate adjustment price to bring them to par. with the cost of compliance with US regulations. This is made more difficult by the fact that CES would operate on a sliding scale depending on the sector and region, as opposed to an EU-style cap-and-trade system that imposes an explicit carbon price, currently set. at about $ 60 per tonne.
Further measures to combat climate change will be necessary even if the bill is passed with these proposals intact. The basic plan to avert climate disasters is to tightly regulate current emissions, immediately start decarbonizing the energy grid, and quickly electrify homes, buildings, vehicles and appliances. These goals require a direct and sustained effort from the government, similar to the production economy under FDR in the pre-WWII era that unified public agencies, private businesses and ordinary citizens to collectively combat the existential threat that weighed on the country and the world at the time.
As with any major law, it is crucial to keep in mind the implications for marginalized communities. On this front, the current proposals are doing well.
First, the cost of unmitigated climate change is high. In a high emissions scenario, climate change could cost US $ 500 billion per year by 2090, and low-income communities and communities of color regularly experience worsening heat waves and natural disasters, as well as health complications due to pollution from factories and electricity. plants.
At the same time, strong subsidies for clean innovation and technology will lower the cost of clean energy and increase the access of low-income households to energy efficiency improvements. Fossil-fuel-based energy will inevitably become more expensive under any meaningful climate policy, but the proposed bill may pave the way for cleaner, more affordable alternatives, even before taking into account the savings from the energy savings. health benefits and climate damage reduction.
In addition, the broader tax policy priorities included in the reconciliation bill, such as the major expansion and reform of the child tax credit, will significantly improve the economic security of millions of families during this transition period. towards a cleaner energy future.
Finally, by funding a Civilian Climate Core – which would directly employ 1.5 million American workers to help the United States make the transition to a clean economy – in the reconciliation bill, Congress is proving it doesn’t There is no need to compromise between a good political climate and a good economic policy. Direct hires aside, an even bolder government-backed effort to secure the future of our planet could create up to 25 million net new jobs at its peak, as well as 5 million permanent jobs, many of them permanent. directly concern national infrastructure and cannot be outsourced. With the US economy still down 5.7 million jobs from pre-pandemic levels, climate legislation can be a critical investment to jumpstart our economic recovery.
Ultimately, the upcoming reconciliation bill represents Congress’ first chance to pass meaningful climate legislation in more than a decade. He cannot waste the opportunity with half measures that do not prevent a climate catastrophe. The benefits of bold climate legislation run deep and the cost of inaction is unthinkable.