Tis the season … for climate policy frameworks.
President-elect Joe Biden has pledged to rejoin the Paris climate agreement on Day One and unwind four years of environmental rollbacks. And then what? His transition is picking through a raft of policy ideas and frameworks.
A big opportunity: Green recovery plans being drawn up by nations could shave projected greenhouse gas emissions by a quarter by 2030. Biden has pledged to put climate and a just transition at the center of his agenda and spend $2 trillion over four years on climate.
Some proposals that have caught our eye:
- Material disclosure. Climate21, a group of former government officials and experts, argues for a “whole-of-government approach.” In a 300-page blueprint, the group lays out detailed actions that a dozen federal agencies can take, from mandating that corporations disclose material climate-related financial risks to using the government’s procurement power to steer spending to American-made, green and fair labor purchases.
- Climate innovation. The U.S. needs to increase spending on climate research fivefold, and “revolutionize the world’s physical economy,” writes Bill Gates. His book, “How to Avoid a Climate Disaster,” is due out in February. Gates wants to see a new National Institutes of Energy Innovation to focus climate funding (the impact of the National Institutes of Health, he says, has been “mind-blowing”). Separate institutes for transportation and other sectors, could be spread across the country and help move products from basic research to commercialization.
- Carbon markets. Putting a price on carbon, via a tax or cap-and-trade or other system, is widely embraced as a way to use market signals to shift capital and reduce emissions. The game changer: an international carbon trading market that brings together U.S., China and Europe, Mark Campanale of Carbon Tracker told ImpactAlpha. Working groups are forming to explore the idea before world leaders meet at COP26 in Glasgow next November.
- Green bank. Connecticut, Hawaii, Michigan, Nevada, New York, and Rhode Island are among the dozen or so states that operate green banks – public or nonprofit financial institutions that mobilize capital for clean energy, green infrastructure and emissions reduction projects. Connecticut Green Bank’s Bryan Garcia is on the Biden transition team. A national green bank, owned by the federal government, could mobilize private capital towards decarbonization and climate resilience, says the Center for Climate and Energy Solutions. A U.S. climate bank funded with $35 billion could activate at least $1 trillion via co-investment, capital recycling and balance sheet leverage, according to the Coalition for Green Capital (see, “Green banks being prepped for the U.S. national stage (again)”).
- National Investment Authority. America’s aging infrastructure is in dire need of an overhaul at the same time the transition to a low-carbon economy requires greening of the power grid, transportation, food production and manufacturing. Cornell professor Saule Omarova proposes a National Investment Authority akin to the European Investment Bank, the E.U.’s infrastructure lender, but with equity investment authority as well. A National Infrastructure Bank could make loans and offer guarantees, insurance, securitization, while a venture capital arm could solicit private investment into infrastructure funds for “transformative” projects such as clean energy and rural broadband. The asset manager could also, during times of crisis, manage federal relief or economic stimulus funds and take stakes in bailed out corporations – rather than relying on Wall Street to do the job, Omaraova told ImpactAlpha. “We really need to be bolder and more proactive if we want to solve the problems of such magnitude that we’re facing now.”