CLIMATE POLICY PRIORITIES FOR THE NEW ADMINISTRATION AND CONGRESS
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CLIMATE INNOVATION
U.S. POLICY
2050
CLIMATE POLICY PRIORITIES FOR THE
NEW ADMINISTRATION AND CONGRESS
The start of a new Administration and a new Congress provides a vital opportunity to dra-
matically scale up the U.S. response to climate change. The Center for Climate and Energy
Solutions has worked closely with leading companies to assess policy options for decarbon-
izing the U.S. economy. Drawing on these discussions, this policy brief recommends a com-
prehensive set of policy priorities to drive climate innovation, reduce emissions, strengthen
climate resilience, remedy inequities and—in many cases—support the post-pandemic
economic recovery. Taken together, these steps would establish the essential foundations of
an ambitious, just, durable, bipartisan climate policy putting the United States on the path
toward carbon neutrality.
INTRODUCTION
The United States and, by extension, the world stand path to climate neutrality, and Restoring the Economy
at the most critical juncture ever in the effort against with Climate Solutions: Recommendations to Congress,
climate change. With the devastating human and highlighting climate measures that can contribute to
economic toll of the climate crisis becoming ever clearer, post-pandemic recovery.
and with the window for decisive action to avert far worse Drawing and building on these previous efforts, this
quickly narrowing, the start of a new Administration and new policy brief presents a distilled and updated set of
a new Congress provides the United States with a vital climate policy priorities for the Biden Administration
opportunity to significantly scale up its climate response. and the 117th Congress (2021–2022).
Over the past three years, through our Climate Our Getting to Zero agenda outlined a range of objec-
Innovation 2050 initiative, the Center for Climate and tives for an effective U.S. climate strategy. Beyond the
Energy Solutions (C2ES) has engaged closely with overriding goal of carbon neutrality, these include
leading companies across diverse sectors to examine reestablishing U.S. climate leadership globally, quickly
challenges and solutions in decarbonizing the U.S. mobilizing a broad array of low- and zero-carbon
economy. This ongoing collaboration has earlier technologies, reducing emissions as cost-effectively
produced Getting to Zero: A U.S. Climate Agenda, outlining as possible, strengthening U.S. competitiveness, and
the policies needed to put the United States on the meeting the needs of workers, low-income households,and marginalized communities. fit most naturally into an economic stimulus or an
In weighing immediate priorities for the new infrastructure package, respectively. Other potential
Administration and Congress, we have aimed for a set legislative vehicles include, for instance, the farm bill, the
of recommendations that speak both to the scale and surface transportation bill, and budget appropriations.
urgency of the climate challenge and to the present We offer recommendations in the following areas:
political moment. We believe that many of the steps • Setting the course
outlined here could garner bipartisan support in the • Economy-wide carbon pricing
near term and that, taken together, they would establish
• Innovation
the essential foundations of an ambitious, just, durable
• Power
U.S. climate policy. Many would, in addition, make vital
contributions to rebuilding the economy as the country • Transportation
emerges from the COVID-19 pandemic. • Industry
These recommendations span both the executive and • Buildings
legislative arenas. The legislative priorities could consti- • Short-lived climate pollutants
tute a stand-alone climate package or, more plausibly, • Nature-based solutions
could be advanced in a more disaggregated fashion
• Digital infrastructure
through a range of legislative vehicles. The recent enact-
• Climate justice
ment of the Energy Act of 2020 demonstrates growing
bipartisan support for action. Going forward, Congress • Finance
should pursue those avenues best suited to strengthening • Trade
the bipartisan foundation needed for durable climate • Federal procurement
policy. • Resilience
Box 1 and Box 2 highlight the elements that would As with our earlier efforts under Climate Innovation
Acknowledgements
C2ES thanks the following companies for their participation in discussions informing this policy brief:
Amazon Exelon Corporation
American Airlines General Motors
Arizona Public Service Intel Corporation
Bank of America Johnson Controls
BASF Corporation LafargeHolcim
bp Microsoft Corporation
The Chemours Company National Grid
Citi Novartis
Dominion Energy PG&E Corporation
Dow Inc. PSEG
DTE Energy Shell
Duke Energy Southern Company
Entergy Corporation Toyota
Equinor US
A company’s participation does not represent an endorsement of the full contents of this brief.
C2ES is grateful to the Bernard and Anne Spitzer Charitable Trust and the William and Flora Hewlett Foundation
for their generous support of this work. As a fully independent organization, C2ES is solely responsible for its
positions, programs, and publications.
2 Center for Climate and Energy Solutions2050, these recommendations have been informed C2ES offers these recommendations in the hope that
though a series of discussions with companies across our elected federal leaders—recognizing the grave risks
a wide range of sectors. Many of these companies also of climate change, and heeding the concerns of scien-
joined a recent statement organized by C2ES publicly tists, investors, state and local leaders, businesses, and a
urging President Biden and the new Congress to work strong and growing majority of Americans—work across
together, and pledging to work with them, toward the aisle to seize this vital opportunity to dramatically
ambitious, durable, bipartisan climate solutions.1 C2ES scale up U.S. climate efforts.
is grateful to these companies for their contributions to
these efforts.
SETTING THE COURSE
Addressing the climate crisis requires—and the Biden community, must be grounded to the maximum
Administration has pledged—an all-of-government degree feasible in established or foreseeable
approach. With his appointments and nominations domestic policy.
to key positions, President Biden has assembled the
To drive the overall decarbonization of the federal
strongest team ever to lead the government’s response
government:
to climate change. With his initial executive actions, he
• The White House should direct federal agencies to
has already launched a wide range of efforts to dramati-
develop and implement agency-wide greenhouse
cally strengthen that response. These include rejoining
gas reduction plans to achieve net-zero emissions,
the Paris Agreement and directing agencies to initiate
inclusive of their owned and operated facilities and
processes to strengthen climate-related regulations and
fleets, and key, high greenhouse gas-emitting supply
to ensure the full consideration of science and climate-
chains, no later than 2050. These plans should
related costs and benefits in federal rulemaking.2 Several
leverage the government’s vast procurement power
additional actions would help to ensure strategic align-
to help strengthen markets for low- and zero-carbon
ment across the executive branch, alignment between
technologies and products (see below).
the United States’ domestic and international climate
policies, and close consultation with key stakeholders. To mobilize strong climate action across the United States:
To prepare a new U.S. contribution under the Paris • The White House and federal agencies should seek
Agreement: every opportunity to engage closely with states,
cities, and companies already taking the lead on
• The White House should lead a process engaging
climate change in order to learn from their experi-
business, labor, state and local officials, and other
ences, build on their momentum, and better enable
key stakeholders to inform the development of a
them to continue strengthening their efforts. The
new “nationally determined contribution” (NDC) in
Administration also should be as transparent as
time for the next U.N. Climate Change Conference
possible in the development of its climate priorities
this coming November in Glasgow, Scotland. The
and policies, and provide full opportunity for mean-
new NDC, which will express a U.S. target for 2030,
ingful input from citizens, state and local govern-
should be in line with the goal of carbon neutrality
ments, the private sector, and other stakeholders.
by 2050 and, to be credible to the international
ECONOMY-WIDE CARBON PRICING
The most economically efficient means of driving decar- clear price signal...the most important consideration for
bonization across the economy is a market-based policy encouraging innovation, driving efficiency, and ensuring
that creates an escalating, economy-wide price on carbon sustained environmental and economic effectiveness.”3
emissions. The Business Roundtable recently declared “a The climate subcommittee of the U.S. Commodity
Climate Policy Priorities for the New Administration and Congress 3Futures Trading Commission has similarly concluded take different forms including: a carbon tax, which sets a
that “financial markets will only be able to channel price on each unit of pollution; a cap-and-trade system,
resources efficiently to activities that reduce greenhouse which sets a declining cap on total emissions, allocates
gas emissions if an economy-wide price on carbon is in a corresponding quantity of emission allowances, and
place at a level that reflects the true social cost of those allows emitters to trade them; and a system of mandatory
emissions.”4 sector-based performance standards with trading.
While an important pillar of a long-term decar- In addition to driving decarbonization, some market-
bonization strategy, economy-wide pricing must be based strategies can generate significant revenue. This
complemented by a wide range of other policies like can be used to support climate mitigation and/or resil-
those recommended here. Economy-wide pricing can ience efforts, address impacts on low-income households
BOX 1: ECONOMIC STIMULUS
This box highlights recommendations from throughout this brief that would contribute significantly to post-
pandemic economic recovery:
• Congress should provide additional flexibility to the Department of Energy’s Loan Program Office to ensure
full utilization of more than $43 billion in existing loan authority for clean energy projects.
• Congress should meaningfully extend, expand, and establish transferable, longer-term tax incentives for a
range of clean electricity technologies (e.g., solar; wind; battery storage; nuclear; geothermal; carbon capture,
utilization, and storage; renewable natural gas; biofuels; hydrogen and other low-carbon fuels) and provide
direct pay options where possible to improve accessibility and reduce reliance on tax equity markets.
• Congress should expand funding to help farmers and rural small businesses adopt renewable energy systems
and make energy efficiency improvements.
• Congress should expand and reform the existing electric vehicle tax credit to make it available to all new, and
certain used, zero emission vehicles and to make it refundable at the point of sale.
• Congress should extend the tax credit for electric vehicle charging and alternative refueling facilities, raise the
current cap of $30,000, and make credits available as cash grants to spur investment.
• Congress should reauthorize the Section 48C Advanced Manufacturing Tax Credit, increase its funding to at
least $2.5 billion per year through 2025, expand it to include other critical decarbonization technologies, and
provide direct options for companies with limited tax liability.
• Congress should ensure that the Weatherization Assistance Program is fully funded at the levels authorized in
the Energy Act of 2020, and that the newly authorized repairs under the Healthy Homes program are success-
fully integrated into the program’s efforts.
• Congress should reinstate and fund the Energy Efficiency and Conservation Block Grant program enabling
state, local, and tribal governments to promote building retrofits, renewable energy, and the purchase of
energy-efficient and non-fossil appliances.
• Congress should increase funding for the U.S. Department of Agriculture Natural Resources Conservation Ser-
vice (including the Environmental Quality Incentives Program, Conservation Reserve Program, and Wetlands
Reserve Program) for forest, agricultural land, grassland, and wetland restoration projects.
• Congress should increase funding for the Bureau of Land Management to inventory abandoned oil and gas
wells on public lands and should establish a reclamation fund to plug and reclaim them.
• Congress should increase funding for programs to help expand high-speed broadband infrastructure and ac-
cess for low-income and rural communities.
4 Center for Climate and Energy Solutionsand affected workers and communities, or address To establish a federal price on carbon:
broader fiscal concerns. A pricing policy must include • The Administration and Congress should imme-
provisions to ensure environmental integrity, address diately begin consultations on the design of an
environmental justice concerns, safeguard the global economy-wide carbon pricing program contributing
competitiveness of U.S. industry, provide for equivalent to the achievement of carbon neutrality by 2050—
state programs, and provide for the appropriate use of including the program’s form and scope, and the
offsets, including for carbon removal. use of any potential revenues—with the aim of
enactment in the 117th Congress.
INNOVATION
Decarbonizing the U.S. and global economies requires federal agencies executing federal research, devel-
the rapid development and deployment of a wide array of opment, demonstration, and deployment (RDD&D)
low- and zero-carbon technologies. Impressive advances activities will prioritize long-term decarbonization
in technologies such as wind and solar power have begun goals through their efforts.
to bend the emissions curve, but a significant portion of • The U.S. Department of Energy (DOE) should
the remaining emissions reductions will require tech- undertake updates to both the quadrennial
nologies that are not yet commercially available.5 technology review (QTR) and quadrennial energy
Historically, the United States and other countries review (QER). The QTR would help assess techno-
have underinvested in energy innovation, while private logical gaps and opportunities and help to better
sector investment has tended to focus on mature tech- target federal resources toward highest-impact
nologies. Additional factors, including complex supply efforts. The QER, focused on articulating an
chains and complicated regulatory environments that integrated view of policies and actions needed to
benefit incumbent technologies, have also created a advance a low-carbon energy future, could serve as
burdensome market environment for emerging clean an important stakeholder engagement opportunity
technologies. for the new administration.
Rapidly developing a broader array of decarbonizing To strengthen investment in climate innovation:
technologies will not only help the United States reduce • Congress should significantly scale up support for
its emissions more cost-effectively, but will also create climate-related RDD&D to at least $20 billion per
domestic jobs and industries, and strengthen U.S. year by 2030, including at least $2 billion per year
competitiveness in the rapidly growing clean energy for Advanced Research Projects Agency–Energy
market. Many policies recommended elsewhere in this (ARPA-E). In the near-term, Congress should fully
brief will create market “pull” for cleaner technologies, appropriate funding for programs authorized in
but other steps are needed to “push” promising new the Energy Act of 2020. Long-term priorities should
technologies toward market readiness. The United States include energy storage; bioenergy; advanced manu-
must prioritize decarbonization across its innovation facturing; digitalization; clean thermal; advanced
nuclear; hydrogen; geothermal; and carbon
agenda, boost investment in a broad range of technolo-
capture, storage, and utilization (CCUS), direct air
gies across all stages of development, and build the
capture, and other carbon removal technologies.
administrative capacity needed to effectively manage
• Congress should dedicate $50 billion to $100 billion
these investments.
of decarbonization innovation funding over the
To focus and strengthen federal efforts on the climate innova- next decade to high-impact demonstration projects.
tion challenge: Translating successful, early-stage applied research
• Congress should establish decarbonization as a into commercially competitive technologies often
principal objective of the research mission of all requires support at the critical intermediary step of
relevant federal agencies. This will ensure that technology demonstration. Federal support at this
Climate Policy Priorities for the New Administration and Congress 5stage is especially important in the case of technolo- Energy Loan Guarantee Program. Congress should
gies requiring large-scale demonstration projects also expand the list of eligible technologies to
that carry technical, policy, and market risks—such include power system infrastructure and medium-
as advanced nuclear, CCUS, and carbon removal and heavy-duty vehicles and, to ease barriers to
technologies. private sector participation, should make all current
• Congress should provide additional flexibility funding available through an open solicitation,
to DOE’s Loan Program Office to ensure full should limit and defer administrative costs, and
utilization of more than $43 billion in existing should expand credit subsidies to better leverage
loan authority under the Title 17 Innovative Clean private capital.
POWER
A zero-emission power sector is a critical linchpin in The power sector must simultaneously meet this growing
decarbonizing the U.S. economy, as other sectors such as demand for electricity and continue to decarbonize its
transportation, buildings, and industry turn increasingly supplies, while also ensuring reliability, affordability,
to electrification to reduce their own fossil fuel reliance. resilience to climate change, and security.6
BOX 2: INFRASTRUCTURE
This box highlights recommendations from throughout this brief that could be components of a comprehensive
federal infrastructure package:
• Congress should invest in grid modernization and resiliency to better connect areas with strong renewable
resources to areas of high power demand.
• Congress should direct the Federal Energy Regulatory Commission and the Department of Energy to develop
a long-term infrastructure strategy establishing clear priorities for staged expansion and enhancement of the
grid, including the designation of high-priority, high-voltage transmission routes.
• Congress should extend the tax credit for electric vehicle charging and alternative refueling facilities, raise the
current cap of $30,000, and make credits available as cash grants to spur investments.
• Congress should fund state and local governments to develop and implement comprehensive long-range
plans to accelerate zero-emitting vehicle charging and refueling infrastructure.
• Congress should facilitate the expansion of carbon dioxide transportation infrastructure to carry captured
carbon dioxide from industrial facilities and power plants to locations where it can be utilized or permanently
stored.
• Congress should establish a National Climate Bank to: deploy commercialized clean energy technologies
and energy efficiency programs in low- and moderate-income communities; bolster green infrastructure and
climate resilience projects otherwise lacking sufficient private investment; provide technical assistance to
support existing state green banks; and provide initial capitalization and technical assistance to help establish
new state green banks.
• Congress should increase funding for programs to help expand high-speed broadband infrastructure and ac-
cess for low-income and rural communities.
• Congress should create a Federal Emergency Management Agency resilience grant program that provides
sustained funding and technical assistance for states, cities, communities, and tribes to develop longer-term
resilience strategies and implement resilience projects.
6 Center for Climate and Energy SolutionsDue to the growth of renewables and a shift from coal • Congress should also meaningfully extend, expand,
to natural gas, greenhouse gas emissions from the sector and establish transferable, longer-term tax incen-
have steadily declined over the last 15 years, falling over tives for a range of clean electricity technologies
27 percent between 2005–2018.7 Many of the country’s (e.g., solar, wind, storage, nuclear, geothermal,
leading electric utilities have set goals to achieve carbon CCUS, renewable natural gas, biofuels, hydrogen
neutrality by 2050 or sooner. Fuller deployment of and other low-carbon fuels), allow entities to opt out
existing technologies can bring the sector much closer of tax normalization provisions, and provide direct
to net zero, but fully achieving that goal will require a pay options where appropriate to improve acces-
broader array of technologies, such as improved storage, sibility and reduce reliance on tax equity markets.
advanced digital solutions, advanced nuclear, and • Given the uncertain political prospects of a federal
natural gas and biomass generation with CCUS. CES, the U.S. Environmental Protection Agency
Decarbonization can be most effectively accelerated (EPA) should immediately convene stakeholder
through a technology-neutral approach that promotes discussions to establish pathways for reducing power
broader deployment of established zero-carbon plant emissions. In the absence of a statutory CES,
sources in the near-term (e.g. solar, wind, hydro, and EPA should proceed with establishing achievable
geothermal), rewards economically vulnerable technolo- emission standards for new and modified power
gies for their climate benefits (e.g. existing nuclear plants. EPA should signal its intent to periodically
and hydro), and provides an ongoing incentive for the strengthen these standards as technology improves
development of new zero-carbon options. Upgrading and to require that all new generation be zero-
the nation’s electrical grid is also essential to ensure that emitting well ahead of 2050.
the power sector can transition to clean energy while
To strengthen the reach, reliability, and performance of the
meeting growing power demand. Other policy priorities
power grid:
include reforming electricity markets to favor clean
• Congress should invest in grid modernization and
electricity generation.
resiliency to better connect areas with strong renew-
To set goals and overall strategy: able resources to areas of high power demand;
• The White House should form and lead an inter- provide grid operators the ability to manage rapidly
agency initiative engaging with the power sector changing power mixes and flexible demand; and
and other key stakeholders to develop a coordinated better manage weather-related threats, natural
set of complementary policies to help utilities meet disasters, and cyber-attacks.
their emissions reduction commitments and to • Congress should direct the Federal Energy
achieve net-zero power well ahead of mid-century. Regulatory Commission (FERC) and DOE to
To incentivize low-carbon power generation: develop a long-term infrastructure strategy. This
infrastructure strategy should be informed by
• In the absence of economy-wide carbon pricing,
a multi-stakeholder process and establish clear
Congress should enact a market-based clean
electricity standard (CES) setting a clear pathway priorities for staged expansion and enhancement of
toward carbon neutrality. The CES should set the grid, including the designation of high-priority,
targets for the percentage of electricity sales that high-voltage transmission routes (co-located, where
must be met via clean electricity sources (e.g., solar, feasible, with existing rights of way).
wind, hydro, nuclear, geothermal, fossil fuels with • Congress should more clearly establish FERC and
CCUS) and/or through the use of carbon removal. DOE authority over inter-regional siting decisions,
In general, the more flexibility utilities have in while ensuring that federal agencies consider the
choosing the technologies they deploy to meet the potential effects of infrastructure projects on
standard, the more cost-effective the program will disadvantaged and marginalized communities.
be. Allowing utilities to trade clean energy credits
would also help lower costs; this flexibility should be To improve the competitiveness of low- and zero-carbon
complemented by measures to reduce impacts on sources in power markets:
communities bearing disproportionate air pollution • FERC should find new ways to compensate low- and
burdens. zero-emission resources in energy, capacity, and
Climate Policy Priorities for the New Administration and Congress 7ancillary markets in anticipation of changing To strengthen rural access to energy efficiency and renewable
dynamics (e.g., increasing quantities of variable energy programs:
renewable electricity and energy storage, greater • Congress should increase funding to the Rural
participation from very low fuel cost generators, Energy Savings Program to help rural utilities
more available flexible demand), including by facili- and other energy service companies provide loans
tating carbon pricing where feasible in wholesale to consumers in rural areas to implement energy
power markets, taking into account any existing or upgrades (e.g., more efficient lighting and building,
anticipated federal or state carbon pricing policies. expanded energy storage, on- and off-grid renew-
• FERC should also work cooperatively with states able energy systems).
setting ambitious electricity decarbonization targets • Congress should also expand funding for Rural
to ensure that its policies do not hinder states’ Energy for America Program (REAP) to further
abilities to meet their goals. provide grants and loans to farmers and rural small
businesses to purchase or install renewable energy
systems or make energy efficiency improvements.
TRANSPORTATION
Transportation is the largest direct source of greenhouse To set goals and overall strategy:
gas emissions in the United States, accounting for 28.3 • The White House should form and lead an inter-
percent of total emissions in 2018. While most of these agency initiative working with states, automakers,
emissions come from light-duty cars and trucks, heavy- and other key transportation stakeholders to
duty freight transportation is responsible for about develop a coordinated set of complementary poli-
23.2 percent of transport emissions, and aviation and cies ensuring that by 2050 all light-duty vehicles on
maritime could represent significant percentages of the road are ZEVs.
future emissions growth.8 Emissions have risen over the
To drive continuous improvement in vehicle performance:
last two decades due to increased travel and the purchase
of larger, more polluting vehicles.9 • EPA should work in tandem with California and
other states to establish uniform greenhouse gas
While continued improvement in vehicle efficiency
performance standards for light-duty vehicles that
can help to reduce emissions, a more promising strategy
increase in stringency on a timeline sufficient to
to decarbonize the transport sector is transitioning to
ensure that all light-duty vehicles on the road in
lower-carbon fuels, notably electricity. However, electric
2050 are ZEVs. Similarly ambitious greenhouse gas
vehicles (EVs) and other zero-emitting vehicles (ZEVs)
standards should be established to ensure that all
face significant barriers to widespread deployment
new sales of medium- and heavy-duty vehicles are
including a lack of charging and fueling infrastructure
ZEVs by 2050.
and higher up-front costs (even though lifetime costs are
lower) than internal combustion vehicles. At the same To create stronger incentives for consumers:
time, the strong incumbency of internal combustion • Congress should expand and reform the existing
poses obstacles to replacing existing fleets with ZEVs, EV tax credit to make it available to all new, and
particularly as the typical lifetime of cars and light trucks qualified used, ZEVs and to make it refundable at
in the United States is 13–15 years.10 the point of sale.
Federal policymakers will need to execute a multi-step • Congress should provide substantially higher incen-
approach to decarbonizing the transportation sector that tives for medium- and heavy-duty ZEVs, offsetting
includes ambitious federal standards to improve emis- their higher initial costs, and should also repeal the
sions performance, stronger incentives for the purchase federal excise tax on heavy-duty ZEVs.
of ZEVs, and stronger investment in the charging and
fueling infrastructure needed to facilitate wide-scale To expand ZEV infrastructure:
adoption of non-fossil fuel vehicles. • Congress should extend the tax credit for EV
8 Center for Climate and Energy Solutionscharging and alternative refueling facilities and channels such as the Better Utilizing Investments
raise the current cap of $30,000, which provides too to Leverage Development program and the Diesel
little incentive for projects with high upfront costs Emissions Reduction Act. These programs should
such as hydrogen refueling stations. Credits should capitalize on the potential of state and local govern-
also be made available as cash grants to support ment procurement to site and deploy ZEV infra-
investments where there is insufficient tax liability to structure that also benefits communities broadly.
benefit from tax credits. Priority should be given to charging and refueling
• Congress should fund state and local governments infrastructure installed at workplaces, multi-unit
to develop and implement comprehensive long- dwellings, and low-income communities, including
range plans to accelerate the deployment of ZEV grants for necessary electrical upgrades to older
charging and refueling infrastructure. Congress single- and multi-family dwellings, and to meeting
should also expand funding through existing the needs of medium- and heavy-duty vehicles.
INDUSTRY
The industrial sector is especially challenging to establish intensity-based greenhouse gas objectives
decarbonize given its tremendous diversity, its heavy for the major industrial subcategories. These objec-
reliance on large quantities of heat, and the fundamental tives should be used to determine how a company
nature of many core manufacturing processes. Although or facility is treated within an economy-wide carbon
industrial emissions have generally declined in recent pricing system or, alternatively, as a basis for manda-
years with improved energy efficiency and the move from tory, tradeable performance standards, such as
coal to natural gas, rising production driven by growing clean product standards applied to both domestic
demand and declining energy prices would make the and imported products.12 The benchmarking
sector the largest source of U.S. emissions by 2030.11 process, informed by programs already imple-
Switching to clean power through electrification and mented in Canada and Europe, would highlight best
improving industrial efficiency though digitalization can practices and promote industry-wide learning.
both help to reduce the sector’s emissions. More funda-
To accelerate research and development of technologies to
mental challenges to industrial decarbonization include
developing new technologies to generate large volumes decarbonize industry:
of “clean heat” and reducing process-related emissions • Congress should elevate the Advanced
by developing cleaner processes for producing products Manufacturing Office (AMO) within DOE to better
such as cement, steel, and plastic. Stronger investment in enable it to coordinate related RDD&D efforts
RDD&D, as recommended above, will be critical on both across the department. Building on existing R&D
fronts. Even with rapid innovation, however, significant consortia and other successful public-private part-
emissions are still likely in 2050, making carbon capture nerships will enable AMO to strengthen American
and carbon removal essential strategies for achieving
leadership on emerging low-carbon industrial
carbon neutrality.
technologies. Priorities should include clean
Stronger federal standards can help drive decar- thermal heat, low-carbon manufacturing processes,
bonization across the industrial sector, while targeted and additive and circular manufacturing.
incentives can help spur low-carbon industries and job
creation, particularly in areas disadvantaged by the To drive investment and jobs through the decarbonization of
transition from fossil fuels. Additional measures will be industry:
needed to protect the competitiveness of U.S. industries • Congress should reauthorize the Section 48C
producing globally traded goods as they decarbonize (see Advanced Manufacturing Tax Credit, increase its
trade recommendations below). funding to at least $2.5 billion per year through
2025, expand it to include other critical decarbon-
To provide industry an overarching incentive to decarbonize:
ization technologies, and provide direct options for
• EPA should undertake a benchmarking process to companies with limited tax liability. Reauthorizing
Climate Policy Priorities for the New Administration and Congress 9and revamping the tax credit—originally autho- captured carbon dioxide from industrial facilities
rized in 2009 to support the manufacture of eligible and power plants to locations where it can be
clean technologies—could spur new industry in utilized or permanently stored.14 These projects,
areas negatively impacted by the transition away which will create jobs in rural areas and in the hard-
from fossil fuels.13 Projects should be prioritized hit energy sector, should be supported by:
based on their potential to reduce greenhouse gas Ŋ Making carbon dioxide pipeline projects eligible
emissions, create domestic jobs, and contribute to a for low-interest federal loans and designating
just transition. them as “pollution control equipment” to allow
To promote the deployment of carbon capture: abatement of property taxes.
• Following the recent extension of Section 45Q of Ŋ Authorizing and funding regional demonstration
the US tax code, which provides a performance- projects featuring large-volume, long-distance
based tax credit for eligible CCUS projects, interstate trunk lines linking multiple industrial
Congress should lower the minimum eligibility facilities and power plants to move captured
threshold for direct air capture projects and provide carbon dioxide to utilization and geologic
a direct pay option for project developers to help storage sites.
move projects stalled during the pandemic by Ŋ Directing EPA to grant states primary authority
constrained tax equity markets. (“primacy”) to approve Class VI (saline) carbon
• Congress should facilitate the expansion of carbon dioxide storage facilities.
dioxide transportation infrastructure, to carry
BUILDINGS
Commercial and residential buildings account for efficiency upgrades can contribute to the post-pandemic
a significant portion of U.S. greenhouse gas emis- economic recovery by creating jobs for local contractors,
sions—27.2 percent in 2018.15 Decarbonizing the particularly in low-income and disadvantaged communi-
building sector requires significantly improving energy ties. In the longer term, state and local governments
efficiency and reducing reliance on fossil fuels, primarily will play the primary role in decarbonizing the building
through increased electrification. Given the long life- sector but will need strong support from the federal
times of buildings, decarbonization efforts must focus government in the form of strong incentives, standards,
both on ensuring that new construction is climate-smart and technical assistance.
and on retrofitting the nation’s vast existing building
To spur efficiency upgrades and fuel switching:
stock.
• Congress should continue to provide tax incentives
In addition to reducing emissions, improved energy
for upgrades that increase efficiency and lower
efficiency produces net cost savings over time. Lower
emissions in commercial and residential buildings.
residential energy bills are especially beneficial to
These upgrades can include switching to high-
low-income households, which typically must devote a
efficiency appliances and using electric heat pumps
higher portion of their income to energy expenses.16
for space and water heating. Where feasible, these
However, stronger incentives and standards are needed
incentives should be provided as direct cash rebates.
to overcome the higher upfront costs of energy-saving
To leverage more private investment, real estate
measures and the challenge of “split incentives”—with,
investment trusts (REITs) should be allowed to
for instance, owners bearing the cost of energy upgrades
monetize these tax incentives.
while tenants realize the resulting savings.17 Measures
also are needed to accelerate the shift from on-site fossil To target assistance to low-income, marginalized, and
fuel combustion to appliances such as heat pumps that disadvantaged communities:
run on electricity or geothermal heating. • Congress should reinstate and fund the Energy
In the near term, strong federal investment in Efficiency and Conservation Block Grant (EECBG)
10 Center for Climate and Energy Solutionsprogram enabling state, local, and tribal govern- appliances and consider expanding the reach of
ments to promote building retrofits, renewable standards for commercial and industrial appli-
energy, and the purchase of energy-efficient and ances. These standards save the average household
non-fossil appliances. The EECBG was authorized approximately $320 a year and have cumulatively
in 2007 and funded by the American Recovery and avoided more than 3 billion tons of carbon emis-
Investment Act (ARRA) in 2009. From 2009 to 2015, sions.21 DOE is required to regularly update energy
EECBG grants helped reduce energy use and emis- efficiency standards for over 60 residential and
sions while producing local economic benefits and commercial appliances and equipment but has
generating billions of dollars in energy savings.18 lagged during the last four years.22
• Congress should ensure that the Weatherization To support state and local efforts:
Assistance Program (WAP) is fully funded at the
• Congress should fund technical assistance to state
levels authorized in the Energy Act of 2020, and
and local governments to support their adoption of
that the newly authorized repairs under the Healthy
updated building codes requiring the use of avail-
Homes program are successfully integrated into
able and affordable energy efficiency technologies
WAP’s efforts.19 WAP provides grants to states,
and systems and other carbon reduction measures.
tribes, and territories to contract with local agencies
These should include favoring building materials
to deliver weatherization services to low-income
with low embodied carbon content and ensuring
households. In 2019, WAP provided weatherization
electrification, adoption of digital energy manage-
services to approximately 35,000 homes, which
ment systems, and EV readiness in commercial
supported 8,500 jobs and produced average house-
and residential buildings. Congress should fund
hold savings of $283 in annual energy costs.20
DOE’s State Energy Program to provide additional
To increase the efficiency of lighting, heating, cooling, and incentives, such as energy efficiency grants, to
other end-use technologies: jurisdictions that have adopted the most up-to-date
• DOE should prioritize reviewing and updating building codes.
existing energy efficiency standards for residential
SHORT-LIVED CLIMATE POLLUTANTS
In addition to reducing carbon dioxide emissions enacted bipartisan legislation authorizing EPA to phase
across the economy, stronger efforts also are needed down U.S. use of HFCs on a timeline consistent with the
to reduce emissions of two other potent greenhouse Kigali Amendment to the Montreal Protocol, which was
gases—hydrofluorocarbons (HFCs) and methane. Both negotiated in 2016 but has not yet been ratified by the
are considered short-lived climate pollutants, as they do United States.24
not persist in the atmosphere as long as carbon dioxide, One of the largest sources of methane emissions is
but both also have a stronger warming effect. Methane, the production, processing, and distribution of oil and
for instance, is over 80 times more potent than carbon natural gas. The private sector has begun voluntary
dioxide over a 20-year time frame. Near-term efforts to efforts to reduce methane leakage from oil and gas
reduce these short-lived pollutants can therefore produce operations. Stronger measures are needed both to
more immediate climate benefits. A global phasedown of reduce methane leakage throughout the value chain and
HFCs could reduce temperature rise this century by an to reduce methane emissions from the flaring of natural
estimated 0.5 degrees Celsius.23 gas during oil and gas production.
U.S. manufacturers have taken a lead in developing
To ensure swift global action to phase down the use of HFCs:
climate-safe alternatives to HFCs, which are used
• Congress should ratify the Kigali Amendment to
primarily in refrigeration and air conditioning, and the
the Montreal Protocol to help ensure comparable
United States is now well positioned to join other coun-
action by other countries and to create markets for
tries in a global phase-down. In December, Congress
Climate Policy Priorities for the New Administration and Congress 11U.S.-produced HFC substitutes. storage. They also should provide flexibility for the
• EPA should move swiftly to exercise its new adoption of fast-evolving leak detection and control
authority to implement a graduated, 85 percent technologies such as drone-mounted sensors and
phasedown of the production and consumption of satellite monitoring.
regulated HFCs over a 15-year timeframe, consistent • The Bureau of Land Management (BLM) should
with the Kigali Amendment. develop and enforce equally stringent regulations to
prevent waste by minimizing methane leakage and
To dramatically reduce methane emissions:
flaring from oil and gas operations on public and
• EPA should establish rigorous standards reflecting
tribal lands. Also, BLM and EPA should coordinate
the latest science and technology to reduce methane
closely to minimize regulatory overlap and provide
emissions across the oil and gas value chain. These
a means for projects to comply with comparable
standards should cover methane emissions from
EPA, state, local, or tribal requirements in lieu of
natural gas flaring, venting, and unintentional leaks
BLM requirements.
during production, processing, transmission, and
NATURE-BASED SOLUTIONS
Agriculture and other land uses are a significant source To guide U.S. sequestration efforts:
of U.S. greenhouse gas emissions, but the land sector • The U.S. Department of Agriculture (USDA),
as a whole is a net greenhouse gas sink, with soils and in consultation with the National Oceanic and
vegetation absorbing significant quantities of carbon Atmospheric Administration (NOAA), should estab-
dioxide from the atmosphere. Significantly increasing lish objectives for increasing the net carbon stock
this land-based sequestration to help offset emissions of American forests, agricultural lands, grasslands,
from other sectors will be essential to achieving carbon wetlands, and coastal blue carbon ecosystems.
neutrality economy-wide. Some studies have estimated These objectives would help guide federal invest-
that increased land sequestration has the potential to ment in land-based carbon sequestration programs
offset up to 45 percent of U.S. economy-wide emissions and account for the dynamic nature of carbon
in 2050.25 sequestration in ecosystems over the long term.
Farmers can play a significant role in addressing
To support on-the-ground efforts:
climate change by adopting “regenerative” agricultural
• Congress should increase funding for the USDA
practices that sequester carbon while also improving
Natural Resources Conservation Service (including
water retention and quality and soil productivity.26 The
the Environmental Quality Incentives Program,
emergence of voluntary and regulatory carbon markets
Conservation Reserve Program, and Wetlands
can provide both farmers and private forest owners with
Reserve Program) for forest, agricultural land,
additional incentives to adopt carbon-sequestering prac-
grassland, and wetland restoration projects.
tices and generate new sources of revenue. Improving
Though these programs are not climate-specific,
the measurement of the carbon captured through such
their existing infrastructure and landowners’
measures will be key to advancing these market-based
familiarity with them provide an opportunity for
approaches and ensuring high-quality offsets that are
large increases in funding for carbon sequestering
additional and permanent.
practices and projects. These programs should
The federal government can most effectively advance
focus on reducing upfront costs for landowners and
nature-based solutions by facilitating the land sector’s
supporting smaller farmers.
participation in emerging carbon markets and by
• Congress should also increase funding for the U.S.
strengthening direct incentives for conservation efforts
Forest Service’s Urban and Community Forestry
across a wide range of rural and urban landscapes.
12 Center for Climate and Energy SolutionsProgram to help local and tribal governments, soil carbon data could improve understanding of
community groups, and others maintain and restore the factors affecting soil carbon stocks in different
community forests, prioritizing support to under- regions, farming systems, and soil types.
served urban and rural communities. • Congress should fund USDA to help farmers and
• Congress should establish a new conservation forest owners participate in voluntary and any
corps program at USDA and the Department of the future regulatory carbon markets by developing
Interior for restoration and green infrastructure standards for carbon offsets, including methodolo-
projects that increase carbon sequestration and gies to ensure the additionality and permanence
improve community resilience, prioritizing projects of offsets; systems for verifying, monitoring, and
in low-income communities. reporting; and certification of third-party verifiers.
Voluntary carbon markets will play an increasingly
To incentivize sustainable farming and forestry practices:
important role in decarbonization especially as
• Congress should fund USDA to develop improved
more companies set ambitious net-zero targets and
soil carbon measurement methods and tech-
the demand for climate finance for nature-based
nologies, and to collect soil carbon data as part of
solutions increases.
USDA’s National Resources Inventory. Enhanced
DIGITAL INFRASTRUCTURE
One critical priority—both in facilitating decarboniza- infrastructure, incentivize deployment of 5G to help
tion across the economy and in strengthening the with “last mile” challenges of connecting customers
economic prospects of rural and low-income communi- to the network, and structure these benefits to
ties—is the expansion of broadband infrastructure. promote capacity-sharing partnerships between
Access to reliable, high-speed internet service has utilities and service providers to encourage commu-
proven invaluable during the COVID-19 pandemic, nity broadband access and grid modernization.
allowing people to work, learn, and receive medical To improve broadband access and affordability in rural and
attention while sheltering in place. Broadband expan- low-income communities:
sion, including the extension of 5G wireless networks,
• Congress should increase funding for programs like
can help facilitate the deployment of digital technologies
USDA’s Rural Development Broadband ReConnect
to reduce energy use and emissions across the economy.27
Program to help expand high-speed broadband in
However, the pandemic has brought into even clearer underserved and unserved areas.
focus a significant digital divide. As of 2019, 37 percent of
• Congress should also increase funding and improve
rural Americans, 44 percent of low-income households,
upon programs to expand broadband access for
and about 40 percent of racial minorities do not have
low-income households. For instance, the Federal
high-speed broadband at home.28 Limited access to
Communications Commission Lifeline program
broadband is a major impediment to jobs creation and
could allow households to have two connections
economic development particularly in remote rural
(e.g., one mobile and one fixed broadband) and
areas.29 The expansion of broadband infrastructure, such
could designate cable operators—key providers of
as 5G wireless networks, must serve to narrow, rather
home broadband—as “Eligible Telecommunications
than reinforce or exacerbate, the digital divide.
Carriers.” Granting this certification would allow
To expand broadband infrastructure nationwide: cable operators to offer discounts on services that
• Congress should provide a short-term tax credit would be paid through the federal universal service
and/or accelerated depreciation for new invest- fund.30
ments in fixed-line and wireless broadband
Climate Policy Priorities for the New Administration and Congress 13CLIMATE JUSTICE
The harmful impacts of climate change—and of our cumulative impacts of climate change, economic
strategies to address climate change—fall dispropor- and racial inequity, and multisource pollution.
tionately across society. U.S. climate policy must ensure • Federal agencies overseeing the siting of energy,
a just, equitable transition to a zero-carbon economy. transportation and other infrastructure should
This includes both addressing “environmental justice,” thoroughly analyze, and do all within their authori-
by easing chronic and new burdens on low-income and ties to minimize, potential harmful impacts on
historically marginalized communities, and ensuring a low-income, disadvantaged, and marginalized
“ just transition,” by helping to build a sound economic communities, especially those bearing dispropor-
future for communities and workers disadvantaged by tionate pollution burdens.
the transition away from high-carbon fuels. • The White House should establish an
Pollution and poor health outcomes disproportion- Environmental and Climate Justice Division within
ately impact low-income communities and communities the U.S. Department of Justice to work with EPA’s
of color, often as a result of systemic inequities and Office of Civil Rights to strengthen and coordinate
chronic underinvestment.31 Many of these communities enforcement of health, environmental, and civil
now face the added burden of climate impacts such as rights laws with an emphasis on protecting margin-
extreme heat and increased flooding. Some communi- alized communities.
ties, meanwhile, face uncertain economic futures as they
To support workers and communities affected by the energy
see jobs and tax bases disappear with the transition away
transition:
from fossil fuels.
The federal government should address climate justice • Congress should establish and fund a multi-agency
both holistically, by making it a priority across all aspects program, building on the Obama Administration’s
of climate decision-making, and through programs POWER+ Plan, to leverage and target federal
directing resources to the communities most in need. economic, workforce development, health, and
community resources to assist fossil fuel-dependent
To address disproportionate impacts on low-income, disad- communities in the energy transition, starting with
vantaged, and marginalized communities: coal communities.
• Congress should increase funding for federal • Congress should reauthorize the coal mine recla-
grant programs focused on environmental mation fee and authorize the Abandoned Mine
justice including the EPA Environmental Justice Reclamation Fund to accelerate the distribution
Small Grants Program, Environmental Justice of funds to support economic revitalization and
Collaborative Problem-Solving Cooperative diversification and the redevelopment of reclama-
Agreement Program, and the Community Action tion sites. The current authorization for the coal
for a Renewed Environment Grant Program. reclamation fee expires in September 2021, but
Congress should also authorize and fund a new there are about 5,200 abandoned coal mines
grant program to assist communities dispropor- across the country, and an estimated $11 billion in
tionately affected by pollution or climate change unfunded reclamation costs.32
through projects such as technical assistance to
• Congress should increase funding for BLM to
communities to identify and monitor environmental
inventory abandoned oil and gas wells on public
health problems and through investments in climate
lands and should establish a reclamation fund to
resilience, building retrofits, nature-based solutions,
plug and reclaim them. EPA estimates there are
and microgrids.
about 3.2 million abandoned wells across the United
• EPA should update and expand its Environmental States.33 Increased investment in reclamation efforts
Justice Screening and Mapping Tool (EJSCREEN) would create jobs in communities long dependent
to help direct assistance to disadvantaged and on high-carbon industries.
marginalized communities threatened by the
14 Center for Climate and Energy SolutionsFINANCE
Investors, companies, and financial regulators have should encompass both physical and transition
begun to recognize and respond to the risks that climate risks, address the use of climate scenarios, build
change poses to financial assets and to the stability of on existing systems and frameworks, provide for
the U.S. financial system. Pressed by investors, many different metrics relevant to different sectors, and
companies have taken up the recommendations of the avoid undue burden on companies.
Task Force on Climate-Related Financial Disclosures
To safeguard the stability of the U.S. financial system:
to provide fuller disclosure of both physical risks (from
• The Financial Stability Oversight Council (FSOC),
climate change itself) and transition risks (from societal
charged with identifying and responding to risks
responses to climate change). Stronger regulatory guid-
to the stability of the U.S. financial system, should
ance would improve the value and consistency of these
examine how to incorporate climate-related
disclosures, enabling markets to more appropriately
financial risks as part of its regular monitoring and
value high- versus low-carbon investments.
oversight functions and, along with state regulators,
Beyond specific investment risks, regulators are
build capacity across FSOC’s member agencies on
growing increasingly concerned about climate-related
best practices for incorporating, monitoring, and
risks to the financial system as a whole, for instance,
managing climate-related risks.
through impacts on real estate values, insurance losses,
• The Federal Reserve should move immediately to
default rates, and supply chains. In September 2020, a
strengthen its understanding of climate-related
subcommittee of the U.S. Commodity Futures Trading
financial risk and should develop transition and
Commission described climate change as “a major risk to
physical climate risk indicators for the financial
the stability of the U.S. financial system and to its ability
system; incorporate these indicators into financial
to sustain the American economy,” and outlined a series
stability analyses and monitoring; and determine
of measures to address those risks.34 In November 2020,
how to integrate them into its supervision of
the Federal Reserve Bank for the first time highlighted
financial institutions, including through the estab-
climate change as a risk to the financial system, saying
lishment of climate-risk stress testing, informed by
it adds a “layer of economic uncertainty and risk that
scenario analysis, under appropriate time horizons.
we have only begun to incorporate into our analysis of
Where feasible and advisable, the Federal Reserve
financial stability.”35
should harmonize its efforts with those of the
In addition to stronger efforts by regulators to
Network of Central Banks and Supervisors for
understand, highlight, and guard against climate-related
Greening the Financial System, which the Federal
financial risks, Congress has a role to play in deploying
Reserve recently joined.
public resources to leverage stronger private invest-
ment in efforts nationwide to reduce emissions and to To mobilize investment in mitigation and resilience projects:
strengthen climate resilience. • Congress should establish a National Climate Bank
to: deploy commercialized clean energy technolo-
To ensure full consideration of climate-related financial risks
gies and energy efficiency programs in low- and
in investment decisions:
moderate-income communities; bolster green
• The U.S. Securities and Exchange Commission
infrastructure and climate resilience projects other-
(SEC) should strengthen guidance to companies
wise lacking sufficient private and local govern-
on how to assess climate-related financial risks so
ment investment; provide technical assistance to
they can more reliably disclose any such material
support existing state green banks; and provide
risks, and their strategies for managing them, in the
initial capitalization and technical assistance to
mandatory disclosures required of publicly traded
help establish new state green banks. Several states
companies. Guidance for assessing and reporting
around the country—including Connecticut,
material climate-related financial risks should be
Hawaii, Michigan, Nevada, New York, and Rhode
informed by a multi-stakeholder working group
Island—operate green banks. In all of its efforts, a
of publicly traded companies, investors, issuers,
National Climate Bank should transparently engage
rating agencies, standard-setting organizations,
the private financial sector to better focus its efforts
and nongovernmental organizations. The guidance
on financing gaps and enabling private investment.
Climate Policy Priorities for the New Administration and Congress 15You can also read
