Contemporary Implementation of Climate Policies – an American Approach

“Our political leader failed us,”

These words will eventually echo across years of summits and conferences in the next years, as far as a coherent plan, both in scope and magnitude, will be drafted by the international community to tackle the Climate Crisis.

While the Intergovernmental Panel on Climate Change (IPCC) has been drafting and developing specific targets since the IPCC First Assessment Report of 1990 (FAR), an international political response for implementing policies to achieve such targets is yet to come. As in the Covid-19 Crisis, immunologists, and scientists more broadly, gave their own recommendation, but is through bearing the responsibility of political choices that a path to achieve such results shall be designed.

In this article, we will cover the latest resolutions that are being implemented to reach the benchmarks of 2030 and 2050 across the western world, specifically in the USA and the European Union with the Green New Deal and the Green Transition aimed by Next Generation EU.

USA

This political duty has not yet been undertaken in the USA. What on February 2019 has been drafted is a first step resolution approved in Congress, recognizing the duty of the Federal Government to develop a transition to net-zero emissions.

The Resolution, commonly known by itself as “Green New Deal”, is not a milestone of legislation, but a preliminary form in 14 pages that formulates (as an ongoing Constitution) the challenges to address and the steps needed for a just transition through systemic change.

The first half of the resolution acknowledges the tipping points reported by the IPCC as well as social injustice such as income inequalities and rising unemployment across the country. Given this acknowledgements, the second half of the resolution draft what has to be achieved in order to prevent the tipping points to happen while at the same time adjusting systemic injustices in the process.

This two phenomena are carefully tied up following an intuitive rationale:

  • the income gap between the top 1% and the bottom 50% of the USA population is increasing;
  • rising unemployment and decreasing wages adjusted to inflation have been worsening;
  • most production and consumption patterns are tied to products and services that rely on extensive usage of carbon, particularly for the lowest income strata of the population.

Failing the political responsibility to lead a green transition without considering key inequality factors would lead to unprecedented job losses and would create barriers to access basic needs for most of the population, particularly severing the gap with minorities in the country.

In preventing this to happen, the resolution pays attention from one side to the basic needs of the citizen (accessible healthcare, clean water, clean air etc.) and on the other on the development of productive factors needed (education for the creation of new jobs in clean energy sectors, technological development, public investment, taxes and incentives, border adjustments and international cooperation).

To reach net-zero emissions, polluting industries which provide millions of jobs will require workers to be reallocated through efforts in re-educating to work with cleaner alternatives. According to the resolution, the Federal Government must take responsibility to guide this transformation so that to avoid that only privileged workers with capabilities of investing in their own education will succeed in this new industrial era.

The income gap will inevitably increase, thus Government intervention will be key to secure a just transition.

The scale and magnitude for which these processes will operate slightly depend on who will be the candidate that will seat in the White House in the next Presidential Elections.

Republicans: While Donald Trump withdrew from Paris Agreement, part of the Republican electorate do consider Climate Change an incoming crisis. Not only the base diverge from its leader policies, but even major Republican economists, businessmen and policymakers came up with market-based solutions to tackle this issue.

Among the economists, Feldstein and Mankiw purposed in 2017 the first Republican Plan to tackle Climate Change, contained in “The Conservative Case for Carbon Dividends”.  This plan contains 4 main steps:

  • Gradually Rising Carbon Tax: Here determined as starting from 40$/t, a Carbon Tax has been studied as part of the plan from most policymakers across the globe. The rationale is to reflect the downsides of carbon-intensive products (pollution) through a Pigouvian tax, being that their price only reflects the upside value. Two pitfalls of this policy are that a single country action might undermine international competitiveness and that the cost of this tax would severe the economic condition of low-income strata of the population.
  • To solve the second pitfall, “Carbon Dividends” has been theorized by American economists, and are now being discussed even in European Boards. While taxes might be appealing to raise the Government’s budget spending, renouncing and redistributing this funds (as universal income) might immediately repay low-income families. The higher the Tax, the higher the redistribution.
  • Regulatory Rollback focuses on a concept beloved by neoliberal republicans: renouncing climate legislation and inefficient government intervention. According to the plan, the Carbon Tax is more than enough to adjust the market failure, the market equilibrium will do the rest. Climate Legislation would only be an inefficient “extra”.
  • “The Climate Domino Effect”: Being early adopters of this strategy, though a system of heavy taxation on foreign EITE goods, foreign legislation should adjust overtime to regain competitiveness by investing on clean and more competitive technologies, offsetting the loss of competitiveness of American businesses over time.

This being said, Donald Trump is known on being in conflict with part of the Republican Leaders, and its strategy it is not likely to change without an unforeseeable agreement with China to limit their emissions. China, on the other hand, holds the argument that being a late-developed country should benefit from carbon allowances for more years than the USA. The agreement is unlikely to be reached.

Democrats: With Joe Biden officially recognized as the incumbent candidate, Sanders’ radical approach is likely to be discarded. Biden’s approach, on the other hand, doesn’t differ much on three of the four points of the Republican Report. His proposed policies are operating within the capitalist system: he wishes to tackle Climate Change by an immense investment of 2 trillion dollars in renewing the productive system and putting faith (and economic boost) on Research & Development to surpass China as the first exporter in renewable energy-producing goods. Therefore, the difference in the approach is not new. Democratic Establishment asks for more public intervention withing a market-based approach, republicans for less public intervention to secure (in theory) free-market equilibrium.

Will a Green New Deal be achieved with democrats victory? Stated by Biden, net-zero emissions by 2030 will not be achieved. Yet, on the praxis aspect, entering back into the Paris Agreement will certainly be a major message for the international community.

How will Europe respond, which policies are planned to be implemented by the Recovery Fund?

We will answer these questions next week.

For more insights:

Leave a Reply

Your email address will not be published.