President-elect Joe Biden was smart to appoint John Kerry as his Presidential Envoy for Climate Change. Kerry has the right credibility and gravitas to reassert American leadership internationally as we rejoin the Paris Agreement. Now comes the harder work. How can Biden push through policies to reduce America’s greenhouse gas pollution?
The best approach would be to enact a national carbon tax along with rules on hard-to-price carbon pollution and a sharp increase in spending on zero-carbon R&D. But if Democrats don’t take the Senate, it is unlikely that Congress will pass a carbon tax. That’s disappointing. After all, pricing carbon is an Econ 101 recommendation that uses the power of markets to reduce pollution.
If Congress won’t pass a carbon tax, Biden has a clear fallback. He can “climate swarm” the government. Swarming the government means that every agency and department in government pushes whatever levers it has to reduce emissions. Most of this can be done through executive and agency action without requiring Congressional support. Let’s look at some examples of swarming.
Electricity accounts for nearly one-third of U.S. emissions, and the Environmental Protection Agency can tackle this directly. Based on its authority under the Clean Air Act, the EPA can mandate sharp reductions in power plant emissions. This could be built around a clean energy standard that mandates a minimum percentage of the nation’s electricity be generated from zero carbon sources. If that minimum were 35 percent to start, for example, it would drive investments in wind, solar, and other zero carbon sources across the nation. The minimum percentage should rise over time as technology improves and we approach our long-term carbon reduction goals. This would likely get challenged in court, but in the meantime would shape investor expectations and encourage investments in zero carbon generation.
For more swarming, FERC can write rules to support the construction of a modern national transmission grid to move renewable power from where it’s generated to where it’s needed. Department of Energy spending on R&D can support bringing new zero carbon technologies to market.
Climate swarming can also help decarbonize the transportation sector, our largest source of carbon pollution. The Biden administration can once again tighten fuel economy standards, moving beyond what the Obama administration had done in 2012, taking advantage of the advances in technology that have occurred over the last decade. Electrifying the vehicle fleet is key. It helps that Detroit is on board with electric cars. General Motors, for one, has announced plans to roll out 30 EV models by 2025 and bring their cost down below the $30,000 threshold.
But there are other swarming levers. President Obama signed an executive order requiring 20 percent of U.S. government vehicle purchases by battery electric or plug-in hybrid vehicles by 2020. Trump rescinded the order, but Biden could reimpose and strengthen it. According to the GAO, some 16,000 sedans and minivans were purchased by government agencies in 2017. Fewer than 400 were electric vehicles. Biden can strengthen the order and help support the EV market. We needn’t restrict the order to EVs. It can be written to support the purchase of any zero-carbon emitting vehicle including, among others, hydrogen and ammonia.
Action doesn’t need to stop at the water’s edge. The U.S. supports projects globally through agencies like the U.S. Export-Import Bank and the International Development Finance Corporation. Limiting funding to projects that support decarbonization is a step these agencies can take. Similarly, for the World Bank and other multilateral agencies that we help fund. But Biden can go further. U.S. Treasury in past years has taken a hard line in not supporting policies to green developing country infrastructure if those countries mandate local hiring or sourcing on their green investments. Treasury should revisit those restrictions recognizing that developing and greening economies can go hand in hand.
Republicans in Congress may not like climate swarming. It’s not the most efficient way to go about greening our economy. But the climate problem is pressing, and we can’t afford further delay. Moreover, if they don’t like it, they have an alternative. They can listen to the more than 3,500 economists, including incoming Treasury Secretary Janet Yellen, and various bipartisan groups including the Climate Leadership Council that have endorsed a carbon tax. As good Republicans, they should applaud our using markets to solve our pollution problem. After all, a carbon tax ensures that Adam Smith’s invisible hand has a green thumb. Smith would surely give a thumb’s up to this approach.
Gilbert Metcalf is the John DiBiaggio Professor of Economics at Tufts University. In 2011-2012 he served as the Deputy Assistant Secretary for Environment and Energy at the U.S. Department of the Treasury.