Hudson Institute

Elections Matter: Climate Change Moves From “Hoax” To Center Stage

Cranes unload coal from a cargo ship at Lianyungang port on August 19, 2020 in Lianyungang, Jiangsu Province of China
Cranes unload coal from a cargo ship at Lianyungang port on August 19, 2020 in Lianyungang, Jiangsu Province of China

Climate change, says President-elect Joe Biden, is “the number one issue facing humanity. And it’s the number one issue for me. Unchecked it’s going to actually bake this planet.” In response to their boss’ concern, the team conducting the administration’s vetting of job candidates, even those considered for relatively lower-level positions, “routinely asks ‘is the person climate-ambitious?’” reports the New York Times. No indication of how applicants prove they share such an ambition with the President-elect.

Biden has promised to reverse President Trump’s withdrawal from the now-188-nation Paris climate accord, and to re-enter the accord on his first day in office, that famous “Day One”, when all presidents perform wondrous feats.

That promise is a brilliant stroke. Biden knows the accord, unlike a treaty, does not require unattainable senate approval. It doesn’t require the outlay of any cash. It ticks a box of his restive progressive wing, which is very unhappy with his cabinet choices. It is consistent with his promise to please our allies who have been antagonized by President Trump’s “America First” policies. And because stay-at-home restrictions resulting from policies adopted in response to Covid-19 have sharply reduced driving, shriveled airline schedules and flights, and generally slowed economic activity, emissions this year dropped 6.7%, which Biden will be able to attribute, in part at least, to his decision to re-join the accord.

But that decision will do little if anything to slow the pace of climate change. That can happen only if Biden or John Kerry, his cabinet-level climate czar and chief Paris negotiator, exacts a price for American re-entry. Unfortunately, Biden’s Day-One pledge leaves him no time to assemble a coalition of nations to support reforms in return for America’s agreement to re-enter the deal. And Kerry, who crafted the original deal, is not a man to concede that any handiwork of his requires improvement.

The Paris accord requires America and other countries to reduce their emissions, while China, already the world’s largest emitter of greenhouse gas emissions, is permitted to continue increasing its emissions until they peak “around 2030,” since modified to “before 2030”. But the Paris accord contains no enforcement mechanism, requiring the world to rely for a major reduction in emissions on China’s promises.

China, it will be recalled, promised Hong Kong a “one country, two systems arrangement”; it promised to abide by World Trade Organization rules in return for membership; it promised not to militarize the islands it was building in the South China Sea. And now we have Xi Jinping’s new promise – China will be carbon neutral by 2060. Since Xi is 67, it is not unreasonable to assume that his term as lifetime president will have run out by the time this promise comes due, no matter what the Politburo ordains.

There is worse. China, which according to The Economist accounts for 52% of global coal consumption, plans to lower domestically generated emissions by exporting them to other countries. Professor Edward Cunningham, director of China Programs and the Asia Energy and Sustainability program at Harvard’s Kennedy School, reckons that China is building or planning more than 300 coal plants in places as widely spread as Turkey, Vietnam, Indonesia, Bangladesh, Egypt and the Philippines. Never mind that the UN estimates that to hit the 1.5oC limit on temperature increases set out in the Paris agreement, coal consumption would have to drop 11% per year for the next decade. Unfortunately, the life of the coal plants China is financing is about 40 years, meaning their greenhouse gas emissions will be with us for some time. Don’t charge these to our account, says Xi.

Christian Bogmans and Claire Mengyi Li, researchers at the International Monetary Fund, write that “while demand for coal remains strong and helps fuel economic development in emerging markets”, policy steps can direct those countries to alternatives. Among those policies: “… limit financing of new coal plants, at least where alternatives exist.” Xi, in a talk last month, agreed “we need to pursue green and low-carbon development. … China… will continue to make extraordinary efforts to address climate change…. You can count on China to keep its promise.” It is not known whether that last sentence was deleted from copies circulated in Hong Kong and in the Geneva headquarters of the World Trade Organization.

Were Biden to postpone re-entry, there would be time to persuade our allies – who really, really, want us back in the deal –to join us in saying to China that the terms of its continued membership in the Paris accord have changed. Agree to reduce emissions like the rest of us. Count emissions from Chinese-financed coal plants as if they are China’s responsibility, which they are. Submit a plan to reduce future emissions. And to show Xi that “this is where promises, promises end,” to borrow from a musical by that name, demand independent verification of that plan. Call it “Trust but verify.”

Equally important, amend the agreement to include a provision that the European Union appears ready to adopt – a carbon border adjustment mechanism, more commonly called a carbon border tax. The emissions created by the production and distribution of all goods imported into the EU would be estimated, and a tax levied on those emissions. Ben Aylor and his colleagues at the Boston Consulting Group point out that such a tax “would influence sourcing decisions throughout entire value chains…” and cause companies that export to the EU to reduce their carbon footprints or “risk losing market share.” Two examples:
* the border tax would make it difficult for steel produced in China’s greenhouse gas-emitting blast furnaces to compete with American or Turkish steel, which is produced using technologies that emit half the CO2 per ton of China’s furnaces, and
* the tax would create an incentive for EU chemical companies to switch from Russian to Saudi Arabian crude oil “which extraction leaves a smaller carbon footprint.”

To say there are details to be worked out is an understatement. A list compiled by Peter Balás and his colleagues at the Covington & Burling law firm includes getting accurate carbon-content data from exporting nations, compliance with WTO regulations, and treatment of imports from countries with their own emissions-limiting taxes and regulations.

Still, Biden might consider attempting to impose such a tax on goods imported into the US. Such a levy would generate much needed revenue and hit made-in-China stuff hard enough to provide a more rational basis than existing tariff restrictions for reducing under-priced imports from the People’s Republic.

Just as China’s trade position benefits from cheap, often forced labor, it also benefits by the absence of the sort of environmental regulations common in democratic countries. According to the World Bank, China produces almost twice the CO2 emissions per dollar of GDP as does the US and five times the amount as the UK.

China’s unreliability as a partner in reducing carbon emissions has not dampened all hopes of reaching the Paris targets. The Financial Times reports that, counting the US as back in the deal, some 63% of global emissions from 120 of the 188 Paris signatories are now covered by “some form of net zero target”. Niklas Höhne, professor of environmental systems at Wageningen University in the Netherlands, believes, “If all these countries meet their long-term targets of net zero…” and if the U.S. adopts a similar target, “then the Paris agreement goals are within reach again.” The bad news is that Professor Höhne’s optimism stems from Xi’s promise: “The game-changer was China really moving into net zero….That is the biggest impact of the Paris agreement so far.” See above re: Hong Kong, the WTO and the South China Sea.

Prof Höhne is careful to point out that if countries are measured on their current policies alone, which do not specify the policies they intend to adopt to reach those goals, the temperature projection for the end of the century rises to around 2.9C, far above 1.5oC limit on temperature increases. While counties struggle to develop appropriate policies, the world gets hotter – the past six years have been the hottest on record. As Kerry puts it, “the war” must go on.

Trump is gone. Climate change is a certainty to some, a possibility to others, and a “hoax” to very few. Prudential policies that recognize the possibility that the globe is hearing up are clearly in the national interest. And can be wrapped into any infrastructure program that Biden is sure to put to congress. His job will be to keep the environmental component fiscally sensible, and not bow to pressures to force those SUVs off the road so that Joe the Plumber is forced to lug his tools onto public transport. Republicans will want to go along with him, if for no other reason than that their grim alternative is to go into the 2022 elections without some plan to meet voters’ concerns.

Republican pols are righty suspicious of academic models and foreign teen-age agitators. But they know that voters increasingly recognize that the wild-fires they see with their very own eyes – California ablaze – might, along with spectacular utility and government mismanagement, have something to do with greenhouse gas emissions. And that water lapping at the entrances of Miami households, Houston flooded, might also have something to do with those emissions.

Biden has rejected his Left’s Green New Deal in favor of the $2 trillion “Biden Plan.” As he contemplates additional relief for businesses and workers hit hard by shut-downs, and the fiscal mess he is inheriting, he might decide to make the Biden Plan self-financing by taxing the emissions that just might be complicit in baking the planet. More on that at a later date.