Boxing Gloves Are Off in Global Climate Fight As Democrats to Control U.S. Senate (4)

–Climate fight gathers steam but thorny issues remain, especially those around global trade in energy-intensive goods (consumption emissions)

By Mathew Carr

Jan. 7-8, 2021– LONDON: The world has suddenly got a better chance of hitting the targets in the Paris climate deal after Democrats won control of the U.S. senate.

It’s now more likely the nation, most to blame for the climate crisis, can get to grips with its own wasteful energy, household and transport systems. The U.S. also plans to use its diplomatic and economic muscle to spur faster climate action across the globe.

The world can now attack the cimate crisis more brutally — with bare fists.

See this chart in a different light now Joe Biden has won the U.S. presidency. President Trump has finally conceded, saying he’s willing to oversee the transition.

See also this related story published in the leadup to the Nov. Presidential vote:

I do realise the riot at the Capitol this week shows U.S. politics is deeply troubled, which means prioritizing the climate might still be difficult amid a global pandemic.

And the U.S. is unlikely to do what it arguably should. See this:
 The report finds “that the US fair share of the global mitigation effort in 2030 is equivalent to a reduction of 195% below its 2005 emissions levels, reflecting a fair share range of 173-229%.” That is, we can’t meet our moral and practical burdens simply by reducing our own emissions; we’ve already put so much carbon into the air (and hence reduced the space that should rightly go to others) that we need to make amends. Here:

Still, ambitious and cost efficient climate action is now more likely.

Instead of rolling back President Trump’s climate policy rollbacks or going down the expensive and inefficient route President Obama was forced to travel because of less favorable political circumstances, the U.S. can how install better markets to spur climate action — via strict ESG standards and potentially even a national carbon market.

It’s probably now possible to make these measures pretty-much irreversible by future administrations because cleantech costs have become so compelling amid increased health awareness and risk adversity.

The plan could include a “fee and dividend” structure that returns money collected as governments sell carbon allowances to those facing higher costs — especially the poor. Such a move might even heal some of the country’s deep divisions.

From snail’s pace to fast pace …or even medium pace? East London grafitti

Carbon floors could protect taxpayers and underpin clean-tech investments, providing for the first time a big incentive to shift away from fossil fuels for good. (I won’t be holding my breath.)

Policymakers have several powerful tools in their toolbox to tackle climate change and trade policy and the private sector (including pension funds) are also adding their own market pressures that could spur more action this year.

Even before the Democrats took control of the U.S. Senate, it was probable the EU’s strategy to force America and China into more ambitious climate action was working, according to Tim Williamson, who was a senior renewable energy official in the Obama administration.

The EU’s planning a carbon border adjustment mechanism (CBAM) that would punish anyone trading with it unless they get ambitious on climate.

Such CBAMs would also help solve the consumption-emissions problem faced by many countries in the west, especially the U.S., according to environment group WWF.

While Mr Trump loves to demonize China for its rising emissions, let’s not forget that much of the greenhouse gas produced by China in the past 30 years has ended up heating our world’s atmosphere because it manufactures goods for export and use in developed nations. The same can be said of many other emerging countries’ emissions.

This is a key thorny issue that may yet delay action in 2021.

Consumption emissions are a recurring theme and time will tell whether CBAMs or the UNFCCC climate negotiations will tackle them, said Brad Schallert, director of carbon market governance and aviation at World Wildlife Fund U.S. The UNFCCC is tasked with seeking to limit global warming below 1.5C vs pre-industrial times

The consumption emissions “are certainly a problem. Countries should be thinking about those, but they might be dealing with those in different ways,” Schallert said via a Zoom call.

That’s one of the reasons why global trade talks around the world will be key this year during the climate fight and pandemic recovery.

“By the end of the Biden administration, you’ll have a cross-border adjustment tax,” Williamson said in a phone interview before the Jan. 6 political changes in the U.S. Senate. “I think that’s true.”

The win by the two Democrats in the Senate is Williamson’s “most hopeful” scenario and will spur the $2 trillion infrastructure and green energy stimulus. There’s oven-ready legislation that might be passable, he said.

The EU’s plan for a CBAM will succeed in getting the U.S. and China on board with more ambitious climate policy, protecting trade between the three. The ambition may stem from disclosure standards and the ESG push by investors rather than carbon pricing, Williamson said.

Here’s some text from the European Commission’s 2021 work program:

As mentioned in President von der Leyen’s Political Guidelines, the Commission will propose a carbon border adjustment mechanism to help motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring a level-playing field conducive to trade in a WTO-compatible way.

It’s unlear to me whether China or the U.S is the biggest climate laggard. Certainly there’s still tension between the two on the issue and Williamson has a clear view:

“We push on the brakes until we get China on board,” Williamson said. There’s no point in restructuring the American economy if “we don’t have the rest of the world on board. The energy transition for the U.S. won’t be cheap or easy. We need to get India more aligned with the goal too.”

The digitization of trade will help too.

China says is ramping up efforts to install its national carbon market and seeking to open its economy. See this:

So there’s now potentially a better chance of the world joining up their free-trade areas and forming some sort of green-trading club that includes the EU, China and the U.S. — but it’s a big ask for 2021.

Williamson got in touch Jan. 7 to say the Biden-Harris administration will try to make the most of the favorable situation in Congress in their first two years before the mid-term elections:

“U.S. climate action may come together much more readily than I hoped, when we spoke [late last year.],” he said by email.  The “Biden Administration now has 657 days between January 20, 2021 and next election on November 8, 2022 to push legislation through U.S. Congress.  Look for Democrats to try push through EVERYTHING in their platform, including phase-out of [40] fossil fuel subsidies, and phase-in of a carbon tax and dividend scheme (provided as yet unscheduled talks with EU, China, and India each conclude with a climate-action breakthrough).”

See – global climate policies already aligning:

(Updates Williamson’s comments, adds WWF consumption emissions wrinkle, corrects dateline)


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