If an American president signs a climate-change agreement, and everyone is around to see it, does it really make a difference? With an election every four years, the answer is not on the international stage.
The Clinton administration signed the Kyoto protocol, and President Bush ignored it. President Obama led the Paris Climate Agreement, and President Trump withdrew from it. Since then, many corporations, cities and states went on to develop their own environmental pledges and standards, no longer waiting on elected officials in Washington, D.C.
President Biden is continuing the trend of recent Democratic administrations by launching ambitious environmental goals that may or may not last, depending on the 2024 elections. As with all proposals by politicians, the portrait they often paint does not present the full picture.
The White House recently released a climate-change proposal pledging that the U.S. will reduce emissions between 50% and 52% from 2005 levels by 2030. However, it is really a 41% reduction when measured against 1990 levels. By comparison, this is double when President Obama sought to cut emissions by 26-28% in 2015 compared with 2005 levels.
On Earth Day, President Biden called for eliminating greenhouse-gas (GHG) emissions from power plants by 2035 and from all industries by 2050. His proposal will also set the first federal government limits on hydrofluorocarbons (HFCs) in cooling, refrigeration and other appliances, with a goal of reducing their use by 85% over 15 years. Congress passed a bipartisan law in December 2020 to address HFCs, which are also banned in a dozen states, but the EPA under Biden moved much more quickly than many expected.
Some of their lofty goals will need congressional buy-in, however, and while Democrats control both the House and Senate today, the likelihood of Republicans taking one or both chambers in 2022 remains very high. Unless enacted immediately, much of their proposal faces the risk of not becoming reality. In many cases, Congress would have to pass a law to support some of the White House spending goals, such as $35 billion on climate technology research and development; $174 billion on electric-vehicle manufacturing and infrastructure; and $10 billion for a new “Civilian Climate Corps.”
Any administration can use the regulatory stick to beat industry into compliance, but the carrot approach will require Congress as well. Tax credits and other incentives are critical, especially for renewable-energy sources such as wind, hydro and solar. Many expect worker displacement to occur, and the infrastructure plan to create more jobs is still just a plan at this point until Congress sends an actual bill to the president’s desk.
President Biden will also need regional and state support, which brings political headwinds from even more politicians with their own agendas. Most in Washington and globally do not believe President Biden or another leader can really guarantee to reach a particular target well after they leave office and Americans go to the polls multiple times.
The disagreements are not exclusively between Republicans and Democrats, industry and environmentalists. These days purity tests exist in both parties and within all factions.
In Colorado recently, Democrats turned on one another when the Democratic governor threatened to veto a major climate bill. Activists argued that the state already missed decarbonization goals, but the Governor, who ran in 2018 as a climate hawk, raised concerns in a state with significant extraction- and energy-industry activities.
Meanwhile, the largest GHG polluter remains China, which recently said it will reach peak emissions by 2030 and declared a goal, without much detail, of erasing its carbon footprint by 2060. This is the underlying issue: If the U.S. government places restrictions on its own manufacturers and energy producers, how will that impact their global competitiveness?
Sources in Washington, D.C. expect EPA regulatory activity to significantly increase in the coming months. Throughout March and April, the U.S. Department of Justice and EPA began reversing the government’s positions in multiple environmental lawsuits. Under the previous administration, government officials would generally support the side of industry and defend against environmental groups’ litigation. Now, those same government lawyers and policymakers are moving to dismiss the pending lawsuits, paving the way for the Biden administration to issue new rules and regulations.
The whole of government climate-change approach currently under way will not just stop at the high-profile items like carbon emissions from power plants. In 2020, the EPA proposed new maximum achievable control technology (MACT) emission limits for industrial boilers. The Obama administration sought to improve small-motor efficiency and heat exposure in manufacturing plants. The infrastructure bill (if it becomes law) will include restrictions on the types of products and equipment federal dollars can go toward.
It is more likely that a collection of incremental steps will become reality prior to large sweeping goals scheduled for decades from now. Manufacturers under the Biden administration should expect to see parts of the climate agenda seep into various aspects of their production and distribution – some expected and some not. Unlike expected increases proposed to take effect on Jan. 1, 2022, the climate-change regulations will call on various sectors of the economy to each take certain steps.
For manufacturers of industrial heaters, coolers, boilers, kilns and other products, this could mean new regulations on their inputs (e.g., energy and raw materials) and on the emissions generated from their operations in addition to increased transportation costs as renewable and other sources work to reach scale. Manufacturers should consider their possible exposure to business disruptions or opportunities due to regulatory action whether from a new boiler MACT rule, building efficiency incentives, or restrictions on the use of certain chemicals and solvents in the facility or machinery.
The summer months will give us a clearer picture of what the EPA has planned for industry, but the environmental sense of urgency to act is only exceeded by the political urgency for Democrats and those seeking broad climate policy changes. Many of us remain skeptical that bipartisan legislation can move through a closely divided Congress, only further empowering the EPA and regulators to act quickly.
President Biden can sign all the international agreements he wants, but political agreements in the U.S. remain hard to come by, leaving most of us to expect the current administration to set its own goals and hope Congress follows along.