Solving the Climate Crisis, a new congressional action plan to address climate change, was released last week by the US House Select Committee on the Climate Crisis (SCCC). In case you don’t have the time to dig into its 500-plus pages, don’t worry—Resources for the Future (RFF) economists have done the legwork for you, offering their review of the recent report here.
The report lays out a framework for future congressional actions, organized into 12 main pillars. Below, we include a table of contents for ease of navigation through the responses provided by RFF scholars. Try clicking on the hyperlinks in the table of contents to jump down to view further elaboration in the article text. In the main text under the table of contents, RFF scholars address some of these pillars in detail and remark on what could work and what’s missing in specific elements of the plan, drawing from existing evidence and continuing research at RFF.
Editor's note: This article was originally published on July 6, with contributions from Alan Krupnick added on August 13.
Pillar 1: Invest in Infrastructure to Build a Just, Equitable, and Resilient Clean Energy Economy
1.1 | Build a Cleaner and More Resilient Electricity Sector
Key Takeaways: SCCC calls for both a carbon price and a clean energy standard, which would set a requirement that US power generation meet a certain percentage of no- or low-carbon generation. The report also includes several recommendations for modernizing wholesale electricity markets.
1.2 | Build a Cleaner and More Resilient Transportation Sector
Key Takeaway: Report attempts to layer multiple policies to reduce greenhouse gases from the transportation sector—but piling up policies could backfire.
1.6 | Plug Leaks and Cut Pollution from America’s Oil and Gas Infrastructure
Key Takeaway: SCCC seizes low-hanging fruit on climate mitigation, with recommendations for more aggressive action to reduce methane emissions from oil and gas sectors.
Pillar 3: Transform US Industry and Expand Domestic Manufacturing of Clean Energy and Zero-Emission Technologies
3.1 | Rebuild US Industry for Global Climate Leadership
Key Takeaway: Key policy pillars in report can drive innovation and investment, support industry, and protect communities in the energy transformation needed to achieve deep decarbonization.
3.2 | Invest in Manufacturing of Clean Energy, Clean Vehicle, and Zero-Emission Technologies
Key Takeaway: Report aims to stimulate clean energy innovation in industrial sectors by contracting federal projects with bidding companies that take advantage of low-emissions technology.
Pillar 4: Break Down Barriers for Clean Energy Technologies
4.1 | Align the Tax Code with a Net-Zero Goal and Eliminate Unnecessary Tax Breaks for Oil and Gas Companies
Key Takeaway: Report proposes ending tax breaks for US oil and gas industry, which may have little impact on global emissions, but would save the federal government billions annually.
4.2 | Put a Price on Carbon Pollution
Key Takeaway: While offering principles for designing an “effective” and “equitable” carbon pricing system, the report shies away from designing carbon pricing policy.
Pillar 5: Invest in America’s Workers and Build a Fairer Economy
5.1 | Ensure the Clean Energy Economy Benefits Current and Future Workers
Key Takeaway: Report recommendations go well beyond previous efforts, establishing a new office to develop community-specific strategies.
Pillar 8: Invest in American Agriculture for Climate Solutions
Key Takeaways: Report positions for success by using established legislation to incentivize land owners and agricultural producers to “farm carbon,” but not all regions—nor plant species—are created equal. Report misses opportunity to identify target watersheds to prioritize and integrate programs, rather than being a scattershot across all states.
8.2 | Reduce Agricultural Emissions
Key Takeaway: A breakthrough step in this plan is the recommendation to expand investments in rural broadband—currently, the absence of this technology holds producers back from being innovative and discourages market expansion.
Pillar 9: Make US Communities More Resilient to Impacts of Climate Change
9.2 | Support Community Leadership in Climate Resilience and Equity
Key Takeaways: Establishing a National Climate Adaptation Program has some value, but may lead to a breakdown in mitigation measures. Section misses an explicit charge to include a criterion for investment in adaptation or mitigation in any infrastructure bill.
9.3 | Partner with Tribes and Indigenous Communities for Climate Adaptation and Resilience
Key Takeaway: The SCCC stresses the disproportionate exposure that communities of color, low-income communities, and tribal and indigenous communities face from climate change and recommends increased funding to implement climate adaptation programs that incentivize resilience and ensure that disadvantaged communities can meet these challenges.
Pillar 10: Protect and Restore America’s Lands, Waters, Ocean, and Wildlife
10.1.2 | Lift Up America’s National Parks and Public Lands as Part of the Climate Solution
Key Takeaway: While an aim to reduce maintenance backlogs to increase resilience could be effective, focusing on the National Park Service addresses only part of the issue. A landscape approach that includes all associated public lands would be helpful, and this strategy may require prioritizing lands and regions with particular vulnerabilities.
10.1.4 | Protect and Restore Forests and Grasslands
Key Takeaway: While the SCCC report makes comprehensive recommendations for forest management, any reforestation or afforestation legislation must consider the forest life cycle—from investment in the earliest steps, to post-planting management—if the goals are to be achieved.
10.2 | Make Public Lands and Waters a Park of the Climate Solution
Key Takeaway: While the report proposes imposing a moratorium on all new federal fossil fuel leases and increasing royalty rates on new onshore leases, it doesn’t consider charging “carbon adders,” which could generate much of the emissions reductions of a moratorium while also generating billions in additional revenue.
Pillar 1: Invest in Infrastructure to Build a Just, Equitable, and Resilient Clean Energy Economy
1.1 Build a Cleaner and More Resilient Electricity Sector
Resources: What role does a clean energy standard (CES) play in this package of proposals?
Daniel Shawhan: Unlike the other power sector policies proposed in the action plan, the CES is an overarching policy that applies to all grid-serving power generation. It would set a requirement that US power generation has to meet a certain standard of “cleanness.” The other power sector policies, many of which support one or more particular kinds of clean generation, would tend to reduce the CES credit price needed to meet that standard of cleanness.
What is a CES?
Kathryne Cleary and Daniel Shawhan: A CES is a market-based portfolio standard that requires a certain percentage of electricity sales to come from zero- or low-carbon generation. This required percentage of sales typically increases over time. A CES is designed like a renewable portfolio standard (RPS) that many states already have in place, which requires a certain percentage of sales to come from renewable technologies. Unlike an RPS, a CES is typically technology neutral and provides credits to other zero- and low-carbon generation, in addition to eligible renewable sources. Thus, technologies like nuclear or fossil-fueled plants with carbon capture and storage can earn credits under a CES policy.
Like an RPS, a CES awards a clean energy credit per megawatt-hour of “clean” generation. Typically, electricity retailers are the entities responsible for complying with the CES. They must acquire some number of clean energy credits—a specified proportion of the amount of electricity they sell—in order to comply with the standard. These credits can be traded, which lowers the cost of compliance and improves the efficiency of the policy. The trading allows the qualifying generation to be done by those who can do it at the lowest cost.
This Resources magazine article and this RFF issue brief provide additional general information about CES.
What are some of the US national CES proposals that have been introduced so far?
Daniel Shawhan: Legislative proposals that include a CES mechanism have been introduced in the House by Rep. Diana DeGette (D, CO), Rep. Frank Pallone (D, NJ), and Senator Tina Smith (D, MN) and Rep. Ben Ray Luján (D, NM).
What are some potential advantages and disadvantages of a CES?
Kathryne Cleary and Daniel Shawhan: Naturally, a CES has advantages and disadvantages relative to other policy options aimed at decarbonizing the electricity sector. We describe a few of them here.
Pricing carbon directly is likely to be a more cost-effective policy for decarbonization, but carbon pricing legislation has often been difficult to pass due to political resistance. A CES, on the other hand, may be more politically appealing because it is structured like an RPS, a policy that is politically popular and widely implemented across 29 states and the District of Columbia.
A CES also tends to raise electricity prices less than a carbon price does. On the other hand, a carbon price can create program revenue that can be redistributed and used to reduce the impacts of the policy on certain groups, such as low-income communities, or for other purposes, such as government deficit reduction.
Relative to an RPS, a CES allows more technologies to compete to meet the standard. This means the cost of achieving emissions reductions is lower under a CES than under an RPS with the same percentage requirement. Alternatively, this enables a CES to have a higher percentage requirement than an RPS without having a higher cost.
For the projected effects of specific US national CES proposals, see this RFF issue brief about the Smith-Luján bill and this RFF working paper about the 2012 Bingaman CES bill.
What are some important design considerations for a CES?
Daniel Shawhan and Kathryne Cleary: Policymakers must decide what kinds of power generation will receive CES credit and how much of a credit per megawatt-hour each generator will receive. One important question about eligibility concerns natural gas. Since natural gas–fueled power plants emit less greenhouse gases than coal-fueled power plants and much less health-damaging local pollutants, giving partial credit to efficient natural gas plants can be a way to reduce emissions even further at a given cost, as shown in a Hill briefing in October 2019 given by Paul Picciano, Daniel Shawhan, and Kevin Rennert.
For a CES implemented at the federal level, policymakers can consider regional disparities in existing clean energy resources. Some regions have better resources for zero-emitting and very low-emitting generation than others, so those regions can meet a higher percentage target with less impact on electricity rates. Having a cleaner electricity supply currently can have a similar effect. Consequently, policymakers can design CES to promote regional fairness while also ensuring that emissions reductions goals are met.
The treatment of existing zero-carbon resources, such as nuclear or hydroelectric plants, is also important to consider. Choosing to credit these resources unnecessarily could increase costs of the program to electricity customers. For example, while some nuclear plants are struggling to stay online, others are able to cover their going-forward costs from wholesale market revenues without subsidies. However, choosing to exclude these resources could reduce the cost effectiveness of the policy, if crediting the resources would prevent early retirement. One option is to give full credit to existing generators. Another is to give partial credit to existing generators. For generators for which this partial credit would not be enough to cover their going-forward costs, state governments could then choose whether to provide additional support or not.
Another design feature that is important to consider is cost-containment measures. Including an alternative compliance payment effectively puts a price ceiling on the credit price. It relaxes the target, if necessary, just enough to ensure that the credit price does not exceed a certain level.
For more information about design considerations, see: “Clean Energy Standards” and “Two Key Design Parameters in Clean Energy Standards” (technical paper).
Credit: American Public Power Association
The Solving the Climate Crisis action plan includes several recommendations for modernizing wholesale electricity markets. Why is wholesale electricity market reform important for advancing clean energy?
Kathryne Cleary and Karen Palmer: Several regions of the United States (namely the Northeast; the Midatlantic; and parts of the Midwest, California, and Texas) rely on wholesale markets to determine which resources to dispatch to meet electricity demand and which resources to invest in. Since the 1990s, grid operators in these regions have used these markets to efficiently procure capacity resources and ensure competitive wholesale electricity prices.
While they have succeeded at opening generation markets to competition, these markets were designed for an electricity system that relies on traditional resource types (e.g., coal, natural gas, and nuclear) and were introduced before renewables contributed much to electricity generation. Consequently, this framework is increasingly becoming outdated and unable to support cleaner resources that have different attributes than traditional resources. For example, wholesale capacity markets—which are used in the Midatlantic and Northeast regions of the United States to encourage investment—compensate generators for being available to generate power when called upon. Unlike some traditional fossil-fueled plants (e.g., natural gas plants) renewables are variable and generate only when natural resources are available, such as when the sun is shining or the wind is blowing. As a result, intermittent renewables cannot earn as much revenue in the capacity market as other resources, which can discourage investment in these cleaner technologies.
In addition to creating a disadvantage for renewable resources, some wholesale markets do not compensate renewables for their clean energy attributes. The carbon damages associated with electricity generation are an externality that the market must internalize to achieve the socially optimal outcome. Thus, when regional grid operators do not take carbon emissions into account, they undervalue power generated from renewables and overvalue power from fossil-fuel generators, which leads them to operate fossil-fueled power plants more frequently than they would if these attributes were taken into account. While some regions incorporate a cost of carbon into wholesale markets as a consequence of state regulation (e.g., in the Northeast and California), others do so only partially for generators in states that participate in the Regional Greenhouse Gas Initiative (e.g., PJM, the largest grid operator in the country).
In addition to not valuing clean energy attributes, some regional grid operators have attempted to discourage the participation of renewables in wholesale markets. Many states have chosen to support clean energy with policies such as renewable portfolio standards. These policies have encouraged investment and resulted in more renewables competing in wholesale markets. However, because these policies effectively subsidize renewables, fossil-fueled generators that do not receive subsidies have argued that state-subsidized resources should be required to bid a minimum price in the capacity market in order to establish a level playing field for all types of generators. The desire to offset the effects of these clean energy policies on electricity market outcomes has led to mitigation efforts in PJM (the Midatlantic regional grid operator) and in New York State to impose additional constraints on subsidized resources participating in these wholesale markets, which further discourages their investment.
Recommendations in the Solving the Climate Crisis action plan address some of these issues by facilitating greater participation of renewables in wholesale markets and advancing clean energy by removing market rules that discourage clean energy. The plan facilitates growth in renewables by incorporating carbon costs in wholesale markets and modernizing market design to effectively incorporate intermittent renewable resources and demand-side resources.
The Solving the Climate Crisis action plan calls for both a CES and a carbon price. What would be the likely effects of having both?
Daniel Shawhan: Indeed, the action plan includes both a CES, which would apply to the power sector, and a carbon price, which the action plan implies would apply to the whole economy (see page 286 of the action plan). A carbon price could be set directly as an emission fee or tax, or could be achieved via a cap-and-trade program, in which the emissions credit price would be the carbon price. The CES and the carbon price would both apply to all grid-serving power generation. If the carbon price is high enough relative to the stringency of the CES, the CES target would be satisfied without a need for the CES. In that case, the CES credit price would be close to zero. Otherwise, the CES would still have an effect, causing the power sector to be “cleaner” than it would be with just the carbon price, by whatever measure of “cleanness” the CES uses. For example, if the CES could only be satisfied by power plants using renewable energy, nuclear, or carbon capture, then more generation from these kinds of plants would result, relative to a case with just the carbon price. Having the CES in addition to the carbon price would increase both benefits and costs.
One can also look at this combination the other way around by asking what would be the effects of adding an economy-wide carbon price on top of a power-sector CES. This scenario would reduce emissions in the rest of the economy. A uniform price for emissions that applies to the whole economy is an effective way to reduce total emissions at the least cost.
1.2 Build a Cleaner and More Resilient Transportation Sector
What are the risks of implementing multiple transportation policies in hopes of solving a single problem?
Joshua Linn: As the SCCC report notes, it won’t be easy to dramatically reduce greenhouse gas emissions from the transportation sector. Although electric vehicles and other technologies have great potential, these technologies have not yet penetrated the mass market. As such, it is tempting to throw as many policies as possible at the problem—setting national greenhouse gas standards, creating a national Zero Emission Vehicle (ZEV) program, subsidizing electric vehicle sales, subsidizing infrastructure investments, and so on. The report layers multiple policies to solve the single problem of reducing greenhouse gas emissions.
Piling up policies in this way could backfire—particularly the idea of combining a national ZEV program with subsidies for buying electric vehicles. To comply with a national ZEV program and boost market shares of ZEVs, vehicle manufacturers would raise the prices of gasoline- or diesel-powered vehicles compared to the prices of ZEVs. If we suppose that there’s a national ZEV program, and then add consumer subsidies, the two policies interact in a surprising way. Offering the subsidies makes it easier for manufacturers to comply with the ZEV program, and manufacturers won’t have to charge as much for gasoline- and diesel-powered vehicles. In effect, the subsidy transfers money from federal taxpayers to buyers of gasoline- or diesel-powered vehicles. It’s hard to imagine that the authors of the report want to use federal tax revenue this way—and yet, that’s essentially what this proposal would do.
Other examples of layering policies on top of one another can lead to perverse outcomes and actually make it more difficult to cut greenhouse gas emissions from transportation. Instead, it is generally more effective to match one policy to one objective. If the goal is to increase the market share of ZEVs, it is better to either subsidize them or create a ZEV standard—but not to do both.
How can federal policy reduce vehicle miles traveled?
Joshua Linn: Pre-COVID, passenger vehicle miles traveled (VMT) were rising steadily, and VMT will probably start rising again as the economy recovers. Reducing VMT is an important step in cutting transportation sector emissions, at least until all vehicles on the road run on emissions-free electricity or hydrogen. The report discusses ways that federal policy can support state and local jurisdictions in reducing VMT. For example, the federal government could increase funding for public transportation or assist in local and state transportation planning bodies.
Targeted use of vehicle technology provides an opportunity for federal policy to encourage lower VMT directly. Vehicles contain software that measures fuel consumption and VMT, and this information can be transferred to outside parties. Car insurance companies already use these technologies to provide discounts for people who reduce their VMT. Insurance companies do this to increase their profits, rather than to reduce greenhouse gas emissions. The federal government could similarly incentivize households to reduce their VMT. For example, a household could get a tax cut or a check from the government if it reduces its driving compared to some baseline level. Since the technology exists, creating a policy like this would be a matter of figuring out the logistics and managing concerns around privacy.
Credit: Shutterstock/Volodymyr Goinyk
What can we learn from the “Cash-for-Clunkers” program?
Joshua Linn: The Solving the Climate Crisis action plan includes a proposal to subsidize scrappage of older and higher-emitting vehicles, similar to part of the Car Allowance Rebate System implemented in 2009 (i.e., “Cash-for-Clunkers”). Such programs provide consumers with a rebate for trading up to a more efficient vehicle, but analyses of programs like Cash-for-Clunkers find that the incentives don’t actually change consumer behavior that much.
Research on this program has concluded emphatically that, although it successfully transferred a few billion dollars to households during the recession, the program did not boost new vehicle sales or reduce greenhouse gas emissions nearly as much as its proponents had hoped. Some have argued that tight timelines for setting up the program hampered its success. Setting up the program more deliberately would help, but it would not address the problem that the program had little effect on consumer behavior; in effect, the program mostly paid people to do things they would have done anyway.
Targeting the retirement subsidies could help. If we consider all the passenger vehicles that are currently on the road, we see a high degree of variation in remaining vehicle lifetimes and vehicle net emissions. Some of the vehicles are relatively new and clean, with relatively low emissions rates and long remaining lifetimes, and other vehicles are older and dirtier. A retirement program is most effective when it systematically targets the vehicles that have the highest future emissions. Tying the subsidies to relevant vehicle attributes, such as its odometer readings and emissions rate, substantially improves emissions reduction outcomes.
Analysis also reveals the importance of scaling subsidies in line with the estimated value of each vehicle. Consumers are more likely to retire a vehicle when the retirement subsidy exceeds the vehicle’s market price. Yet, public proposals for scrappage programs have included very little targeting, and the subsidy amounts often are not set at the levels needed to succeed in changing consumer behavior.
What are the implications of COVID for transportation policy?
Joshua Linn: Public transportation ridership has dropped dramatically since the pandemic began, and public polling shows that many people are fearful about riding the bus, subway, or train, even as some states reopen their economies. The drop in ridership could cause emissions to increase, particularly if people drive their own cars rather than taking public transportation. On the other hand, COVID appears to have substantially reduced demand for air travel, which has an offsetting effect on emissions.
Presently, it is hard to predict the long-term implications of COVID for travel behavior and emissions. Large subsidies may be needed to increase public transportation ridership to pre-COVID levels. Other approaches could be more cost effective and equitable, such as changes in transit system operation to protect public health, combined with other precautions and a public information campaign. While it may be too early to determine the long-term implications of COVID for travel behavior—much less for transportation policy—it’s not too early to begin thoughtful and targeted analyses of these issues by commissioning new research, soliciting input from a range of stakeholders, and presenting the findings in public reports.
1.6 Plug Leaks and Cut Pollution from America’s Oil and Gas Infrastructure
How does the Solving the Climate Crisis action plan address methane emissions from oil and natural gas systems?
Daniel Raimi: Oil and natural gas systems have the potential to emit methane, a potent greenhouse gas, at millions of locations, including active well sites, pipelines, storage systems, and much more. In recent years, a substantial body of research (see here, here, and here for a few examples) has demonstrated that emissions from these sources appear to be considerably larger than was previously understood.
The Obama administration in 2015 announced goals of reducing methane emissions by 40 to 45 percent below 2012 levels by 2025, and in 2016, the US Environmental Protection Agency (EPA) finalized rules that would have required companies to perform additional monitoring and repairs of these leaks. However, the Trump administration has proposed changes to the rule that would considerably weaken these standards.
In its report, the SCCC recommends more aggressive action to reduce methane emissions from the oil and gas sector, aiming to achieve a 65 to 70 percent reduction by 2025 and a 90 percent reduction by 2030. The plan would instruct EPA and Bureau of Land Management (BLM) to develop rules to achieve these targets.
In terms of cost effectiveness, methane from the oil and gas sector offers some seriously low-hanging fruit. Numerous engineering analyses have estimated that deep emissions reductions can be achieved at low—and in some cases negative—costs. What’s more, recent improvements in methane sensing, including technologies to detect leaks from the air and from space, offer the potential for even cheaper emissions reductions. However, existing regulatory frameworks have made it difficult for EPA, BLM, and state governments to allow companies to use these new, more cost-effective tools. Recognizing this challenge, the SCCC report states that any new rules should offer a “clear pathway and criteria” that would allow for the use of these new technologies.
The SCCC report also aims to reduce methane emissions from long-distance transmission lines to zero within 10 years. Again, the committee highlights the potential role of new technologies, and recommends that the US Department of Energy establish a grant program to fund repairs across the country. Intriguingly, the grant program is similar to one recently proposed by Rep. Fred Upton (R, MI) of the House Energy and Commerce Committee.
How does the action plan address the legacy of energy-related pollution around the country?
Daniel Raimi: In recent weeks, interest has grown in a federal effort to remediate pollution associated with energy production, including the plugging and restoration of orphaned and abandoned oil and gas wells. These wells emit methane and other pollutants, can contaminate local water resources, and pose safety risks for those living or recreating nearby. EPA estimates that there are 2.1 million unplugged abandoned wells around the country, and the number of “orphaned” wells (those that have no owner) is in the hundreds of thousands—though no one knows the true count.
The SCCC recommends that Congress establish a dedicated fund to support the plugging and restoration of well sites on federal, state, tribal, and private lands, and cites recent legislation that proposes spending $2 billion to do just that.
Looking forward, a large-scale federal effort could benefit from consistency. Currently, state requirements for plugging and restoring well sites differ markedly. In forthcoming research in partnership with the Columbia Center on Global Energy Policy, I have found that consistent standards across state, federal, and tribal borders would make it easier for companies to scale up quickly to plug large numbers of wells, which could considerably reduce program costs. However, one of the potential challenges of plugging tens or hundreds of thousands of wells is that state programs overseeing these activities would need to scale up quickly, potentially slowing and raising the costs of these efforts.
Pillar 3: Transform US Industry and Expand Domestic Manufacturing of Clean Energy and Zero-Emission Technologies
3.1 Rebuild US Industry for Global Climate Leadership
How well do the SCCC’s recommendations in the report address our global needs for decarbonizing the industrial sector?
Dallas Burtraw: Achieving decarbonization of the industrial sector means enabling innovation and investments that will be necessary to position US industries as global leaders for this century. The pathway involves near-term and long-term technological solutions that vary across the industrial sector. A multidimensional policy framework is needed to promote research and development, flexible efficiency standards, government procurement, labeling and data disclosure; support carbon pricing; and provide incentives for directed technological change. Key policy pillars in the Solving the Climate Crisis action plan will drive innovation and investment, support industry, and protect communities in the energy transformation that is necessary to achieve deep decarbonization.
How does the action plan apply incentives for industry that will help reduce greenhouse gases?
Alan Krupnick: The SCCC report envisions tax incentives for the production of decarbonized hydrogen, along with tax incentives for the use of decarbonized hydrogen in industrial processes. These incentives would build broadly on the 45Q tax credit to incentivize carbon capture, utilization, and storage by adding significant tax credits for hydrogen. A production tax credit is appropriate and preferable to an investment tax credit, because the production is more directly related to the desired goal: to reduce carbon dioxide emissions. The proposal also appropriately ties the size of the credit to the degree that carbon dioxide emissions are reduced below the counterfactual situation. I’ve done some work on this topic with Jay Bartlett, and our major report on industrial hydrogen technologies, costs, and tax credit design is forthcoming.
3.2 Invest in Manufacturing of Clean Energy, Clean Vehicle, and Zero-Emission Technologies
How can federal funding help incentivize clean energy in the broader economy?
Alan Krupnick: The SCCC report advances a green procurement agenda for the federal government to build demand and stimulate innovation in high-emitting industrial sectors and commodities such as cement and steel. The report endorses the Energy and Commerce Committee’s discussion draft of the CLEAN Future Act, which creates a federal Buy Clean program to “steadily reduce the quantity of embodied carbon emissions of construction materials and products and promote the use of clean construction materials and products, in projects supported by federal funds.” The report’s recommendation for green procurement is that EPA should lead this program and set maximum-emissions-intensity benchmarks for procurement of emissions-intensive goods, requiring a portion of procurement to support innovative low-emissions materials. Notably, the suggested standards set by the report are such that many plants in the sector already are able to meet them. The report also considers awarding contracts to push innovation and calls for the creation of an Environmental Product Declaration database, a common way for bidding companies to document their pollution performance. Stay tuned for my forthcoming paper on green procurement programs for natural gas, cement, and steel, which will examine how programs like this can be successful.
Pillar 4: Break Down Barriers for Clean Energy Technologies
4.1 Align the Tax Code with a Net-Zero Goal and Eliminate Unnecessary Tax Breaks for Oil and Gas Companies
What would be some possible outcomes of eliminating unnecessary tax breaks for oil and gas companies?
Brian C. Prest: The SCCC report proposes ending tax breaks for the US oil and gas industry, such as the deductions for intangible drilling expenses and percentage depletion. In a recent peer-reviewed study, RFF University Fellow Gilbert E. Metcalf estimated that this repeal would reduce domestic oil and gas production by 4 to 5 percent in the long run, although the effect on global emissions is likely to be small. While ending the tax breaks might have little impact on global emissions, this recommendation would save the federal government several billion dollars annually.
4.2 Put a Price on Carbon Pollution
What role does the SCCC report envision for carbon pricing in confronting climate change?
Marc Hafstead: The majority staff of the SCCC dedicate 1.5 pages of the 536-page report to carbon pricing, specifically writing that “Congress could design a comprehensive climate plan without a carbon price” and that “carbon pricing is not a silver bullet.” I think it is clear that carbon pricing is not a priority for members of the SCCC. The reason could be political—making politically sensitive (some would even say toxic) carbon pricing a central component of the policy package may make it more difficult to pass other legislative proposals that have more bipartisan support—or it could reflect the actual policy preferences of the legislators.
The report does offer principles for designing an effective and equitable carbon pricing system (note the lack of mention of efficient). Listed in the Solving the Climate Crisis action plan are the following:
- Congress should establish a carbon pricing system designed to achieve America’s economy-wide greenhouse gas emissions reduction goal of net zero by no later than 2050.
- Congress should consider a carbon price as only one tool to complement a suite of policies to achieve deep pollution reductions and strengthen community resilience to climate impacts. Carbon pricing is not a silver bullet.
- Congress should ensure that energy-intensive, trade-exposed domestic industries that are working to reduce pollution remain on a level playing field with foreign competitors that use dirtier technologies.
- Congress should ensure low- and moderate-income households benefit from a national carbon price.
- Congress should pair a carbon price with policies to achieve measurable air pollution reductions from facilities located in environmental justice communities, which face chronic and acute health impacts from a legacy of industrial development in their neighborhoods.
- Congress should respect states and localities that have led the nation in climate action, ensure that a national carbon price complements and builds on their programs, and apply the lessons learned from their experiences and other international approaches.
- Congress should not offer liability relief or nullify Clean Air Act authorities or other existing statutory duties to cut pollution in exchange for a carbon price.
The environmental and economic impacts of carbon pricing can vary substantially across different types of carbon pricing policies, but it shouldn’t be hard to design a policy to meet these seven principles. Numerous policy proposals call for an escalating carbon price over time, with a tax adjustment mechanism to help emissions stay on track, a border tax adjustment to protect domestic industries, and a portion (if not all) of the revenues devoted to dividends that favor low- and moderate-income households. Carbon pricing also can significantly reduce local air pollution, particularly in environmental justice communities, without companion policies.
Interestingly, liability relief and the nullification of Clean Air Act authorities have been previously proposed as trade-offs that could be offered to achieve a pathway for a carbon pricing bill to pass through Congress. Inclusion of this provision appears to limit opportunities for future negotiations.
Pillar 5: Invest in America’s Workers and Build a Fairer Economy
5.1 Ensure the Clean Energy Economy Benefits Current and Future Workers
How does the SCCC report address the issue of “Just Transition”?
Daniel Raimi: One of the major potential challenges to ambitious climate policy is the potential for deep reductions in fossil fuel use to negatively affect the workers and communities whose livelihoods depend on the production, transformation, and—in some cases—the use of coal, oil, and natural gas. The Waxman-Markey cap-and-trade bill of 2009 addressed this issue by providing “worker adjustment assistance,” and the Obama administration began in 2015 a multi-agency collaboration called the POWER Initiative to support struggling coal communities.
The SCCC report proposes the establishment of a new “National Economic Transition Office,” which would coordinate existing federal economic development, workforce training, and other programs to deliver support to affected communities. Importantly, the office is instructed to work closely with local stakeholders to develop strategies that are targeted and tailored differently for communities with different needs. At a minimum, the SCCC recommends that the national program should include wage replacement and other direct financial assistance to workers, “wrap-around” services to address mental health and substance abuse challenges, support to address loss of tax revenue for local governments, capacity-building programs for local leaders, and targeted economic diversification strategies.
To aid in this effort, the SCCC also recommends that these communities and environmental justice communities should be the largest beneficiaries of federal infrastructure and clean energy deployment programs.
Taken together, this set of recommendations goes well beyond the previous efforts from the prior presidential administration, offering an ambitious vision. Led by Wesley Look and me, current research at RFF with partners at other organizations is evaluating the potential of different federal policy options to support workers and communities that could be negatively affected by a sharp shift away from fossil energy use. Stay tuned for our analysis in the months ahead.
Pillar 8: Invest in American Agriculture for Climate Solutions
The SCCC’s recommendations for agriculture seem like a heavy lift and involve multiple agencies and programs. Are these actions even doable?
Ann M. Bartuska: The report positions the Conservation Title of the Farm Bill to incentivize land owners and agricultural producers to "farm carbon." This strategy effectively places programs that can be very flexible into the Farm Bill, an established piece of legislation. By calling out the Regional Conservation Partnership Program, the Solving the Climate Crisis action plan allows for a watershed-scale integrated approach, using multiple mechanisms to achieve the carbon sequestration goal. Targeting the Conservation Reserve Program by increasing funding makes a lot of sense, enabling more landowners in the queue to enroll in the program. Increasing funds and providing guidance on best practices will increase enrollment. Similarly, the Crop Insurance Program has been underutilized to achieve conservation goals, so including it to achieve climate stewardship is a significant evolutionary step.
What is missing is the recommendation that the US Department of Agriculture (USDA) do an analysis to identify priority areas where carbon sequestration goals can be achieved optimally. Not all regions are created equal, nor are all plant species equal in sequestering carbon. The prior administration identified target watersheds to prioritize and integrate programs, rather than being a scattershot across all states.
Credit: StockStudio Aerials/Shutterstock
8.2 Reduce Agricultural Emissions
What are some of the best ways to achieve the goals laid out in the Solving the Climate Crisis action plan, particularly when it comes to agriculture?
Ann M. Bartuska: The SCCC’s recommendations for agriculture are consistent with a set of actions that USDA began promoting through existing programs during the Obama administration. To optimize the reduction of agricultural emissions, a life-cycle assessment of various production systems would enable the targeting of specific steps where the greatest reduction in emissions is attainable. In addition, a comprehensive life-cycle assessment would not be constrained to the farm itself, but would also include transportation and post-consumer food waste.
A breakthrough step in this plan is the recommendation to expand investments in rural broadband. The absence of this technology is holding producers back from being innovative, and it discourages market expansion. One thing we have learned from the coronavirus crisis is that connecting consumers directly to producers keeps those producers functioning.
The report also explicitly recognizes the value of urban and indoor agriculture—but what has that got to do with climate change?
Ann M. Bartuska: While these approaches won’t achieve carbon sequestration goals at the scale needed, they do accomplish the mitigation of climate-associated weather stress in cities by reducing the "heat island" effect. They also bring fresh produce closer to the consumer, thus adding to nutritional health and contributing to health equity goals.
Pillar 9: Make US Communities More Resilient to Impacts of Climate Change
9.2 Support Community Leadership in Climate Resilience and Equity
What advantages and disadvantages do you see in establishing a National Climate Adaptation Program, as proposed in the action plan?
Ann M. Bartuska: The concept has some value, but I think it will lead to stovepiping adaptation and a breakdown in mitigation measures. The Solving the Climate Crisis action plan is silent on where this program will be housed, and no shortage of agencies is lining up to get the authority. I think it could be set up as an action analog to the US Global Change Research Program, which is housed within the executive branch and the Office of Science and Technology Policy, but which has a congressional mandate to deliver a comprehensive and integrated research program about global change and produce the National Climate Assessment. Thus, no one agency or department has primacy, but all have to come to the table to get their budget approved by Congress.
What is missing from this section is the explicit charge to include a criterion for investment in adaptation or mitigation in any future infrastructure bill.
9.3 Partner with Tribes and Indigenous Communities for Climate Adaptation and Resilience
Does the SCCC’s plan offer any viable measures that can help communities adapt to climate change?
Matthew Wibbenmeyer: The SCCC recommends increased funding for states, tribes, and territories to implement climate adaptation programs. This funding could be a critical component in achieving the report’s goals with respect to adaptation for two reasons. First, the proposal stresses the importance of adoption of resilience-based building codes and standards within the United States. Such standards can be critical for determining how much damage communities suffer from disaster events. For example, the November 2018 Camp Fire destroyed 51 percent of single-family homes in Paradise, California, that were built before California implemented a statewide building code for high-fire-risk areas. Only 18 percent of homes built after the building code was adopted were destroyed. Despite evidence that building codes and careful land use planning can be effective in reducing damage in disasters, development in risky locations continues unchecked in many areas. Adaptation grants can serve as a “carrot” the federal government can use to incentivize communities to adopt smarter building strategies.
Second, the proposal stresses the disproportionate exposure to climate risk that communities of color, low-income communities, and tribal and indigenous communities face. These communities will face steeper challenges in adapting to climate risk, and climate adaptation grants can be used to ensure these communities meet these challenges.
Pillar 10: Protect and Restore America’s Lands, Waters, Ocean, and Wildlife
10.1.2 Lift Up America’s National Parks and Public Lands as Part of the Climate Solution
What’s missing from the SCCC’s recommendations related to national parks and public lands?
Ann M. Bartuska: The measures here seek to reduce the maintenance backlog with an eye toward increasing resilience to climate change. The focus placed on the US National Park Service addresses only part of the issue. National parks and their iconic landscapes are often surrounded by lands managed by the US Forest Service or the Bureau of Land Management. The goals set for the US agricultural sector take a landscape approach that includes all of the associated public lands, and so should these. This approach will probably require prioritizing lands and regions with particular vulnerabilities. Similarly, investing in national parks does not necessarily reveal the vulnerabilities adjacent to the parks. Picture a healthy, resilient Yellowstone, but with fires and floods raging on the surrounding highways—that just doesn't make sense.
10.1.4 Protect and Restore Forests and Grasslands
How comprehensive are the forest management recommendations in the Solving the Climate Crisis action plan?
Ann M. Bartuska: The SCCC report mentions old-growth forests, young-growth forests, urban forests, reforestation, avoiding deforestation—the report has them all, calling for an assessment of optimal land use and associated carbon gains. Any such analysis should include a consideration of market impacts and any related vulnerabilities.
Support of a life-cycle analysis of wood use and wood products, including biomass for energy, is key. Any such analysis must incorporate regional variability, as the forestry in the Southeast, for example, is quite different from the forestry in the Pacific Northwest.
Any reforestation or afforestation legislation must consider the forest life cycle, if the goals are to be achieved, as I have noted in a Common Resources blog post about the Trillion Trees Act. Seeds and nurseries are required to produce the seedlings for planting. Investment in these early steps and a focus on post-planting management is critical for the long-term success of reforestation.
10.2 Make Public Lands and Waters a Part of the Climate Solution
Would the federal leasing recommendations, which the SCCC suggests for fossil fuel production on public lands, achieve the purported goals related to raising revenues and reducing greenhouse gas emissions?
Brian C. Prest: The SCCC report proposes two policies affecting fossil fuel production (coal, oil, and natural gas) on public lands: imposing a moratorium on all new federal fossil fuel leases, and increasing the royalty rates on new onshore leases. These two proposed policies have the dual goals of reducing greenhouse gas emissions and increasing the return to taxpayers on federal resources.
RFF researchers have previously studied how increasing royalty rates on federal coal production can internalize its negative externalities. Work by other researchers, including RFF University Fellow James Stock, has also found that this approach can generate substantial reductions in greenhouse gas emissions—as much as three-quarters as large as projected for the Clean Power Plan. With respect to oil and gas, the two sets of policies in the SCCC report would lead to very different impacts on emissions and royalty revenues. Increasing onshore royalty rates from 12.5 percent to 18.75 percent (which is already the royalty rate commonly charged for offshore leases) as proposed in the SCCC report would reduce emissions only modestly, in part because the policy would affect only onshore federal production. Onshore federal production focuses more on natural gas, which has a lower emissions intensity than oil. By contrast, federal oil production, which has a larger carbon footprint, is concentrated offshore and would be relatively unaffected by this policy. While the emissions’ impacts of higher onshore royalties is likely to be small, the higher royalty rate would bring in billions of dollars in additional revenues.
By contrast, a moratorium on both onshore and offshore federal leasing would generate much larger domestic emissions reductions (although the impacts on global emissions would be smaller than the domestic reductions due to “carbon leakage”), but would reduce production leading to billions of dollars of lost royalty revenues. For example, in 2019, the US Department of the Interior collected $8 billion in royalty revenues from federal oil and gas leases (about two-thirds of which were derived from offshore wells)—a revenue stream that would be cut sharply by a moratorium.
A third policy option that the report does not consider is charging “carbon adders” on new oil and gas leases that would reflect the social cost of carbon. Carbon adders would internalize the externalities associated with the climate impacts of oil and gas. Preliminary estimates in my ongoing research at RFF (forthcoming paper to be released later this summer) suggest that charging carbon adders on federal leases could generate much of the emissions reductions that a moratorium would achieve, while also generating many billions of dollars in additional revenue.
