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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Greening an Economic Stimulus: Lessons from Experience

As the U.S. Congress and the Trump administration continue to discuss the possibility of a second major economic relief bill, many observers in this country and other countries maintain that any eventual economic recovery package ought to include green elements that can help move the country along a path toward a more carbon-friendly society.  That is the topic of the most recent (October 19th) webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA), in which I have the pleasure of hosting my colleague, Joseph Aldy, Professor of the Practice of Public Policy at the Harvard Kennedy School

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 this latest webinar are available here.

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Joe Aldy has had significant experience in more than one of those realms.  In addition to being a professor at Harvard, Joe has worked in government in a variety of positions, most recently as Special Assistant to the President for Energy and Environment in the Obama administration.  On a personal note, I’m pleased to say that we have been colleagues for many years, going back to when Joe was a Ph.D. student in economics at Harvard.  Subsequent to that, when he was a Fellow at Resources for the Future in Washington, D.C., he and I were the co-founders of the Harvard Project on Climate Agreements.  Over the years, we’ve co-authored quite a few books and articles, including one that will be published later this year in Climate Change Economics.

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In his webinar presentation and the subsequent discussion, Joe shares his perspectives on lessons that can be learned from the 2009 American Recovery and Reinvestment Act, which policymakers can apply to future economic stimulus negotiations.

“There is clearly a growing interest in thinking about ways in which we can both tackle the COVID-19 recession, establish an economic recovery, and rebuild the economy, and do so in a way that addresses climate change,” Aldy remarks. To do so, he continues, a plan must be timely, targeted, and in some ways temporary, so as not to outlast its need and effectiveness. “At the end of the day you need something that is politically viable. You need something that is a bill that can then become a law. All of this should play into how we think about the design, crafting, and subsequent implementation of a recovery program.”

Aldy highlights the successes of the 2009 Recovery Act, pointing to the 900,000 jobs it created through green energy investments, and the subsequent growth in renewable power, particularly solar and wind.

“I think what’s important is not just to think about what was the impact of having subsidies for two or three years during the Recovery Act period for wind and solar, but recognizing that pushing out those technologies in those early years helped drive down the cost over time to enable even more significant expansion in our capacity of wind and solar in the past half dozen years,” he said.

But Joe also points out the shortcomings of the Recovery Act, arguing that some elements, like the “Cash for Appliances” subsidy program, were poorly targeted, rewarding those who would have purchased the items even without government assistance. He also cites the fact that some green projects, like carbon capture and storage and high-speed rail, were nixed or downscaled when non-federal partners withdrew from their obligations and the federal government chose not to move forward on its own.

Targeting programs so that they reach underserved and lower-income populations is important, Aldy notes, but so is the simplicity of design.

“Simplicity is really important, although I recognize there is a tension between wanting to be very thoughtful and how you target. Sometimes you might need to be a little less simple to be more effective in targeting, but you want to try to strike the right balance so that you don’t make the program so complicated that a lot of potential participants in the program shy away from its complexity, or delays the rollout of the program.” 

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When we are halfway through the one-hour session, I pose some questions submitted by members of the virtual audience on a wide range of issues.  One question seeks Joe’s insights about how a Biden Administration, if elected in November, would differ from a second-term Trump Administration in its approach to advancing a green economic stimulus package.

“If Trump were to be re-elected, I don’t think there will be much that would be meaningful that would be focused on green energy in a recovery package,” he said. “For a President-elect Biden, I think that there could be considerable investment here. He has talked about…a significant ramping up of spending on the order of $2 trillion over four years, and a large fraction, about 40-percent, would try to target underserved communities.” 

Regardless of who is elected, Aldy says, policymakers need to be cognizant of the politics of green energy investment, and design their programs accordingly to appeal to elected officials in red as well as blue states.

“They may not talk much about climate change, but if it means creating demand for new construction jobs in their district or in their state, that might be something that they find attractive,” he argues. “At the end of the day, there’s a bit of the politics and the sausage making, if you will, in how you craft all the different kinds of components into a piece of legislation that effective leaders, people who know how to pass bills in Congress, know how to do that so they can then count the votes and get their bills passed in their chamber.”

All of this and more can be seen and heard at this website.  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,” and Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery

The next HPCA Conversation on Climate Change and Energy Policy is scheduled for November 12th with guest Jason Bordoff, Professor of Professional Practice in International and Public Affairs at Columbia University.  Please register in advance for that event on the HPCA website.

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Opportunities and Risks for Green Economic Recovery

In our most recent (August 19th) webinar in the series of Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA), I had the pleasure of hosting Rachel Kyte, Dean of the Fletcher School of Law and Diplomacy at Tufts University.  This webinar series features leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government.  In this case, my guest has had her feet planted firmly in more than one of those realms.  Previously Dean Kyte served as a Special Representative of the U.N. Secretary-General, and before that was Vice President and Special Envoy for Climate Change at the World Bank.  A video recording and transcript of the webinar are available here.

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Due to the global COVID pandemic, the webinar was executed remotely.  The consequent economic downturns have made many countries think about the design of their respective economic recovery packages, including the possibility of greening recovery policies and instruments.  This was the topic of Rachel Kyte’s presentation, “Using the Pandemic Recovery to Spur the Clean Transition – Opportunities and Potential Pitfalls.”

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Citing the fact that 180 nations are in severe recessions, with some possibly teetering on the brink of depression, Dean Kyte describes the current moment as an opportunity to “pivot to a trajectory that would get us closer to being on track for the kind of economic pathway forward that we would need to reach zero net emissions by mid-century … in order to combat the worst impacts of climate change.”  Leveraging that opportunity, however, will be complicated, Kyte explained, noting that the severe economic stress caused by the pandemic is “testing the boundaries of international solidarity.”

“We are about to see over the fall, I think, some of the cumulative impacts of the economic crisis on our financial systems. And we can see that the traditional mechanisms and multinational cooperation which we rely upon in order to attack issues of global public good are straining. They are straining with COVID and they are straining with the impacts of climate change,” she says.

It is imperative, she argues, for citizens, institutions, and governments to recognize the severity of the situation, and muster the political will to address the severe economic pains caused both by the pandemic and unmitigated climate change.

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“We will really be putting pressure on the systems that are normally in place to support that – the IMF, the multinational development banks, the role of central banks,” she points out. “In these economic crises, it is the least well off, the most vulnerable, and the most vulnerable to climate change, who are impacted the most. And what we’re looking at is wiping out the advances that have been made in poverty alleviation over the last few years. That has huge impacts for the way we think about vulnerability to climate change going forward.”

Over the short-term, however, Rachel Kyte acknowledges that economic contractions have reduced carbon dioxide (CO2) emissions, as global energy demand is expected to fall by about six percent in 2020, compared with 2019. But demand will pick back up when economies rebound, she notes, unless there are systematic efforts to change it. Those efforts, she remarks, can be strategically incorporated into economic relief packages that will continue to emerge.

“There are, I think, a number of think tank groups, [and other] regional bodies now suggesting that there are clear policy priorities in order to be able to hit that sweet spot of short-term recovery, but also a cleaner and faster pathway down the energy transition,” she remarks. She specifically cites the need for green “shovel-ready” projects aligned with rescue plans for distressed industries that adhere to a pathway of deep decarbonization and increased energy efficiency. Rachel also discusses the need for smart private finance and investment in green technologies, and sufficient international cooperation necessary to spare developing countries crushing debt loads that would cripple their climate change mitigation efforts.

Referring to the nature of such a green energy pivot, she remarks that, “We’re at a moment where we need both scaffolding and scholarship or new design. The scaffolding is that we have an international system that helps us respond to pandemics, that helps us respond to economic crises, and that should help us to respond to climate change. And that system is really underperforming, at risk, and under strain.  So, we have to in this immediate phase put scaffolding around it and help it limp forward and help us all limp forward together.”

During the webinar, after concluding her presentation, Dean Kyte fields questions from the audience, including the risks of economic rescue packages that worsen the effects of climate change, the potential for reductions in Overseas Development Assistance budgets to the developing world, the challenges of green aid in Africa, obstacles facing the United Nations Framework Convention on Climate Change (UNFCCC) in making substantive progress, Mexico’s mixed record on climate change policy, and potential incentives to encourage developing countries to adopt green recovery trajectories. 

All of this and more can be heard and seen 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, and Jake Werksman’s assessment of the European Union’s Green New Deal

The next HPCA Conversation on Climate Change and Energy Policy is scheduled for September 8th with guest Joseph Stiglitz, University Professor at Columbia University.  Click here to register in advance for that webinar.

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