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What the EU’s CBAM Means for the United States

Climate Advisers reviews the EU’s new Carbon Border Adjustment Mechanism and the potential economic and political implications of a US response. (more…)

Biden Signing Executive Order

Update on President Biden’s Regulatory Climate Agenda

The Trump administration devoted considerable effort to undoing environmental regulations such as restrictions on oil and gas and other development on protected lands, fuel efficiency standards and greenhouse gas emissions rules for motor vehicles, standards for taking climate impacts into account in cost-benefit analyses, regulations governing air pollutants and toxic substances, protections for threatened and endangered species, and many other areas of environmental policy. The ramifications of these actions are significant, with rollbacks projected to result in an additional 1.8 billion metric tons of greenhouse gases in the atmosphere by 2035. These additional emissions amount to about three years of emissions at current levels. President Biden ordered a thorough review of all Trump-era rollbacks in an executive order on his first day in office, making clear that undoing former President Trump’s attempts to undercut environmental rules is a top priority for the Biden administration. This message has been reinforced in a variety of ways since that executive order. However, as many observers have noted, in some cases, undoing Trump-era rollbacks will be neither easy nor straightforward and will likely take some time.

This section summarizes notable regulatory actions by the Biden administration to date and offers analysis concerning likely future actions, obstacles the administration may encounter, and considerations it will need to consider as it seeks to reinstate or strengthen the environmental policy regime that the Trump administration sought to dismantle.

President Biden’s Executive Order

Perhaps the most notable Trump-era rollbacks targeted by President Biden’s day-one executive order are standards regulating fuel efficiency for cars and light trucks administered by the Department of Transportation (DOT) and the Obama-era greenhouse gas emissions regulations for motor vehicles administered by the EPA. The order directs the relevant agencies to consider suspending, revising or rescinding Trump-era actions by relevant agencies by the end of July. The administration has yet to make any specific pronouncements on the content of any proposed replacement rules, they are likely to be at least as if not more ambitious than the Obama era. In any case, finalizing replacement rules is expected to take some time—likely years. The process involves many steps, including formally publishing a proposal to change the rule; opening it to public comments; drafting legal, economic, and scientific justifications for the rule; and performing complex technical analyses of the impacts of the new rule on highway safety, air quality, and consumer behavior. Another likely cause of delay is the need for coordination between DOT and EPA, as well as with the state of California, which may develop its own, stricter rules if the Biden administration reinstates its authority to do so.

The President’s executive order also directs agency heads to consider suspending, revising, or rescinding Trump-era regulations concerning the use of scientific research in Federal policymaking, the process for calculating costs and benefits of proposed regulations, harmful pollutants (such as mercury) that are associated with coal- and oil-fired power plants, building and appliance efficiency standards, and the social cost of carbon. The deadlines for some reviews have already passed, and Secretary of the Interior Deb Haaland has already recommended restoring several protected areas to their previous boundaries and restoring previous protections. Other deadlines are later this year. Regardless, few if any replacement regulations are likely to be finalized this year.

Finally, President Biden’s executive order directs relevant agencies to review the boundaries of national monuments (some of which President Trump altered), restores protections for some coastal areas in Alaska the Trump administration opened to oil and gas development and revokes the construction permit for the Keystone XL pipeline. Though the President’s order immediately revoked the permit for the pipeline, the reviews and any subsequent changes to national monument boundaries and development restrictions are still ongoing and will take some time.

Possibilities for Further Executive Action

The Biden administration has also taken or signaled its intent to act on several other fronts.

The Trump administration devoted considerable effort to weakening protections for undeveloped public lands and threatened wildlife to ease the path for further resource extraction, especially oil and gas development. The Biden administration has already begun undoing many of the Trump administration’s efforts in this area. For instance:

  • The administration has moved to reinstate a rule barring construction of roads and other development in much of the Tongass National Forest in southeastern Alaska, one of the world’s largest intact temperate rainforests and one of the nation’s largest natural carbon sinks. The administration plans to issue the new rule in August.
  • The administration has moved to pause oil and gas leases in Alaska’s Arctic National Wildlife Refuge pending an environmental review.
  • The Biden administration has proposed reinstating a rule that would penalize companies and individuals who unintentionally kill birds protected by the Migratory Bird Treaty Act.

The administration is likely to continue these efforts going forward. Some of these efforts will likely meet with challenges in the courts. A judge already struck down the President’s ban on new oil and gas leases on public lands, and another lawsuit pushes back on the Biden administration’s attempt to halt development on 28 million acres of land in Alaska while the administration conducts environmental reviews. The administration’s efforts may be slowed by the need to craft new protections to facilitate environmentally sensitive deployment of renewables on public lands.

The Trump administration also targeted the Obama administration’s Clean Power Plan (CPP), which regulated greenhouse gas emissions from power plants, replaced it with the far weaker Affordable Clean Energy (ACE) rule. In January, a federal court struck down the ACE rule, clearing the path for the Biden administration to replace it with stronger regulations. EPA administrator Michael Regan has already indicated that, rather than reverting the CPP, which was mired in legal challenges, it will craft an entirely new rule to replace the ACE rule. The administration has not yet indicated what form the new rule will take. As emphasized previously in Climate Intel, the Clean Air Act gives the agency several options. Regardless of which it chooses, the rule will likely be stronger than its Obama-era predecessor. Finalizing the new rule will take some time due to the need to design carefully to avoid being struck down by the Supreme Court. If Congress passes a national clean electricity standard, which is now being considered in the Democrats’ infrastructure bill, taking some pressure off the Biden administration’s rulemaking process.

The Biden administration and Congressional Democrats were widely expected to reverse other Trump administration environmental rollbacks using the Congressional Review Act (CRA), a law that allows Congress to reverse regulatory actions finalized by an outgoing administration during the last 60 days of its tenure. However, the window for using the CRA has now closed, with Congress choosing to invoke it only one time to reinstate environmental rules the Trump administration rolled back, namely Obama-era rules requiring oil and gas companies to monitor and fix methane leaks. It is possible that the administration will seek to replace these rules with even stronger ones in the future, but given how much further along this aspect of its climate agenda is than others, it is more likely is that the administration will seek to further curtail methane emissions by including complementary measures in any infrastructure bills.

The Biden administration’s actions to date and its plans illustrate a commitment to a whole-of-government approach to climate action. However, the myriad difficulties besetting President Biden’s regulatory agenda illustrate how extensive and how successful the Trump administration’s deregulatory efforts were, the general incompetence of many of its efforts notwithstanding. Together with a Supreme Court that is now more hostile to environmental regulation than the Court has been in decades, the Trump administration’s legacy on environmental regulation will be a significant constraint limiting the implementation of President Biden’s regulatory agenda.

Pathways for Reaching the New U.S. NDC

Though there are a variety of potential pathways to achieving the United States’ emissions reduction target, doing so will likely require a combination of executive action, efforts by states and cities, and new federal legislation. Models agree that achieving the U.S. NDC is feasible or nearly so and that, in the next decade, the greatest emissions reductions will need to come from decarbonizing the electricity and transportation sectors. In turn, these changes would pave the way for electrifying (and so decarbonizing) other sectors in the 2030s and 2040s.

We consider near-term legislative and administrative vehicles for implementing the policies necessary to achieve the U.S. NDC, as well as the political considerations relevant to the timing and content of relevant legislation.

The Content and Significance of the Infrastructure Bill

A variety of recent modeling efforts have been devoted to determining how much the United States can reduce its emissions by the end of the decade. Some of the models rely on carbon pricing, while others include a Clean Electricity Standard (CES), a policy that would require a steady increase in electricity generators’ output to come from carbon-free sources. At least one model, from the University of Maryland’s Center for Global Sustainability, relies on neither policy; instead it models the effects of a variety of federal incentives for clean electricity, electric vehicles, energy efficiency measures, retention of existing nuclear capacity, and carbon sequestration, as well as a suite of federal standards for existing coal and new and existing gas, among other policy measures. Models also differ in the degree of ambition they expect at the state and local levels. Despite these differences, the modeling is clear on one point: The United States is unlikely to achieve its reduction target without action by Congress.

The best chance to put the necessary policies in place at the federal level is likely the infrastructure bill the White House hopes to get passed by August, making it the best opportunity to enact the policies necessary to reduce emissions 50-52 percent by 2030. The White House wants to pass the infrastructure bill in 2021 for two main reasons. First, Democrats are expected to lose control of the House of Representatives in 2022, largely because voters have historically tended to turn on the party that holds the White House during midterm elections. Compounding the difficulties for Democrats this time around is the fact that, as a result of the balance of power in state legislatures across the country, Republicans will have considerably greater control over the redistricting process that will determine the boundaries of Congressional districts in the next cycle. If Republicans retake the House, there will be little prospect of Congress passing any major climate bills before 2025 at the earliest.

The second reason that the infrastructure bill is likely the best opportunity to implement the policies necessary to achieve the NDC is that, as midterms get closer, members of Congress running for re-election will become increasingly less open to taking potentially controversial votes that may be used against them in their campaigns. Any climate bill ambitious enough to put the United States on the path to achieve its NDC will have to involve substantial changes in many sectors of the economy and so is likely to be controversial in at least some quarters. As a result, Congress is much less likely to pass major climate legislation in 2022.

The content of the infrastructure bill has recently come into focus. On March 31, President Biden announced his “American Jobs Plan,” a sweeping proposal for more than $2 trillion worth of investments in roads, bridges, and public transit, as well as grid improvements, safe drinking water, research and development, and much more. It would be paid for through increases in corporate taxes and provisions to ensure U.S. companies do not avoid federal taxes through offshore “tax havens,” among other revenue measures. Notably, the White House’s plan includes a number of significant climate-related provisions, such as an “Energy Efficiency and Clean Electricity Standard,” investments in electric vehicle charging infrastructure, electrification of the federal fleet, and building retrofits (see Figure 2 below).

Figure: Funding Breakdown of American Jobs Plan

Sources: CSIS, Climate Advisers

Going forward, a crucial open question about the infrastructure bill is how it will pass the Senate, if it does—through regular order (requiring 60 votes in favor), or through budget reconciliation (requiring only 50 Senators plus the Vice President). For the bill to pass through regular order, Democrats would need to secure the votes of at least 10 Republicans to overcome a Republican filibuster. To pass the bill through reconciliation, by contrast, Democrats would not need any Republican votes, provided that every Senate Democrat supports the bill. Some Senate Democrats—perhaps most prominent among them West Virginia Senator Joe Manchin—strongly prefer that the bill passes through regular order with bipartisan support, and President Biden himself has indicated that he would prefer this as well. However, many Senate Democrats, as well as many observers, think it is extremely unlikely that 10 Senate Republicans will support an infrastructure bill backed by President Biden and the Democrats. Senate Minority Leader Mitch McConnell’s comment that “One hundred percent of [his] focus is on stopping this new administration” reinforces this impression, as does recent polling showing that, while more Americans support the Biden administration’s infrastructure plan than oppose it by a wide margin, 74 percent of Republicans oppose it.

If Democrats use reconciliation, they will have to exclude any provisions they cannot convince the Senate Parliamentarian are related to the budget since reconciliation votes are only allowed to include provisions that raise money or spend money. This might endanger the CES, which mandates the increase of clean electricity and models suggest could reduce U.S. power sector emissions 80 percent by 2030, as a CES has no direct effects on the federal budget. However, Evergreen, an organization that advocates for ambitious climate policy, published a report earlier this year outlining six ways to design a CES or a CES-like alternative with the same effects that, they argue, would be compatible with Senate rules. At this point, it is unknown whether the Senate Parliamentarian will allow for the CES to be included in a bill using reconciliation. If, however, the Parliamentarian rules that the CES is not compatible with Senate rules, some Democrats may push for carbon pricing as an alternative. Provided all Democrats vote in favor, the Senate can also overrule the Parliamentarian’s decisions.

A number of economic models suggest that the NDC is achievable with either a CES or carbon pricing, provided that the carbon price is high enough (likely starting somewhere in the $25-50 per ton range and increasing over time). It is less clear whether either a CES or a carbon price could secure the support of a majority in the U.S. Senate. A CES has been embraced by the White House, many prominent advocates and commentators, and, most recently, by a coalition of more than 150 environmental groups. At the same time, carbon pricing may encounter less resistance than a CES from the oil and gas industry, which has recently embraced carbon pricing more enthusiastically than ever and views the push to “electrify everything” that a CES would supercharge as an existential threat. The industry’s support for carbon pricing typically comes with a condition, however: the sector wants any carbon pricing legislation paired with rollbacks of existing environmental regulations, restrictions on the federal government’s ability to issue new ones, or preemption of more ambitious state and local policies. Given this stance, the industry is likely to push back on any policy that is ambitious enough to put the United States on a path to achieving its new NDC. Because Democrats cannot afford to lose even a single Senator if they are forced to pass an infrastructure bill through reconciliation, the industry’s position makes the politics of ambitious climate provisions extremely delicate.

Despite the Democrats’ thin margins in Congress, the likelihood that an infrastructure bill of some type will pass is good. President Biden is pushing hard for an infrastructure package, and Democratic leadership sees passing meaningful legislation as key to the party’s electoral prospects going forward. Nevertheless, if Democrats cannot pass an infrastructure bill, it would be extremely difficult for the United States to achieve its new NDC. However, there are a variety of steps Congress and the Biden administration can take to ensure that the country at least comes close to reaching the 50-52 percent reduction.

Alternative Pathways to Reducing U.S. Emissions

If Congress does not pass an infrastructure bill with significant climate provisions, the following are likely options available to Congress and the Biden administration for reducing U.S. emissions.

  • The EPA could use existing authority under the Clean Air Act to regulate greenhouse gases, as detailed in the February edition of Climate Intel.
  • The Department of Transportation could use Corporate Average Fuel Economy (CAFE) standards to make producing electric cars and light trucks easier and more attractive than producing traditional, internal combustion engine vehicles.
  • The federal government could use its purchasing power to drive emissions reductions through measures including buying electric vehicles, retrofitting and implementing efficiency measures in federal buildings, entering into power purchase agreements for renewable energy, and setting emissions standards for the raw materials it procures (including steel and cement).
  • Key federal agencies such as the Department of Transportation and the Department of Energy could fund research and development efforts and demonstration projects.
  • In 2023, Congress will have to re-authorize the Farm Bill, a massive bill that includes a number of farming – and conservation – related measures that could be used to advance climate objectives.
  • There is growing enthusiasm for the so-called “Civilian Conservation Corps” or “Civilian Climate Corps,” a reference to the Civilian Conservation Corps created in the 1930s as part of the New Deal under President Franklin Roosevelt. Any such program would create jobs on conservation and climate-related projects across the country.

In addition, the EPA has already taken steps to sharply reduce the use and production of hydrofluorocarbons or HFCs, and Congress recently voted to overturn the Trump administration’s lax regulations on methane emissions from oil and gas operations, in effect reinstating the Obama administration’s much stricter policies. These actions, plus more coal retirements, are expected to bring about a significant amount of emissions reductions.

It is unclear, however, exactly how close these initiatives would get the United States to achieving its NDC. However, there is reason to think that they could help to reduce emissions by more than 40 percent, at least if combined with sufficiently ambitious efforts at the state and local level. We Are Still In, a coalition of local actors and business leaders, suggests that enhanced state and local action alone could lead to reductions as high as 37 percent below 2005 by 2030. If that is correct, then combining state and local action with the initiatives mentioned above would likely be enough to reduce emissions by more than 40 percent and put the new U.S. NDC within reach.

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