Biden Promises to Cut U.S. Emissions in Half from 2005 Levels
The Biden administration kicked off their two-day Climate Leaders’ Summit on Earth Day, April 22, 2021, and concluded the event on April 23, 2021. The intent of the summit is likely to reestablish the negotiating position of the United States prior to the United Nations climate change conference (COP26) this November in Glasgow, Scotland. Vice President Kamala Harris introduced President Biden to kick off the event. To open the summit, President Biden announced a new target for the United States to achieve a 50%‒52% reduction from 2005 levels in economywide net greenhouse gas (GHG) pollution in 2030. The National Climate Task force will be tasked with parceling out sector-by-sector goals for this Nationally Determined Contribution (NDC). By comparison, President Barack Obama pledged to cut emissions 26%‒28% from 2005 levels by 2025. EPA last reported that the U.S. cut emissions 13% from 2005 levels in 2019.
The newly created target and accompanying fact sheet issued by the administration did not provide details on how individual sectors will contribute to the NDC. The fact sheet reiterated the Biden campaign pledge to bring electricity sector emissions to net-zero in 2035. Additionally, decreases in emissions from the building, transportation, forests, agriculture and industrial sectors were targeted. Emitters of methane and non-CO2 greenhouse gases were also named, although specific goals and targets were not defined. Environmental groups and Sen. Ed Markey (D-MA) in the days leading up to the event had urged President Biden to include a pledge to reduce methane emissions as part of the country’s updated commitment.
The United States, Japan, Canada and South Africa were the only countries to explicitly set new goals in regard to emissions over the next 10 years. President Biden announced that the United States would work to cut emissions by 50% to 52% by 2030. Japan stated they would work toward a 46% reduction. Canada will work to reduce emissions 40% to 45% by 2030. Lastly, South Africa said they would reach peak emissions by 2025. Other countries reaffirmed past commitments to curb emissions. Notably, Brazil said they would end illegal deforestation by 2030 and be carbon neutral as a country by 2050.
How the administration hopes to accomplish the new U.S. climate target is a big question. The American Jobs Plan, a $2.25 trillion infrastructure plan, is likely needed to fund many of the domestic investments needed to stem GHG emissions. However, a legislative path is unclear at the moment and Senate Republican counteroffers for infrastructure have left energy and climate policy out entirely. Some in the administration have opined that the executive branch alone could act to meet these targets, but many environmental organizations and industry alike doubt that assertion. Additionally, key components of the president’s plan to spur job creation in energy communities hinge on the passage of the American Jobs Plan. Still, federal environmental agencies such as the U.S. Environmental Protection Agency (EPA), the Department of the Interior (DOI) and the Department of Energy (DOE) will be critical in setting regulatory schemes and pursuing enforcement actions to advance the administration’s climate priorities.
Day One Initiatives
The Biden administration announced two initiatives to help reduce GHG emissions on day one of the summit. The first of which was an International Climate Finance Plan followed by announcements on steps taken to bolster electric vehicle charging infrastructure. Brownstein has outlined some of the highlights from these two initiatives below. The administration also took the opportunity to announce 12 new climate-oriented nominations sent to the Senate. Lastly, to close out the day, Press Secretary Jen Psaki was joined by Special Presidential Envoy for Climate John Kerry and National Climate Advisor Gina McCarthy for a special Earth Day press briefing.
International Climate Finance Plan
In remarks made by President Biden during Climate Session 2: Investing in Climate Solutions, the president laid the groundwork for the International Climate Finance Plan calling for stronger climate-related investment. The White House, drawing on Sec. 102 of the Jan. 27, 2021, E.O.14008 “Tackling the Climate Crisis at Home and Abroad,” laid out a framework to approach international financing of clean energy to address the climate crisis in developing countries. The plan is coupled with a pledge made by President Biden to contribute $5.7 billion in climate finance annually by 2024. Initial reactions from developing countries and environmental advocates were that the funds were not enough to assist developing countries most impacted by climate change, including countries that must adapt to survive. Many countries stated they would only be able to make pledges for decreased emissions if they were coupled with more climate finance.
The International Climate Finance Plan rests on five pillars to encourage investment that involve a number of international aid agencies. Brownstein has outlined the five pillars below.
(1) Scale Up Finance: The U.S. will encourage improved coordination within international agencies tasked with administering the $5.7 billion in funds. These agencies include the U.S. Agency for International Development (USAID), the Development Finance Corporation (DFC), National Security Council (NSC), Millennium Challenge Corporation (MCC), Department of Energy (DOE), U.S. Trade and Development Agency (USTDA) and the Department of the Treasury (which can direct U.S. executive directors in multilateral development banks (MDBs)). These agencies will all be tasked with creating climate plans for better assistance with developing countries’ climate mitigation. Additionally, the Department of State, Department of the Treasury’s Office of Technical Assistance (OTA), USAID, MCC, DOE and DFC will also be tasked with capacity building and technical assistance for these nations. Both international and domestic environmental agencies alike will need to assist with coordination on these issues and share U.S. best practices. Bottom line: the Biden whole-of-government approach will require significant coordination between U.S. agencies and their international counterparts.
(2) Spur Private Sector Finance. DFC, USAID, MCC, Department of State, the Department of Commerce, the EXIM Bank, USTDA and Department of the Treasury will all be tasked with encouraging and supporting initiatives that will spur private sector finance of climate-friendly international development. This includes technical assistance, promotion of private finance, reducing risk associated with investments, and greater coordination with MDBs. The Department of the Treasury will also be tasked with ensuring MDBs can be more creative with their balance sheets in order to encourage more climate finance.
(3) Cut Off International Investments in Fossil Fuels. The U.S. will seek to end practices at bilateral and multilateral agencies that provide financing for carbon-intensive fossil fuel energy projects. The departments of State and Treasury in coordination with NSC will seek to phase out investments and international subsidies while promoting more clean energy investments. The Department of the Treasury will also take steps to work with the Organisation for Economic Co-operation and Development (OECD) to modify official export financing to better align with climate finance goals. Lastly, the DFC will aim for its portfolio to include net-zero emissions by 2040.
(4) Shift the International Market Toward Climate-Friendly Investment. The administration will seek to encourage investments through (1) improved information on risks and opportunities surrounding climate change; (2) identification of preferred climate investments; (3) management of climate-related risks; and lastly, (4) ensuring government investment portfolios and strategies align with climate objectives. During the summit and in recent statements, Biden officials have discussed harmonizing a climate-risk disclosure scheme with international standards. Doing so will require the Department of the Treasury to work with several international actors including the Financial Stability Board (FSB), the International Association of Insurance Supervisors, the G20, and the IMF to ensure domestic policies related to climate risk disclosure and investing align with international principles.
(5) Set U.S. Standards for Defining, Measuring and Reporting International Climate Finance. The Office of Management and Budget (OMB) is tasked to work with the NSC staff and the Special Presidential Envoy for Climate (SPEC) to define, measure and report on climate-related investment abroad. This is to ensure the best rate of return for taxpayers as well as create standardized reporting mechanisms to the OECD. U.S. agencies will then need to report their activities per OMB guidance.
Domestic EV Deployment
The other initiative announced is a central part of the Biden administration’s plan to decrease emissions—rapid deployment of electric vehicles (EVs). The White House released a fact sheet on steps taken by the Department of Transportation (DOT), DOE and the General Services Administration (GSA) to advance EV charging infrastructure. Brownstein has outlined some of those steps below.
(1) DOT released guidance on how grants may be used to support charging infrastructure and newly designated alternative fuel corridors. The guidance expands EV charging eligibility for $41.9 billion in federal grant funding in 15 specific programs. The newly designated alternative fuel corridors are now federally designated highway segments that support alternative fuels, including electricity.
(2) DOE announced new funding and partnerships for EV charging R&D. The funding announcements provide $34 million in new funding opportunities. Additionally, DOE and the Electric Power Research Institute (EPRI) announced a national EV charging technical blueprint to enhance charging and grid interaction. Additionally, research partnerships with automakers and the Idaho National Laboratory (INL) were announced.
(3) Lastly, GSA announced that they had procured more EVs for the federal fleet this year than in the previous fiscal year. Ramping up the number of EVs procured for the federal fleet has been a key component of the Biden administration’s efforts.
Day Two Initiatives
On day two, the administration released a fact sheet reiterating the commitments of the administration to reaching the NDC through various means—including federal funding commitments—as well as recommitting to the International Climate Finance Plan. The president addressed the summit once more during Session 5: The Economic Opportunities of Climate Action. The remarks set the stage for the release of the Biden administration’s plan to invest in coal and power plant community economic revitalization.
The plan outlines a number of existing and proposed programs that would spur job creation and create opportunities for communities facing job losses as a result of the clean energy transition. This transition would invoke the work of several agencies across the federal government. The plan would require new job creation through infrastructure investments, environmental remediation and restoration, and clean technology innovation. However, much of the proposed job creation is contingent on passage of the American Jobs Plan or some similar infrastructure legislation. Brownstein has conducted an analysis of the American Jobs Plan and continues to monitor the infrastructure debate in Congress.
More to Come?
A much anticipated domestic climate finance executive order (EO) may be released, as well as other U.S. initiatives to support the NDC. Brownstein will continue to share its analyses of these developments as they unfold.