As the world’s policy and business leaders descend on New York for climate week, the urgency to coalesce around a concrete set of solutions to reduce greenhouse gas emissions is ever-present.
The United States’ 2050 global climate goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels may be passing beyond reach. Moreover, models now predict that there is a 50 percent chance of reaching a 2-degree level by mid-century, which would result in significantly worse impacts from climate change.
Where does this leave U.S. political and business leaders?
In 2021, the U.S. set the goal of achieving net-zero emissions by 2050. These align with the goal of the global Paris Agreement on climate change, aimed at holding the rise in global temperatures to 1.5 degrees Celsius above pre-industrial levels.
Yet reducing greenhouse gas emissions is not the work of a moment. Getting there will take significant investment in a variety of efforts, including using more renewable energy sources and nuclear power, and reducing emissions, including methane, in all major sectors of the economy. It will also require training workers for jobs in the energy transition economy.
Most of all, though, it will require greater innovation and research and development. Many of the technologies necessary to achieve net zero are still experimental and need to rapidly come to scale; others have not even been discovered yet.
Thus, the principal task for policymakers and business leaders is working in close partnership — not in conflict — to ensure that this transition maintains energy independence and security while managing significant associated costs. A comprehensive and resilient U.S. strategy must avoid the distortions of a heavy-handed industrial policy and build on a market principles foundation, accelerate innovation and preserve U.S. global competitiveness.
Congress has already allocated hundreds of billions of dollars in historic federal investments and tax credits related to climate change in three laws: the Inflation Reduction Act, the Infrastructure Investment and Jobs Act and the CHIPS and Science Act. Now, political and business leaders must ensure that the money is spent wisely.
Most importantly, this investment should catalyze further private-sector innovation. Public-private partnerships can stretch funding to supplement public expertise and resources and help manage lifecycle maintenance and costs. It will be essential both to collaborate with business leaders to encourage bold ideas and new technology, but also to recognize when programs have not succeeded and to redirect research funding appropriately.
In short, let the private and public sectors do what they do best. For business, that means innovating in response to market forces. For the public sector, it means the government ensuring that funded programs proceed expeditiously while providing diligent contract award and implementation oversight as well as applying cost-benefit analysis to prevent money from being wasted.
That will be a solid start, but more work will be required in this transition. Greater use of renewables will mean redoubling the focus on power storage and transmission. The National Renewable Energy Laboratory estimates that decarbonizing the electricity sector by 2035 would entail a three-fold increase in new transmission infrastructure, with over 10,000 miles of new lines. Permitting essential power grid projects quickly and imposing stricter requirements on actions that would delay permitting decisions will help promote the needed investments for achieving net-zero goals.
Let’s also be clear: While decarbonization is a goal throughout all economic sectors, net zero means just that — net zero. We will continue to use fossil fuels even after 2050. But we can and must drive carbon reductions across the board. One aspect of this will be developing a carbon market plan that prices carbon and puts market forces in play to promote low-carbon options on the principles of revenue neutrality, net-zero carbon, regional coordination and, possibly, a border adjustment mechanism to maintain U.S. competitiveness.
While 2050 remains several decades away, the 2020s have been called the “decisive decade” to determine whether the U.S. can reach our net zero goal. The investments we make in this decade will produce research on technologies that can come to scale in the 2030s and 2040s, allowing us to not only achieve our aim but also position the U.S. to lead in a greener global economy.
The U.S. can have an energy transition that will strengthen, rather than overly burden, the economy as a whole by relying on its strengths — abundant energy, ingenuity and flexible, market-based regulatory policies, which will lead to a cleaner environment for all. With the right policies, net zero is both an opportunity and a realistic possibility.
Jacob Worenklein is CEO of US Grid Company. Cynthia Warner is the former president and CEO of Renewable Energy Group, Inc. They are co-chairs of the Committee for Economic Development of The Conference Board’s Climate, Energy & the Environment Task Force. Lori Esposito Murray, Ph.D. is the president of the Committee for Economic Development of the Conference Board.