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President Joe Biden's plan to make a strong US comeback at the
UN COP26 climate change meeting that begins 31 October may be
tempered by domestic political roadblocks and global energy price
surges, analysts say.
The meeting, which was postponed by a year owing to the COVID-19
pandemic, takes place in Glasgow, Scotland, against a backdrop of
global energy price surges correlated with supply shortfalls and
shipping price spikes.
"The pace, scale, and shape of the energy transition—and the
related capital transition in financial markets—are all set to
bifurcate at COP26 between competing views of the current crisis in
energy pricing, with implications for the future of economic
planning and infrastructure funding for years to come," IHS Markit
Cleantech and Climate Executive Director Peter Gardett wrote in a
25 October note.
Despite the legislative roadblocks and global events, Biden has
taken more steps to tackle the climate crisis in the 10 months
since he took office than any other US president before him, and
some analysts say this puts him in a position to demand commitments
from other major economies.
There is no question that Biden's presence as a participant and
a key player at the COP26 meeting, which his predecessor shunned,
is "likely to be the most significant accomplishment to date," IHS
Markit Chief Energy Strategist Atul Arya told Net-Zero Business
Daily.
President Trump shunned global climate meetings during his term
in office and disliked multilateral agreements in general,
preferring that the US to deal with countries on a bilateral
basis.
Back in the game
"The US is definitely back in the game on climate change," as is
evident from the many actions Biden has taken since he assumed
office 10 months ago, Zach Friedman, federal policy director for
Ceres, a nonprofit sustainable network of institutional investors,
told Net-Zero Business Daily 28 October.
Friedman and others pointed to the Biden administration's
re-entry into the 2015 Paris Agreement shortly after taking office,
its commitment to halving US GHG releases by 2030 and to reach a
net-zero economy by mid-century, and the series of executive orders
requiring all federal agencies to tackle the deleterious effects of
climate change across all aspects of the economy, including the
financial and housing sectors.
Past US administrations have largely focused on regulations to
curb GHGs from the power and transportation sectors, while the
Biden administration has pushed the federal government to assess
the risk that climate change is having on all aspects of
business.
Actions lag rhetoric
Although IHS Markit's Arya agrees the narrative on US
government's response to climate change has shifted dramatically in
2021, he said "specific actions lag the rhetoric so far."
Progress on the regulatory front remains slow and somewhat
stymied by courts, Arya said, while noting that "US public opinion continues to
shift in favor of taking action but the willingness to pay for
these actions remains elusive."
In Glasgow, Arya said, "Biden could argue that a glass half-full
is better than an empty glass. How the world responds remains to be
seen."
Most observers like Arya expected Biden would attend this
conference with his signature Build Back Better agenda in place,
offering billions of dollars in funding and new policies for
decarbonizing the economy and tackling the climate crisis.
However, the Build Back Better agenda, which was to be
implemented through two key pieces of legislation (the
infrastructure package and the budget reconciliation measure), has
been tied up in the US Congress, owing to objections from various
wings of the Democratic party.
The $1.2-trillion bipartisan infrastructure legislation, which
the US Senate approved 10 August, remains stuck in the US House of
Representatives, where the progressive wing of the Democrats is
preventing a vote.
The infrastructure legislation, once approved, would offer $500
billion in new funding to create a national network of electric
vehicle (EV) charging stations, purchase zero-emissions school
buses, and shore up the nation's roads, bridges, ports, and transit
systems as well as water and wastewater infrastructure against the
vagaries of climate change.
Key decarbonization program removed
To appease the more conservative members of his party, notably
Senators Joe Manchin, of West Virginia, and Kyrsten Sinema, of
Arizona, Biden also agreed to slash the price tag of the $3.5
trillion reconciliation measure that included funding and policies
to implement the climate goals not included in the infrastructure
package.
Biden on 28 October agreed to pare back the price tag for the
reconciliation measure to $1.75 trillion, which included removing a
new Clean Electricity Payment Program (CEPP) that was supposed to
anchor Biden's plan for a carbon-free US grid by 2035.
The CEPP, which would have paid or penalized utilities for their
success in meeting 4% annual increases in clean energy sourcing,
was opposed by Manchin, whose home state is heavily dependent on
coal and natural gas production. Manchin also objected to the
methane fee sought in the original measure that would have offset
the cost of implementing the measures.
In a 28 October tweet, Sinema welcomed Biden's revised price
tag and his good-faith efforts to compromise. Manchin didn't
comment on the provisions that were left out of the revised deal,
but he too tweeted that the product was the result of good-faith
negotiations.
In a speech, Biden for his own part acknowledged that "no one
got all they wanted," but added that such was the nature of
compromise.
Jennifer Turner, director of the China Environment Forum at the
nonprofit Wilson Center, described the deal Biden reached on his
signature legislation as "woefully inadequate" in the face of the
dire predictions made about
global warming in the latest UN report.
Progress on regulations
Despite the legislative setbacks, the Biden administration has
made strides in tackling the climate crisis through agreements in
the international arena and regulations on the domestic front.
In September, the US and EU pledged to cut global levels of
methane, a potent GHG gas, by 30% by 2030. In the US, this pledge
would be implemented through regulations that the US Environmental
Protection Agency (EPA) is poised any day to release to cap methane
releases from extracting, processing, distributing, and
transporting oil and gas products from new plus existing
operations. The rules were originally due in September.
The US Department of the Treasury for the first time is working
to assess the risk that climate
change poses to banks and insurance companies, and is directing
multilateral development banks, where it has veto power, to direct
financing towards projects geared toward capturing methane and
carbon releases from industrial activities. The US Federal Reserve
Bank is studying how best to
incorporate climate risk into stress tests for banks, and the US
Securities and Exchange Commission is crafting a proposal, which is
to be released by the year's end, to mandate climate risk
disclosures by publicly traded companies.
Thanks to measures like these, the US is coming into COP26 with
"a pretty strong hand," Ceres' Friedman said.
He added that it is possible regulation could be published
and/or legislation approved before the Glasgow meeting ends, adding
further momentum to the US effort.
Ben Finzel, a former congressional staffer and President Clinton
appointee, said Biden has accomplished more in the first 10 months
in office than he has been given credit.
Besides, "there is work required to fix four years of
malfeasance and malpractice," said Finzel, who heads RENEWPR, a
public relations company focused on energy and environmental
solutions. "I think there is too much Monday quarterbacking going
on when it is only Friday," he said about criticism that Biden has
not been able to move his signature legislative priorities across
the finish line yet.
Posted 29 October 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst