Deep divisions between Democrats and Republicans, exacerbated by an unusually bitter presidential election season, threaten to undermine significant gains made by President Barack Obama on climate change, chief among them being a landmark Paris agreement that will be signed by world leaders in New York City on April 22.
U.S. leadership has been instrumental in uniting the world around climate action. Greater use of zero-carbon energy sources, underpinned by ever cheaper renewables, is well under way across the country, helping to reduce its still oversized carbon footprint.
But this progress is in jeopardy. The Supreme Court’s stay on the implementation of the Obama administration’s Clean Power Plan (CPP), which is aimed at reducing emissions in the electricity sector, threatens even the modest U.S. climate commitments made in Paris.
Moreover, even with the CPP, neither the extent nor the speed of the transition to clean energy are sufficient to decarbonize the U.S. economy by 2050, which is needed to avoid dramatic temperature rises. Meanwhile, an aging U.S. energy infrastructure could lead to blackouts and major efficiency losses.
Political gridlock in Washington has made it difficult to tackle the twin challenges of cutting carbon emissions in the energy sector and modernizing infrastructure.
Yet amidst the election noise, there are signs of subtle shifts underneath party lines that could enable a more sensible conversation about policy options. Last fall, 11 Republicans signed a House resolution that called for climate action and a bipartisan climate caucus was formed; renewable energy tax credits were extended for another six years under a budget deal in December 2015; and a bipartisan energy bill just adopted by the Senate contains critical provisions to modernize the U.S. grid facilitating the spread of renewables and improving energy efficiency.
With increasing awareness in the electorate about the implications of global warming, these shifts may open up political space after the elections in November and pave the way for a new, bipartisan U.S. climate and energy policy framework.
Such a framework should provide a predictable, level playing field that factors in the social and environmental costs resulting from carbon emissions. It should put a heavy emphasis on research and development of cutting-edge energy technologies that will enable the full decarbonization of the energy sector.
A progressively escalating carbon fee introduced as part of a comprehensive tax reform would accomplish these goals in the most effective way. A market-friendly, all-across-the-board carbon fee would make it possible to scrap the controversial and cumbersome CPP (Clean Power Plan) and phase out all energy subsidies for both renewable and fossil fuels beyond 2021. It would boost the competitiveness of cleaner-burning natural gas as a bridge fuel.
It would propel energy efficiency investments and enhance the competitiveness of carbon capture and storage techniques that could provide a long-term future for gas. A carbon fee would also go a long way toward helping revive the commercial prospects of zero-carbon nuclear power.
A carbon fee would generate revenue that could be used to ease the pain of the transition by providing assistance through targeted subsidies, early retirement schemes, education and job training programs for those whose livelihoods would be disrupted. Revenues from a carbon fee in the transportation sector could help renew the crumbling transportation infrastructure, with special attention to urban mass transportation systems, intercity high-speed rail networks and infrastructure catering to electric vehicles.
Finally, but most importantly, carbon revenues could also boost research and development spending on breakthrough energy technologies needed to make full decarbonization by mid-century easier, in line with the goals of the U.S.-led Mission Innovation project announced in Paris.
Without bolder public policies in place, the United States risks losing out on the energy revolution — one of the most consequential transformations of this century. It is time to start constructing a new U.S. energy edifice.
