Climate: What To Expect From The Summit Hosted By Joe Biden

In the salvo of Joe Biden’s first presidential decrees was the one bringing the United States back into the Paris Agreement. With John Kerry at the helm of climate diplomacy, the United States has a seasoned team. Its first full-scale test arrives with the Leaders Summit on Climate, convened by the White House on April 22 and 23, eight months before the COP in Glasgow.

Vis-à-vis his peers, Biden plays his credibility, altered by the multiple about-faces of the United States in the climate negotiations: adoption of the Kyoto protocol under Clinton (1997), abandoned by the Bush administration (2001) ; Obama’s pledges in Copenhagen (2009), rejected the following year by Congress; ratification of the Paris Agreement in 2016, denounced by Donald Trump upon his arrival at the White House.

Setting goals

We can count on the Biden-Kerry ticket to reaffirm the ambition of climate neutrality by 2050. It is now an obligatory formula in terms of climate diplomacy. The crucial question concerns the interim 2030 target to achieve this.

The contribution deposited in 2015 by the United States of Obama within the framework of the Paris agreement related to a reduction of 26-28% of the emissions between 2005 and 2025. If the administration Biden was satisfied with this objective, it would be a total lack of ambition. It has already set the tone by announcing upstream of the summit that its international commitments would be reassessed. But at what height should the new stair tread be fixed?

Taking up the proposals of economist Keohane, who was Barack Obama’s energy-climate advisor, a coalition of 300 business leaders advocates targeting a 50% reduction in emissions between 2005 and 2030. This would represent an effort by 2030 of an order of magnitude comparable to the 55% drop compared to 1990 now targeted by the EU.

The first test for Joe Biden’s credibility will be on this number. If the United States stays below it will be a bad signal. If they set the bar higher, it will be a new warning to the Old Continent, after that of its recovery plan which reveals a rather timid Europe in view of the billions injected into the American economy.

The test of passing before Congress

The second test of credibility will be the most decisive. It will take place in Congress, where Joe Biden is to pass the American Jobs Plan to inject more than $ 2 trillion in investment into the economy. Of these amounts, half (around 0.6% of GDP) is directly linked to the low-carbon transition, with two priority objectives: completely decarbonizing electricity production by 2035 and shifting the automotive industry towards everything. -electric.

Although back on campaign promises, this plan would inject into the low-carbon transition much more than what had been envisaged by previous Democratic administrations. But the game will be complicated in the Senate, where Democrats have only one voice. The negotiations there will be bitter and could water down the initial ambitions.

Even if the plan comes out of the passing exam intact, it may not be enough to meet the goals. It does provide an impressive mass of incentives to invest in low carbon, but remains timid on the most complex aspect of the transition for a large energy producer: the divestment from fossil fuels.

As economist Robert Stavins has analyzed, a compromise is more easily found in Congress on stimulus measures based on tax breaks and subsidies than on the key instrument to accelerate the exit from fossils: the CO tax.₂. The renunciation of this measure, however present (in a rather vague way) in the campaign program, is the great weakness of the current proposals.

Such taxation would first of all make it possible to secure additional expenditure for the federal budget, an important pledge of credibility: the current monetary financing facilities and the resulting low interest rates are difficult to extrapolate to the 2030 horizon.

Above all, an ambitious CO price trajectory₂ would accelerate the withdrawal of fossil fuels because of their increase in price. This withdrawal from fossil addiction poses a major industrial restructuring problem for an economy in which entire sections are based on the availability of low-cost fossil fuels extracted locally

During his presidency, Obama initiated the withdrawal from the use of coal in the electricity sector, which the Trump administration could not reverse. Despite the introduction of standards on vehicle emissions and the blocking of the Keystone pipeline extension project, his administration has not launched an equivalent dynamic on oil and gas of fossil origin.

Biden’s true credibility will emerge if he succeeds in expanding the exit from fossil fuels to fossil-based oil and gas. It is the mother of all battles. In the absence of an ambitious carbon price, this battle will involve a proliferation of regulations that will quickly become more unpopular than a properly configured and redistributed carbon tax.

Potential ripple effects

Externally, the potential spillover effects of the Biden summit primarily concern China and the EU. The EU’s position is already known. Can the Leaders Summit clarify that of China?

At the origin of more than a quarter of global emissions, China’s voice weighs heavily, but has become completely inaudible. At the United Nations Annual Assembly in September 2020, President Xi Jinping spoke in favor of climate neutrality by 2060. A step in the right direction. At the same time, domestic regulations freezing investment in coal have been relaxed. In 2020, for the first time since 2015, investments in new thermal electricity capacities increased: a step backwards that could call into question the very sharp drop in Chinese emissions over the past decade.

Clarifying China’s position would be a major deliverable from the summit. Its most important ripple effects, however, concern the “rest of the world”, which has become, ahead of China, the biggest contributor to the increase in global emissions.

Within this group, the countries producing and exporting fossil fuels are those which have increased their emissions the most. Since COP1 (Berlin, 1995), they have been playing for time by slowing down or blocking negotiations. They should be brought back into the process because it will be impossible to aim for a warming target of less than 2 ° C without a drastic reorganization of their economies. On the political level, this constitutes an objective as complex as to involve, in the American context, Wyoming or North Dakota in the low carbon transition …

The least developed countries still weigh little in global emissions because of the low level of their emissions per capita. If they reproduce historical growth paths based on fossil fuels, they will tomorrow be the world’s largest emitters. To avoid this, the low-carbon transition should be started directly with a gigantic investment effort expanding access to energy, which a large part of their population is deprived of. If the White House summit leads this way, it could be a major inflection point in international climate action.