Meeting Biden’s climate pledge would require ‘dramatic’ changes to fossil fuel-based economy


President Joe Biden’s pledge to cut U.S. greenhouse gas emissions in half by 2030 would require fundamentally transforming the country’s fossil fuel-based economy.

A lot of work has been done, with the United States leading the world in emissions reductions since 2005 because of natural gas and renewables replacing more expensive and dirtier coal in electricity.

But to meet Biden’s target, the pace of emissions cuts will need to increase substantially and reach into sectors in which emissions have increased or remained steady, such as transportation, heavy manufacturing, and buildings.

“It’s going to be really hard,” said Sasha Mackler, director of the Energy Project at the Bipartisan Policy Center. “It will require changes across all sectors of our economy that will be pretty dramatic. They will unlock a lot of economic opportunity, but it will also have some dislocations and require a new collaboration between the public and private sector on environmental issues that we haven't seen before.”

Most people are unaware of what fuel source generates power when they flick on the light switch. However, making cuts in other parts of the economy could be more noticeable to the average person.

“There are segments of the decarbonization challenge that are a lot more consumer-facing and others not at all,” said Alex Trembath, deputy director of the Breakthrough Institute. “You want to electrify commercial and residential buildings, but a lot of people like their stove, they like their gas furnace. To the extent this is seen as a climate policy instead of just an appliance upgrade, it will be challenging for many consumers.”

The Biden administration is not yet providing a detailed road map for reducing emissions from each economic sector to achieve its goal and is instead claiming that broad “multiple paths” could do it.

That is causing angst among some business leaders who supported Biden rejoining the Paris Agreement but are concerned about the feasibility of his 2030 target.

“The business community will hold their feet to the fire on the details of how to get from point A to point B,” said Frank Maisano, an energy industry lobbyist at Bracewell. “They haven’t been clear about that. They are just assuming all this stuff is doable.”

The math is hard.

The U.S. reduced economy-wide emissions by 12% from 2005 through 2019, so it will have to more than triple its pace to meet the Biden target. Nearly all of that progress has come from the power sector, where emissions have dropped by around 37% since 2005.

“We have been making progress on emissions over the last 15 years, but to achieve these goals, there will need to be much more,” said Daniel Raimi, a fellow at Resources for the Future focusing on energy and climate issues.

Biden’s $2.3 trillion green infrastructure spending proposal aims to make the math more manageable, especially in the electricity and transportation sectors, which analysts say should contribute to the bulk of emissions cuts this decade.

The American Jobs Plan contains as much as $1.6 trillion in climate-related spending over eight years, or about 7% of today’s GDP, according to the Center for Strategic and International Studies.

That includes $400 billion in tax credits to support clean energy technologies that will need to be more widely deployed to meet Biden’s pledge, including energy storage, electric transmission lines, carbon capture, and hydrogen.

Biden also proposes that Congress impose a clean electricity standard requiring utilities to use 100% carbon-free power by 2035.

More than a dozen utilities have endorsed a mandate for an 80% carbon-free power grid by 2030, compared to 40% of electricity generated today from wind, solar, nuclear, hydropower, and geothermal.

But the CEO of utility trade group the Edison Electric Institute has warned that meeting the 100% clean electricity by 2035 timeline could lead to power reliability problems and rate increases for customers.

“That’s a very fast timeline to do the capital stock turnover required,” Mackler said. “There are costs associated with faster timelines.”

The clean power mandate will also be contested by the oil and gas industry, which has sought to take credit for U.S. emissions reductions in recent years as cleaner-burning natural gas has replaced coal.

Meeting Biden’s pledge would likely require shutting all coal plants by 2030, but it would also mean reducing natural gas use significantly.

“Gas can continue displacing coal, but it’s already done a lot of that,” Raimi said. “At a certain point, which will happen to some extent in the next 10 years, we will need zero-emissions sources replacing gas.”

The level of change would be even greater in transportation, the top polluting sector, combining with power to produce more than half of U.S. emissions.

To meet his goal, Biden would need to spur sluggish demand for electric vehicles from 2% of total U.S. sales to 50% in 2030, according to the Breakthrough Institute.

Joseph Majkut, director of climate policy at the Niskanen Center, said making substantial progress in electrifying transportation means consumption of gasoline and diesel, which are both made from oil, would have to drop substantially this decade.

“What does the world look like when the U.S. is consuming 30-plus percent less gas and diesel? That’s millions of barrels. The economic ramifications are potentially quite large,” Majkut said.

As the U.S. weans off oil-based products, it could lead to reduced supply and rising prices as oil companies find it harder to finance investment in a declining market.

Supporters of the Biden administration’s plans say his proposed policies to boost EV sales contain carrots and not sticks and are intended to reduce the costs of electric vehicles rather than raise the costs of polluting technologies.

Biden’s infrastructure plan promises to spend $174 billion to “win the EV market” from China by providing rebates (on top of expanded tax credits) for consumers, grants to states and localities to build 500,000 charging stations, and incentives for manufacturers to retool factories to make batteries and EVs.

“As the cost of electric vehicles reaches parity, and as the ability to charge gets more widespread because the batteries are more efficient and durable, the transition becomes something that is just seamless, where you don't think much about what fuel your car is burning,” said Mary Nichols, the former chairwoman of the California Air Resources Board.

Nichols, who is now a distinguished visiting fellow at Columbia University’s Center for Global Energy Policy, noted that Biden has not sought to ban the sale of new gasoline-powered vehicles, as California has. Automakers are voluntarily promising an explosion of electric vehicles across every segment over the next few years, including pickups, vans, and SUVs, the most popular type of car in America.

“It’s politically smart not to create fear on the part of the public that their SUVs will be taken away,” Nichols said. “The goal is to promote a superior product. People will appreciate the advantages of going electric, and the things seen as real or perceived obstacles will disappear.”

Other sectors, such as buildings, heavy industry, and agriculture, will play less of a role this decade, experts say, but changes could set the stage for deeper reductions beyond 2030.

Biden wants to build or retrofit millions of homes and commercial buildings that are electrified or more energy-efficient.

He aims to pay farmers to capture carbon in soil, but such incentive programs have been unreliable in the past, Trembath said.

The Biden administration’s challenge is especially tricky for industrial manufacturing, responsible for about 22% of U.S. emissions.

The chemical processes of producing steel, cement, and iron inherently require the use of carbon-emitting fossil fuels, and few substitutes would work the same way.

The technology for capturing carbon directly from an industrial facility so that it is never released into the atmosphere is also less advanced than the kind that can remove carbon dioxide from a coal or natural gas plant’s exhaust.

“Ideas around decarbonizing industrial processes will require new technologies on the cusp but not quite there yet,” Mackler said.

Many economists say the prospect of reducing emissions in harder-to-decarbonize sectors would be made easier, and cheaper, if the government imposed an economy-wide carbon price that would orient the market to cleaner alternatives by making fossil fuels more expensive.

“The sector-by-sector approach of eliminating emissions always gets more expensive than a broader-based approach,” Majkut said.

But Biden, unlike the Obama administration, is not promoting a carbon tax or cap-and-trade program, as these policies have become less popular with liberals.

Instead, the Biden administration is embracing a new breed of climate industrial policy that links public investment and regulations to job creation, using the federal government as the primary engine to steer the development of new industries.

James Stock, an economist at Harvard University, said carbon taxes implemented in U.S. states and other countries have proven to be a “benign” policy that does not have noticeable negative effects on employment or economic activity.

He said “inefficient” policies could be more costly. Still, he’s optimistic that Biden’s agenda of mandating greater use of clean electricity while providing tax credits for key technologies can work well because of the dramatic fall in costs this decade of wind and solar.

“It definitely avoids the worst aspects of inefficient policies, where the government tells you what to do,” Stock said. “These are not command-and-control policies. They are not picking winners. I see opportunities if we do it right.”

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