Biden's unlikely new ally on climate change: Corporate America

Now corporate lobbyists need Republicans in Washington to deliver on policy.

By Lorraine Woellert, Politico, April 27, 2021

Donald Trump called climate change “a Chinese hoax” and said global emissions goals would be “very hard on our business.” But when the former president pulled the U.S. out of the Paris accord in 2017, there was no celebrating in the C-suite.

Instead, Corporate America went where the federal government wouldn’t, with companies issuing their own Paris-aligned pledges even without pressure from regulators. The We Are Still In campaign — hundreds of corporate leaders, nonprofits and cities — was born and had an outsized presence at climate meetings that year in Bonn, where several companies committed to targets for cutting emissions.

Now those business leaders have allied with President Joe Biden to push Congress to do its part. Executives who stepped into the vacuum left by Trump say they need Washington to standardize corporate risk disclosure, modernize the electrical grid, price carbon, and put money into technology if the U.S. is to meet its goal on greenhouse gas emissions.

“We can’t do it alone,” HP Inc. CEO Enrique Lores said at a World Wildlife Fund event last week. “There is a limit to how far private industry can take this.”

The shift by business, a group long tied to Republicans, has raised hope among environmentalists that corporate lobbyists will be able to do what they couldn’t —persuade lawmakers, particularly conservatives, to limit the release of greenhouse gases.

In the past, “you couldn’t go to a board and have a real conversation about climate. People thought you were making a political statement,” said Helen Clarkson, CEO of The Climate Group, a nonprofit that partners with business on climate action. “Suddenly you saw these companies stepping forward and lobbying President Trump not to pull out of Paris.”

It’s a fight for survival, and profits. Some corporations are long on virtue-signaling and short on action, but many others, including HP, Microsoft Corp., General Motors Co., Danone S.A. and Gap Inc., are spending millions of dollars to push the boundaries of renewable energy, protect water resources, and deploy new technology as they rush to deal with climate change and gain a competitive edge.

Their impact has been significant. As of last year, corporate buyers had reached deals for a combined 10.6 gigawatts of renewable capacity, the equivalent of 33 million solar panels. On Wall Street, firms with $37 trillion under management, including mutual fund giants State Street and Vanguard, have pledged to go net zero.

If just 80 of the largest corporate emitters meet their pledged targets, they could reduce global emissions by more than 8 billion metric tons, or about 25 percent, according to an analysis by BloombergNEF. That’s the equivalent of zeroing out all emissions in the U.S. and Japan combined.

“The magnitude of this is colossal,” BNEF analyst Kyle Harrison said. “This is only 80 companies, and what they can achieve is ridiculous.”

More than 400 companies this month urged Biden to align with their own promises to cut emissions, what’s known in climate lingo as a nationally determined contribution or NDC. Biden committed to reducing emissions by half during a global climate summit he convened last week.

“The last time an NDC was set, who even knew what an NDC was? It wasn’t as if companies were engaged. Now they’re on the front lines,” said Anne Kelly, vice president of government relations at CERES, a nonprofit that helped organize the Biden letter. “There’s a genuine recognition of climate change. I don’t see this as virtue signaling.”

Armed with economic data, executives are working Capitol Hill to make a case for carbon pricing and, in some cases, convince Republican lawmakers that the cost of Biden’s multitrillion-dollar jobs plan is greater than the cost of inaction.

Privately, many lawmakers are listening, lobbyists say. But publicly, climate remains politically divisive. Senate Minority Leader Mitch McConnell has decried “woke” corporations for weighing in on social issues, and fewer than half of Republicans think the U.S. should reduce its greenhouse gas emissions, according to a survey from the Yale Program on Climate Communication.

“We’ve had offices call us up and say, ‘We want to figure out stuff that makes sense for us,’” said Chris Adamo, vice president for federal and industry affairs at Danone North America. “The actual dialogue, for Republicans, can be very constructive.”

The food multinational, like hundreds of other companies, has set its own internal price on carbon — about $42 per metric ton — and is pushing for government help on sustainable agriculture.

“We need policies,” Adamo said. “We’re going to invest millions of dollars of our money. To do it alone is going to be very difficult and probably a lot slower. That’s true for most sectors.”

Even the U.S. Chamber of Commerce, long the dominant force in corporate lobbying in Washington, has changed its approach. In 2019 the group ceded to pressure from members to abandon its obstruction on climate action, and last week it endorsed Biden’s Paris pledge. The test will be how — or whether — the chamber works to bring Republicans on board.

“What those statements did in my mind was free up Republican members of Congress who had been progressive on climate issues but were afraid to talk about it,” said Hugh Welsh, president of nutrition giant DSM North America. “We’ll have to wait and see when the first big climate bills come up whether the chamber actively promotes them or lobbies against them. I’m going to give them the benefit of the doubt for the time being.”

College students organizing under the banner of Change the Chamber — think a battalion of Greta Thunbergs — last year began naming and shaming the association’s members on social media. Their message: Customers won’t let brands get away with hiding behind the trade group.

Plenty of businesses were on board the last time Congress tried a heavy lift on climate. The contours of a 2009 cap-and-trade bill from then-Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) were designed by a committee in which business played a prominent role.

“Chemistry, oil, auto — they were all part of it,” Waxman said in an interview. “We had important business backing. It wasn’t enough.”

“I worked on the assumption that Republicans were the party of business. I was wrong,” Waxman said. “Let’s hope this time I’m not wrong.”

https://www.politico.com/news/2021/04/27/bidens-climate-change-corporate-america-484784

Biden’s Big Government Should Be Handled With Care

The president should lean more heavily on the private sector to boost his infrastructure plan’s odds of success.

Op-ed by Steven Rattner, The New York Times, April 9, 2021

The Biden administration has put forward the biggest, boldest, most expensive expansion of government in at least a half-century. The goals listed are on target and its sweeping ambition is welcome, but the administration’s excessive reliance on government for execution of these goals and its intrusion into the domain of the private sector are worrisome.

Yes, I’m all for government leaning in and becoming part of the solution. And yes, the years of de-prioritizing public investment need to be reversed. We just need to do it more thoughtfully. Here’s my plea to our policymakers: Take the politics and bureaucracy out of these critical initiatives. Embrace private sector solutions when applicable. And use tax incentives more aggressively to drive behavior.

The Biden plan doesn’t just tiptoe around the quagmire of the government picking winners and losers, or what has been termed “industrial policy” — it lurches into it. Hundreds of billions of dollars will be invested by government agencies, whose record of success with direct involvement in the commercial world is, at best, mixed.

A recent case in point: the 2009 American Recovery and Reinvestment Act, which, at $787 billion, was much, much smaller than the more than $4 trillion sum of the two Biden plans put forward thus far. While the 2009 stimulus did put much-needed dollars into the economy without fraud or abuse (as Mr. Biden likes to remind us), it didn’t achieve another of its goals: a swifter transition to clean energy.

Among its failures: Two solar manufacturing plants it helped start shut down. A Jacksonville, Fla., battery plant that President Barack Obama heralded in a 2016 visit, recently laid off many of its workers and shifted its business model. A coal-fired power plant in Texas that was capturing the carbon it was emitting, effectively stopped doing so in 2020.

As a 2015 Congressional Research Service report reviewing stimulus projects further noted, “Solyndra declared bankruptcy in late 2011 and defaulted on its $535 million loan, Abound Solar received about $70 million of its $400 million loan before shuttering its solar panel operation and filing for bankruptcy in 2012, and SoloPower never met the requirements to initiate its $197 million loan guarantee.”

None of this should be too surprising. Going all the way back to the creation of the Synthetic Fuels Corporation in 1980, which I covered as a New York Times correspondent, the federal government’s recurring efforts at directing energy transitions have mostly struggled.

As for transportation, only government can build highways and mass transit, and repair bridges. But here, too, Washington-directed programs sometimes fall spectacularly short. For more than 15 years, the Federal Aviation Administration has been trying to construct a “NextGen” air traffic control system; it’s still trying. By allowing for more-efficient flight routes, upgrading our air traffic infrastructure would do more to reduce oil consumption than most other projects.

No one should want the Biden plan to fall short. But given its vast sweep — I conservatively counted more than five dozen initiatives — the administration should increase its chances of success by leaning more heavily on private models for help and using tax incentives to a greater extent for efficiency.

Lawmakers should consider, for example, moving air traffic control into an independent corporation, as a number of other countries do. (The private aviation lobby, which enjoys the current absurdly low fees it pays to use the system, has helped block this effort.)

As recently as 2009, sustainable investing was in its infancy. Today, dozens of companies have developed this special expertise. Government can improve the returns on its sustainability investments by partnering with the best of these businesses.

For some investment programs that don’t lend themselves to private sector involvement, such as dams, it’s still possible to take responsibility for execution out of the normal governmental process (where the combination of influence peddling and inexperience can be devastating). Instead control could be vested in more independent entities, similar to the Reconstruction Finance Corporation of the Great Depression era, which successfully directed loans to farmers, railroads, schools, state governments and various private companies.

Unfortunately, the Biden administration has often shown disdain for business so far. But during the height of the Great Recession, when I headed President Obama’s auto industry task force — which was essentially removed from politics and staffed largely by private sector refugees — I believe we proved the efficacy of a business-oriented model.

Finally, there’s the tax system. To be fair, the Biden plan does use tax incentives in a number of constructive ways — to spur housing creation, to encourage purchase of electric vehicles and more. But we can go much further. It’s criminal that the 18.4-cent federal gasoline tax hasn’t been raised since 1993, especially with oil prices so low. A tax of $43 per ton on carbon would be roughly equivalent to a 38-cents-per-gallon increase in the price of gasoline, leading motorists to cut back on their driving and opt for public transportation. And the proceeds could be rebated to Americans other than the wealthy via income tax credits.

The simplest, most effective and ultimately least expensive way to address the climate problem would be through a tax on greenhouse gas emissions — a carbon tax. Think about how many inefficient programs, how many thousands of pages of regulations and how much waste could be avoided.

Rattner is a New York investment asset manager who served as lead adviser to the Presidential Task Force on the Auto Industry in 2009.

https://www.nytimes.com/2021/04/09/opinion/biden-spending-clean-energy.html?referringSource=articleShare

Executives Call for Deep Emission Cuts to Combat Climate Change

More than 300 corporate leaders will ask the Biden administration to nearly double the emission reduction targets set by the Obama administration.

By Lisa Friedman, The New York Times, April 13, 2021

WASHINGTON — More than 300 businesses, including Google, McDonalds and Walmart, are pushing the Biden administration to nearly double the United States’ target for cuts to planet-warming emissions ahead of an April 22 global summit on climate change.

In a letter to President Biden, expected to be released Tuesday morning, chief executive officers from some of the nation’s largest companies will call on the administration to set a new Paris Agreement goal of slashing the nation’s carbon dioxide, methane and other planet-warming emissions at least 50 percent below 2005 levels by 2030.

That is roughly what most major environmental groups want, and the corporate executives called the target “ambitious and attainable.”

Former President Donald J. Trump pulled the United States out of the Paris Agreement, eradicating emissions reduction targets set by the Obama administration that many environmentalists had seen as too weak. President Obama had pledged to cut national emissions 26 percent to 28 percent below 2005 levels by 2025.

With Mr. Biden promising to tackle climate change intensely, climate change activists are watching to see how much more ambitious his targets will be than those set when he was vice president. Mr. Biden, who returned the United States to the Paris Agreement on Inauguration Day, has said the United States will announce fresh targets for the Paris Agreement on or before a virtual summit of world leaders he is hosting around Earth Day next week.

According to two administration officials familiar with the deliberations, the target is expected to be a range that will include a 50 percent reduction in emissions.

Organizers of the business letter said they hoped such a message coming from the private sector — including electric utilities like Exelon and Pacific Gas & Electric, as well as dozens of companies based in Republican districts — would resonate strongly with Congress. Other signators include Target, Verizon and Philip Morris, the tobacco giant once considered a firm ally of the Republican Party.

The effort also underscores the delicate path corporate leaders are treading in the post-Trump era. Their decisions to break with Republicans on issues like voting rights and racial justice have rankled their traditional allies in the G.O.P. Pressing the Biden administration to aggressively combat climate change could further alienate Republicans, who have long fought emissions regulations as “job killers” that would make American business less competitive.

“I think this signals a major shift in the corporate community’s understanding of the urgency of climate change as a systemic financial risk,” said Anne Kelly, vice president for government affairs at the sustainability nonprofit Ceres, which organized the letter.

Republican lawmakers have given no indication they are likely to be swayed, but they framed their opposition as a defense of consumers, not businesses.

“The Paris climate agreement will result in increased energy costs for Americans while Russia and China increase greenhouse gas emissions,” Senator John Barrasso of Wyoming said in a statement. He predicted whatever target Mr. Biden announces will be “punishing.”

Patrick Flynn, vice president of sustainability for Salesforce, which signed on to the letter, said he hopes businesses will lobby Congress to support the Biden administration’s target.

“We know it will create millions of jobs, we know it’s a good thing for the economy, and we know if we do it right we can do it in a way that leaves no one behind,” he said.

Ralph Izzo, president and chairman of the Public Service Enterprise Group, a New Jersey-based energy company, said he is supporting the 50 percent target because he has seen the consequences of climate change in his state.

“It’s critical that we take significant action against the threat,” he said.

The corporate response is all the more remarkable because Mr. Biden’s plan for curbing climate change would be paid for in large part by raising corporate tax rates, a move sure to raise objections among at least some of the climate-conscious corporations. He also has called for a clean electricity standard and promised new regulations on the utility sector, automobile makers and oil and gas industries.

Mr. Flynn said his company has supported tax increases in the past and called Mr. Biden’s $2 trillion infrastructure proposal “a good investment” for the long term. Other companies that signed on to the letter sidestepped questions about the tax plan.

Ms. Kelley said she believes companies can “decouple” the commitments the United States needs to make to curb climate change with differences they may have with the administration around how to pay for it. “I think they see that as a separate set of negotiations,” she said.

Under the Paris Agreement, nearly 200 nations set their own voluntary targets for cutting emissions by 2025, including major developing nations like China and India. The rules of the accord do not punish countries for failing to meet the goals, but do require countries to set them.

The United States is currently less than halfway to its original goal.

Concentrations of atmospheric carbon dioxide continue to rise. According to a recent measurement taken at the Mauna Loa Observatory in Hawaii, concentrations recently topped 420 parts per million for the first time since levels have been recorded.

https://www.nytimes.com/2021/04/13/climate/business-executives-climate-change.html?smid=tw-nytclimate&smtyp=cur

House Democrats introduce carbon pricing measure

By Zack Budryk, The Hill, April 1, 2021

Four House Democrats on Thursday reintroduced legislation to establish a carbon pricing system in the U.S.

The bill would price carbon at $15 per metric ton of carbon dioxide equivalent, with the price increasing $10 a year. The measure’s sponsors wrote that it would reduce carbon pollution by as much as 45 percent by 2030 and net zero by 2050.

The sponsors include Reps. Ted Deutch (D-Fla.), Charlie Crist (D-Fla.), Judy Chu (D-Calif.), Anna Eshoo (D-Calif.) and Scott Peters (D-Calif.).

“The pandemic may have temporarily interrupted the scale of global carbon emissions, but we need a robust plan that makes lasting changes to our energy sector. We're proposing a market-based solution to put a price on carbon and drive the transition to cleaner energy sources. Returning 100% of the net revenue back to American families will not only cover any increase in energy costs but also give extra support to those continuing to struggle financially from the pandemic,” Deutch said in a statement Thursday.

“Congress must move forward with this popular and effective plan to curb rising emissions and address a major contributor to climate change,” he added.

The legislation was first introduced in 2019. However, the reintroduction comes after one of the fossil fuel industry’s biggest lobbying groups, the American Petroleum Institute (API), announced its backing for carbon pricing after vocally opposing it for years. The API did not endorse a specific pricing system but said it was open to a cap-and-trade plan after spearheading lobbying against such a plan under the Obama administration.

Addressing the Biden administration’s target of net zero carbon emissions by 2050, API President and CEO Mike Sommers said last week that “there’s no way it is feasible without technologies that aren’t currently in the marketplace today. We think that the best way to do that is through a market based carbon-pricing mechanism that isn’t picking winners and losers.”

https://thehill.com/policy/energy-environment/545988-house-democrats-introduce-carbon-pricing-measure?rl=1

Carbon Tax Sidelined in Biden’s Push on Climate, Taxes

President, some Democrats fret over inequities from pricing carbon, despite lack of evidence

Column by Greg Ip, The Wall Street Journal, March 24, 2021

There is no more effective way for President Biden to meet his aggressive climate goals than a carbon tax. The timing seems ripe: his Treasury Secretary, Janet Yellen, has been a prominent advocate. Big business has flipped from opponent to proponent. Republican opposition is no longer monolithic.

But a carbon tax lacks support where it matters most: with Mr. Biden and the Democratic base. Progressive Democrats claim a carbon tax and its close cousin, cap-and-trade, are unfair to the poor and racial minorities. And a carbon tax appears to conflict with Mr. Biden’s promise not to raise taxes on any household earning less than $400,000 a year.

So as Mr. Biden prepares a regulatory and infrastructure package aimed at driving net greenhouse gas emissions to zero in electricity by 2035 and the entire economy by 2050, he is fighting with one hand tied behind his back.

A carbon price incentivizes consumers, producers and investors to substitute low- or no-carbon energy technology for fossil fuels more smoothly and cheaply than subsidies and rules. This has long been self-evident to economists, including Ms. Yellen. She is a founding member of the Climate Leadership Council, a bipartisan group that has put forward a detailed plan for a carbon tax starting at $43 per ton with proceeds rebated to households as a “carbon dividend.”

In response to questions from senators at her confirmation hearing, Ms. Yellen said, “We cannot solve the climate crisis without effective carbon pricing.” While a carbon tax is the most direct way to price carbon, it isn’t the only one. With cap and trade, total greenhouse gas emissions are capped and companies purchase permits to emit one ton of gas. The more expensive the permit, the greater the incentive to reduce emissions. Cap and trade was the centerpiece of the last major effort to price carbon, in 2010. It ultimately failed due to opposition from business, Republicans and some Democrats.

Since then, opposition has softened: the U.S. Chamber of Commerce favors a “market-based” approach to carbon reductions, Business Roundtable now backs a price on carbon, and even the American Petroleum Institute is weighing the same. Most Republicans still oppose aggressive action on climate, but in recent months Sens. Mitt Romney (R., Utah), Lindsey Graham (R., S.C.) and Lisa Murkowski (R., Alaska) have all expressed openness to carbon pricing.

Yet just as others are moving toward a carbon price, progressive Democrats are moving away. They argue that the poor, Blacks and Hispanics are disproportionately harmed by carbon taxes or the pollutants that businesses can release on nearby communities under a cap and trade system. Mary Nichols, who oversaw California’s cap and trade system, was passed over as head of Mr. Biden’s Environmental Protection Agency in the face of activists’ opposition. A coalition of environmental groups accused her of “pushing market-based approaches to the climate crisis at the expense of the health and well-being of California’s communities of color.”

But empirical evidence suggests otherwise. California’s carbon market actually narrowed disparities in exposure to particulates, nitrogen oxides and sulfur oxides, according to a study by economists Danae Hernandez-Cortes and Kyle Meng of the University of California, Santa Barbara. An older federal program that allows higher-polluting plants to buy offsets from less-polluting plants didn’t disproportionately move pollution to lower-income communities or communities of color, according to a separate study by Joseph Shapiro and Reed Walker, economists at the University of California, Berkeley.

Whether carbon taxes hurt the poor depends on what is done with the revenue. The Climate Leadership Council estimates its carbon tax would finance $2,000 in carbon dividends a year for a family of four, and the 80% lowest-income families end up better off. Regulatory alternatives aren’t necessarily better: renewable-fuel requirements can raise electricity prices and disproportionately hurt poor families who devote more of their budget to power.

Many Democratic politicos have concluded a carbon tax is a political loser with voters opposing it. The question is, compared with what? Progressives’ beloved Green New Deal polls no better. Mr. Biden and Congress have floated a range of incentives, tax credits, regulations and investments aimed at driving down emissions, many of which, individually, are quite popular. But they’re not enough. A new study by Rhodium Group estimates all such measures, combined, wouldn’t put the U.S. electricity sector on a path to net zero by 2035.

So if Mr. Biden is serious about his emissions targets, a carbon price may become harder to avoid. His administration is already considering taxing imports for their carbon content. Without a similar levy on domestically-made goods, the U.S. could face retaliation from trading partners. He also plans to raise taxes, in part to pay for a big boost to the child tax credit, which slashes child poverty. If he wants a tax that helps the poor, defrays the deficit and combats climate change, there is one waiting in the wings.

https://www.wsj.com/articles/support-for-carbon-tax-grows-except-where-it-matters-most-11616590985?mod=searchresults_pos1&page=1

PRG reaction: This is an insightful column that deserves wide attention. Note, though, that analysis has found that if at least 50 percent of the tax revenues are issued as dividends, and are means-tested, the poor are better off. Also, polling shows strong support for levying carbon fees on fossil fuel companies. Most progressives would support a price mechanism if it complemented other approaches to tackling the climate problem.

The danger of climate change is imminent. The Senate must approve a strong policy.

Editorial, The Washington Post, March 18, 2021

THERE HAVE been many moments when it seemed as though the United States would tackle climate change, only for hopes to be dashed. Now, it has another chance. President Biden promised to put global warming at the top of his agenda, and congressional Democrats, for now clinging to narrow majorities, are beginning to offer plans.

The danger is imminent. The world cannot afford another round of nice-sounding proposals followed by inaction. Congress must go big on climate change.

One plan, the sprawling Clean Future Act, released earlier this month by the leaders of several House committees, would have the country reach net-zero greenhouse emissions by mid-century, starting with massive decarbonization of the electricity sector over the next decade. The bill would require utilities to derive increasing amounts of their electricity from clean sources, which include renewables, nuclear power and, for a limited time and at a discounted rate, natural-gas-fired power plants. The bill would invest in electric car infrastructure, compensate coal country for lost jobs and ask states to develop emissions-cutting plans that would address any areas federal programs failed to cover.

Elements of the Clean Future Act might have bipartisan appeal, but the package as a whole is unlikely to attract GOP support. No doubt sensing that Democrats would seek to impose emissions regulations and mandates, as does the Clean Future Act, some Republicans and industry players have begun talking up market-based reforms that would be less costly and disruptive. Major oil companies now favor taxing at some level the carbon content of fuels such as gasoline. Sen. Mitt Romney (R-Utah) called for such a tax in February. Even the American Petroleum Institute, a longtime opponent of climate action, is reportedly considering endorsing a carbon tax.

These voices should have spoken up a decade ago. Democrats have been reluctant to embrace such a plan since 2010, when they proposed a carbon pricing bill and slammed into a wall of coal-state and industry opposition. Since then, the left has soured on market-based emissions policies. Many Democrats now favor massive spending and regulations instead.

But market-based incentives should be part of any climate legislation, for reasons of policy and politics alike. Democrats need more than their side to get a comprehensive bill. They need 10 Republican votes to reach 60 in the Senate. The only other option is using reconciliation, a parliamentary maneuver that allows budget-related bills to pass the Senate by a simple majority. But climate mandates would not qualify for reconciliation. Using reconciliation, Democrats could enact massive federal subsidies but not climate regulations. They also could impose carbon taxes, or a mix of carbon taxes and spending.

In a functional Congress, this situation would produce a deal: Mr. Romney and other GOP senators would offer a carbon tax; Democrats would insist that some of its revenue go to underserved communities and renewable energy research; the nation would get a climate plan. Mr. Romney should try. Democrats should listen. If it does not work, Democrats must find another path. One way or another, this Senate must approve a strong climate policy.

https://www.washingtonpost.com/opinions/this-congress-must-go-big-on-climate-change/2021/03/18/80dd58fc-876e-11eb-bfdf-4d36dab83a6d_story.html