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t systematic exit from fossil fuels. It needs to find both economic and technical solutions to make a green energy system viable. But it also needs to win the political argument. While the technological uncertainties and economic obstacles of planning for a net-zero future are universal, America’s distinctive problem is the political question of commitment. Decarbonisation is a longterm business. But there is nothing close to a consensus in US politics on the need for action. As serious as the Biden administration may be about tackling the climate crisis, its power to deliver on this depends on having the votes in Congress, a balance that might shift in the 2022 midterms, or in 2024, or in 2026, and so on. Without broader societal agreement, each US election will be a heartstopping moment of potential derailment. beginning to apply real pressure to large polluters in Europe. China is following the European lead and introducing its own carbon pricing system. In the US, carbon pricing was on the agendas of both the Clinton and Obama administrations – in Clinton’s case, through carbon taxation, in Obama’s, through cap and trade. Both had majorities in Congress, but in both cases, when it came to the final agonising battles that accompany every major piece of legislation in the US, the majorities evaporated. These defeats have scarred the US climate movement. One of the striking absences in the Green New Deal Resolution introduced by Congressional Democrats Alexandria Ocasio-Cortez and Ed Markey in 2019 is carbon pricing, which has come to be re- The US is unique among rich countries in having one of its two main parties committed to outright climate denial In every advanced economy there are economic interests opposed to deep, rapid decarbonisation, including those of businesses, consumers and some labour unions. The US is unique among advanced economies, however, in having one of its two governing parties committed to outright climate denial, and a large part of the public with it. Unless this can be changed, America will remain a fundamentally unreliable partner in the effort to halt global heating. On one count, at least, the Biden administration’s climate policy has clearly drawn lessons from the failures of the Clinton and Obama presidencies. The policy instrument that most economists agree is essential for comprehensive decarbonisation of the US economy is left off the agenda in 2021: carbon pricing – imposing a cost on emissions sufficient to incentivise polluters to reduce, or eradicate, their carbon footprint. This omission is one of history’s ironies. At the very beginning of global climate politics, in the late 1980s, it was the US’s Environmental Defense Fund (EDF) that persuaded then president George HW Bush to adopt cap and trade – a system for allocating the right to emit through permits, which can be bought and sold – as the most effective way to drive down emissions. The model was reluctantly taken up in Europe in 2005, when, with help from EDF, the EU set up the Emissions Trading Scheme (ETS). Today, rising prices in the ETS are 24 | NEW STATESMAN | 23-29 APRIL 2021 garded as a neoliberal placebo rather than an effective policy. A state-level scheme operates in California but it is deeply unpopular among the Democratic Party left, who view it as a discriminatory and regressive mechanism that gives pollution permits to corporations and the rich. Experts insist that if the revenue raised by carbon pricing were reallocated to lowerincome households it could be a tool of positive redistribution, but the Biden team despairs of brokering such a complicated deal. The carbon prices necessary to make a real difference would be exorbitant, especially from a standing start. Unlike in Europe, not even petrol is taxed heavily in the US; the last thing the Biden administration needs is Frank Lloyd Wrong a gilet jaunes-style movement. But without some kind of carbon pricing scheme, what is the mechanism for driving fossil fuels out of the system? Instead of using prices to incentivise polluters to reduce fossil fuel consumption and to shift supply to cleaner energy sources, the Biden administration’s first actions have centred on regulations and the carbon pricing standards used in internal calculations by government agencies. This is not new. It was the method used during Obama’s second term after the Supreme Court gave the Environmental Protection Agency the right to oversee carbon emissions. It is fragile, because it is subject to court challenge, but it is a first step towards the Biden administration’s aim of achieving a carbon-free electricity system by 2035. Clean energy technologies are already maturing fast but, given America’s huge energy consumption, it is a demanding goal. Shifting from gas and coal to variable solar and wind requires a vast amount of extra capacity, as well as a new cross-country transmission system to ensure clean power gets from the states with plenty of wind and sun in the centre of the US, to the coastal conurbations that need it most. The growth in demand will be compounded by the need to shift transport and domestic and industrial heating to electricity, too. Where will the investment come from? On 31 March the Biden administration gave the answer in the form of the $2trn American Jobs Plan – the second, after the $1.9trn stimulus, of three major programmes being rolled out by the government. The third will be a family plan aimed at improving the US’s miserably inadequate childcare system. The Jobs Plan was announced with much fanfare as a three-pronged investment in addressing the ills of American society – from inequality and unemployment to crumbling infrastructure – as well as the challenge posed by China’s autocracy and the climate crisis. Working through dozens of sub-programmes, one has to admire the ingenuity of its construction: covering everything from care for the elderly to laboratory funding at historically black colleges, it is a Rubik’s Cube of intersectionality. But for all the admirable sophistication of its targeting, there is one outstanding and all-important question: is the investment programme big enough, and will it actually reduce emissions? The $2trn headline sounds impressive. Totting up the various promises made in the initial announcement, one can even arrive at a figure closer to RAT TRAY BOB
page 25
Thinking big: the $2trn Jobs Plan addresses domestic problems, China, and the climate crisis I MAG E S G E T T Y IA VI ME S/BLOOMBERG TYORK NE W MONE YMAKER/T HE ANN A $2.7trn. But the grand total matters less than the timing. Unlike the Coronavirus Aid, Relief and Economic Security (Cares) Act – the first $2.2trn Covid-19 relief stimulus, unleashed at the end of March 2020 – and Biden’s $1.9trn Relief Act, both of which were designed to be disbursed in a matter of months, this infrastructure programme is spread over eight years. At a generous estimate, half of the $2trn to $2.7trn is devoted to tackling the climate crisis. Spreading $1trn to $1.3trn over eight years comes to around 0.5 per cent of current GDP annually. That is far short of any reasonable estimate of the investment needed for decarbonisation. The Bernie Sanders camp, backed by the writer and activist Bill McKibben’s 350.org campaign, wanted $16.3trn. The Thrive Act proposal supported by groups associated with the Green New Deal is asking for $10trn, with 80 per cent focused on the climate. The size of those proposed schemes reflects the unprecedented scale of the challenge. But unlike the US’s fiscal response to Covid-19, which delivered trillions of dollars in stimulus cheques and pay-cheque protection schemes to households in the face of a historic shock, the Biden infrastructure programme, for all its clever politics, dispenses its funding in dribs and drabs. When you break down the items included in the package, its true modesty becomes clear. On passenger railway transport – an area in which the US lags far behind China and other advanced economies – the Jobs Plan proposes $10bn per annum over eight years. That, as the fine print states, should allow America to “address Amtrak’s repair backlog; modernise the high-traffic Northeast Corridor; improve existing corridors and connect new city pairs”. It will no doubt create good jobs. What it will not do is catapult the US into an age of high-speed rail travel to match that pioneered by Japan and China. The latter currently has 19,000 miles of high-speed track; America boasts 500 miles. It is indicative of the lack of transformative ambition that the proposed spending on electric cars is larger than that targeted at public transport. Car culture, one of the symbolic essentials of the American way of life, is clearly non-negotiable. A total of $174bn is allocated to the electric vehicle sector, including spending on the motor industry, purchase subsidies and car-charging infrastructure. China has 19,000 miles of high-speed rail track; the US boasts 500 The programme expects to build 500,000 charging ports by 2030. By the same date, Germany aims for one million and China at least three million. The last time the numbers were compared, Americans completed five times as many vehicle miles per annum as Germans. There will be tax incentives for the purchases of new electric vehicles, but there is nothing in the plan for getting the internal combustion fleet off the road. In 2020 there were around 287 million registered vehicles in the US, practically all of which need to be retired as soon as possible, which is why the Sanders-McKibben plan allocated $2trn of its $17trn to a giant “cash for clunkers” programme. Every day a wheezing fleet of dieselpowered yellow school buses carries 25 million children to school. It is one of the rites of passage of American childhood. Collectively, these pupils travel four billion miles every year, belching diesel fumes all the way. The Biden administration proudly announces it will electrify 20 per cent of them by 2030. What of the rest? The American Jobs Plan is not a paradigm-busting vision. That impression is confirmed when we consider the funding side. It is significant, in fact, that the Jobs Plan has a funding component at all – the Relief and Cares Acts did not, other than to simply borrow the money. By contrast, the Jobs Plan is tied directly to revenue raising. It is covered by what Washington jargon refers to as “pay-fors” – offsets or savings from other government programmes. Viewed within the narrative of Bidenomics, which supposedly marks the dawn of a new era, this is puzzling. On the basis of America’s fiscal track record in recent decades of running up a succession of huge deficits with no adverse consequences, it is hard to see how anyone can argue for the need to balance taxes and spending. If there is such a thing as Bidenomics, it is an outlook founded precisely on the rejection of that equation: spend what is necessary to get the US economy to full speed, worry about finances later. But you don’t need to be any kind of radical to think financing an investment programme with debt makes sense. That’s how any business or household with good credit does it. Borrow now and pay later, as the investment pays off. But that’s not how the Biden administration is selling the investment programme. After the initial surge of unfunded relief spending, it is now linking investment to revenue, and the logic is not economic but political. The centrist Democrat Joe Manchin, elected incongruously in the Trump country of West Virginia, is digging his heels in. He demands “pay-fors”, so the social justice technocrats of the Biden administration have come up with a plan: link the longterm investments of the infrastructure programme to the right kind of tax increases; restore America’s corporate tax rates to their pre-Trump levels. One can see the progressive logic in this: taxes are clearly a key tool for influencing income and wealth distribution. But given the furious lobby fight that such tax increases will entail, the effect has been to limit the overall size of t 23-29 APRIL 2021 | NEW STATESMAN | 25

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t systematic exit from fossil fuels. It needs to find both economic and technical solutions to make a green energy system viable.

But it also needs to win the political argument. While the technological uncertainties and economic obstacles of planning for a net-zero future are universal, America’s distinctive problem is the political question of commitment. Decarbonisation is a longterm business. But there is nothing close to a consensus in US politics on the need for action. As serious as the Biden administration may be about tackling the climate crisis, its power to deliver on this depends on having the votes in Congress, a balance that might shift in the 2022 midterms, or in 2024, or in 2026, and so on. Without broader societal agreement, each US election will be a heartstopping moment of potential derailment.

beginning to apply real pressure to large polluters in Europe. China is following the European lead and introducing its own carbon pricing system.

In the US, carbon pricing was on the agendas of both the Clinton and Obama administrations – in Clinton’s case, through carbon taxation, in Obama’s, through cap and trade. Both had majorities in Congress, but in both cases, when it came to the final agonising battles that accompany every major piece of legislation in the US, the majorities evaporated.

These defeats have scarred the US climate movement. One of the striking absences in the Green New Deal Resolution introduced by Congressional Democrats Alexandria Ocasio-Cortez and Ed Markey in 2019 is carbon pricing, which has come to be re-

The US is unique among rich countries in having one of its two main parties committed to outright climate denial

In every advanced economy there are economic interests opposed to deep, rapid decarbonisation, including those of businesses, consumers and some labour unions. The US is unique among advanced economies, however, in having one of its two governing parties committed to outright climate denial, and a large part of the public with it. Unless this can be changed, America will remain a fundamentally unreliable partner in the effort to halt global heating.

On one count, at least, the Biden administration’s climate policy has clearly drawn lessons from the failures of the Clinton and Obama presidencies. The policy instrument that most economists agree is essential for comprehensive decarbonisation of the US economy is left off the agenda in 2021: carbon pricing – imposing a cost on emissions sufficient to incentivise polluters to reduce, or eradicate, their carbon footprint.

This omission is one of history’s ironies. At the very beginning of global climate politics, in the late 1980s, it was the US’s Environmental Defense Fund (EDF) that persuaded then president George HW Bush to adopt cap and trade – a system for allocating the right to emit through permits, which can be bought and sold – as the most effective way to drive down emissions. The model was reluctantly taken up in Europe in 2005, when, with help from EDF, the EU set up the Emissions Trading Scheme (ETS). Today, rising prices in the ETS are

24 | NEW STATESMAN | 23-29 APRIL 2021

garded as a neoliberal placebo rather than an effective policy. A state-level scheme operates in California but it is deeply unpopular among the Democratic Party left, who view it as a discriminatory and regressive mechanism that gives pollution permits to corporations and the rich.

Experts insist that if the revenue raised by carbon pricing were reallocated to lowerincome households it could be a tool of positive redistribution, but the Biden team despairs of brokering such a complicated deal. The carbon prices necessary to make a real difference would be exorbitant, especially from a standing start. Unlike in Europe, not even petrol is taxed heavily in the US; the last thing the Biden administration needs is

Frank Lloyd Wrong a gilet jaunes-style movement.

But without some kind of carbon pricing scheme, what is the mechanism for driving fossil fuels out of the system? Instead of using prices to incentivise polluters to reduce fossil fuel consumption and to shift supply to cleaner energy sources, the Biden administration’s first actions have centred on regulations and the carbon pricing standards used in internal calculations by government agencies.

This is not new. It was the method used during Obama’s second term after the Supreme Court gave the Environmental Protection Agency the right to oversee carbon emissions. It is fragile, because it is subject to court challenge, but it is a first step towards the Biden administration’s aim of achieving a carbon-free electricity system by 2035.

Clean energy technologies are already maturing fast but, given America’s huge energy consumption, it is a demanding goal. Shifting from gas and coal to variable solar and wind requires a vast amount of extra capacity, as well as a new cross-country transmission system to ensure clean power gets from the states with plenty of wind and sun in the centre of the US, to the coastal conurbations that need it most. The growth in demand will be compounded by the need to shift transport and domestic and industrial heating to electricity, too.

Where will the investment come from? On 31 March the Biden administration gave the answer in the form of the $2trn American Jobs

Plan – the second, after the $1.9trn stimulus, of three major programmes being rolled out by the government. The third will be a family plan aimed at improving the US’s miserably inadequate childcare system.

The Jobs Plan was announced with much fanfare as a three-pronged investment in addressing the ills of American society – from inequality and unemployment to crumbling infrastructure – as well as the challenge posed by China’s autocracy and the climate crisis. Working through dozens of sub-programmes, one has to admire the ingenuity of its construction: covering everything from care for the elderly to laboratory funding at historically black colleges, it is a Rubik’s Cube of intersectionality.

But for all the admirable sophistication of its targeting, there is one outstanding and all-important question: is the investment programme big enough, and will it actually reduce emissions? The $2trn headline sounds impressive. Totting up the various promises made in the initial announcement, one can even arrive at a figure closer to

RAT TRAY

BOB

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