Investing in low-emissions energy is the key to the climate crisis
Last week’s release of The Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report highlights once again the imperative for the world to take action to address the risks of climate change.
Across much of the United States, there is already widespread agreement that an aggressive response to the issue is warranted. Not only are we seeing politicians from both parties support climate action, as evidenced by the Climate Solutions Caucus, but corporate America is making carbon emissions commitments, too, including achieving net-zero carbon emissions.
While presidents can wield executive power to make some progress, lasting policies require legislative action that would not be susceptible to the changing priorities of another administration. However, previous legislative frameworks to address climate have little chance of passage in today’s partisan Congress. Cap and trade proposals were abandoned a decade ago as costly and ineffective. A carbon tax is the most economically efficient option, and its proponents include many in the fossil fuel industry, yet some argue that any proposal labeled a tax will face strong opposition among voters and, therefore, lawmakers.
The most often heard concern in opposition to climate legislation is centered on economics. When consumers make purchasing choices, economics will always win out. For real change that is supported by economics, zero- and low-emission technologies must be more cost-effective than the status quo. Since the pricing of carbon emissions is a legislative nonstarter (for the reasons identified above), why not take the opposite approach? Instead of increasing costs of higher-net emissions energy, why not reduce the costs of lower-net emissions energy?
That’s the idea behind the approach promoted by Reps. David McKinley (R-W.Va.) and Kurt Schrader (D-Ore.). They argue that we should put our resources into technology innovation to improve the cost-effectiveness of energy production, without choosing which energy sources will be “winners” or “losers.”
In a recent webinar hosted by the American Council for Capital Formation (ACCF), where I serve as vice president of energy and regulatory policy, McKinley and Schrader envisioned technology advances in all energy sectors, including efficiency gains in wind and solar, improved batteries that will be cheaper and hold more charge for longer (and rely less on foreign sources of critical minerals), cost-effective carbon capture from emissions sources and/or direct air capture, reduced cost-storage and utilization options for captured carbon, green hydrogen and cost-effective nuclear reactors.
The McKinley-Schrader bill, the Clean Energy Future Through Innovation Act of 2021, would pour billions into low-emissions energy research like those mentioned above in a series of public-private partnerships over 10 years, then impose a Clean Energy Standard (CES) that would mandate an 80 percent reduction in carbon emissions from the power sector by 2050.
In this way, they would take advantage of the improved economics of technology advancements achieved through government-funded research. With economical options to reduce our carbon emissions, energy producers will not need to be cajoled into reducing carbon; they will likely do so voluntarily, for economic reasons. As a backstop, the CES would mandate changes to those who were still reluctant to change their power generation portfolio.
Their bill also has an additional advantage that cannot be understated: it is bipartisan. In today’s political climate, and especially in a split Senate with the filibuster threat still looming, only a bipartisan approach has any chance of clearing the Senate.
Legislation is key to achieving durable climate policy in the U.S. While there are other options to address climate that may be just as effective, they are unlikely to ever reach the president’s desk for signature. A pragmatist would then look to options like the McKinley-Schrader bill as an alternative that is both effective and has a chance of passage. At the very least, the House Energy and Commerce Committee should consider the bill. We should all urge Chairman Frank Pallone (D-N.J.) to schedule a hearing this fall to evaluate this common-sense approach.
Kyle Isakower is senior vice president of Energy and Regulatory Policy for the American Council for Capital Formation.