November 24, 2020 | Howard Geller
President-elect Biden has promised to address the climate crisis as one of his top priorities, and to do so in a way that creates millions of well-paying jobs while advancing environmental justice. The President-elect’s Clean Energy Plan includes some noteworthy national goals including achieving carbon-free power generation and cutting the carbon footprint of our building stock 50 percent by 2035, and constructing 500,000 public charging stations to accelerate the transition to electric vehicles (EVs).
A cornerstone of the Biden plan is to provide $2 trillion in federal funding over four years for clean energy and climate measures. The proposed areas of investment run the gamut from retrofitting millions of homes and commercial buildings, incentives for EV purchases and charging infrastructure, upgrading transportation infrastructure and public transit systems, increased R&D on climate-friendly technologies including energy storage, zero net energy buildings, and carbon capture and sequestration, and incentives for greenhouse gas (GHG) emissions reduction and carbon sequestration in agriculture.
Executive branch action alone can get us part of the way to the President-elect’s laudable clean energy and climate goals. But will the Congress support additional policies? Depending on the outcome of the special election in Georgia, the U.S. Senate may continue to be controlled by Republicans. The best outcome for Democrats is a 50-50 split in the Senate with any tied vote decided by Vice-President Harris. Even in this scenario it may be difficult for the Biden Administration to gain approval of anything close to $2 trillion in new funding for energy and climate initiatives. Likewise, it may be difficult to pass new laws mandating high levels of clean energy, energy efficiency, or deep decarbonization nationwide.
The Biden Administration will need to make some strategic choices regarding where to target clean energy and climate funding. In doing so, partnering with states, local governments, and utilities should be a priority.
States, local governments, and utilities have been leading the way on clean energy policy and emissions reductions for many years — through clean energy and energy efficiency targets in the power sector, clean car standards along with zero-emissions vehicle requirements, or action plans for decarbonization. Supporting and scaling up state and local initiatives can have large impacts relatively quickly while leveraging federal dollars. And these efforts are supported by many Republican mayors and governors, not just Democrats.
One way the Biden Administration can partner with states, local governments, and utilities to achieve deep and enduring reductions in GHG emissions — and also advance the job creation, equity and environmental justice goals in the Biden Clean Energy Plan — would be to provide funding to entities that adopt (or have already adopted) ambitious clean energy policies and focus the federal dollars on the social components of these policies. Here are three suggestions for how to do this.
Reward states and utilities that set ambitious utility sector goals
States and utilities representing over half of national electricity consumption have adopted clean energy standards or targets calling for an 80-100 percent reduction in utility sector carbon dioxide emissions by 2050, if not sooner. The Biden Administration could accelerate achievement of these targets, and encourage more states and utilities to act, by providing significant federal funding to any state or utility that sets a strong and binding near-term power sector GHG emissions target and develops a plan to meet the target. A suitable target would be at least an 80 percent reduction in GHG emissions relative to 2005 levels by 2030.
Federal funding could be provided for assistance to lower income families or small businesses that might face an increase in electricity rates from accelerating compliance with strong clean energy standards, investments in zero carbon technologies in communities that lose tax revenues due to closing of coal-fired power plants, and assistance to workers who lose jobs in the fossil fuel sectors.
With this approach, most of the necessary investment in clean generation and energy efficiency measures is made by states or utilities, and not the federal government. It is already cost effective to deeply reduce utility sector GHG emissions in most parts of the country, so the federal government doesn’t need to further subsidize wind farms, utility scale solar facilities, LED light bulbs, or energy efficient appliances, beyond any tax credits already in place. In this manner, the leveraging of federal dollars can be very high.
Reward states that adopt transportation electrification policies
The Biden Administration is likely to reverse Trump’s attacks on Clean Car Standards, offer additional incentives for EVs and EV charging infrastructure, and support manufacturing of EVs around the country. In addition, the new Administration may be willing to adopt a ZEV mandate that includes a ban on the sale of new vehicles with internal combustion engines at some point in the future. The federal government could also reward states that enact these policies in the near term, focused on incentivizing more states to follow California’s lead on adopting Advanced Clean Car Standards including a ZEV mandate and the Advanced Clean Trucks Rule for medium and heavy duty trucks. Additional action at the state level could pave the way to the Biden Administration eventually adopting these policies nationwide.
Federal funds could be provided for certain designated purposes that support policy implementation and advance equity, such as assisting lower income families in acquiring EVs, expansion of public charging infrastructure in rural areas, replacing polluting diesel buses with electric buses, and helping truck owners with the substantial extra cost of acquiring zero emission trucks. By partnering with states on these goals, the impact on GHG emissions could be very large while limiting the federal cost to a modest level.
Reward states and cities that adopt all-electric or net zero energy new building requirements
A number of cities, counties, and states are starting to adopt building energy codes requiring highly efficient, all-electric or net zero energy new buildings. The federal government could provide funding to reward jurisdictions that do this and assist with policy implementation. Funding could be provided for education and training of builders and contractors, inspection and compliance activities, financial assistance for affordable housing properties, and incentives for new qualifying homes or commercial buildings constructed in income-challenged communities.
Once again, the investment in new energy efficient all-electric homes and commercial buildings would be made mainly by the private sector, with high leveraging of federal funding provided to state and local governments for social purposes and policy implementation. In most regions, highly energy efficient and all-electric homes are already cost-effective on their own on a lifecycle cost basis.
These three proposals are not the only ways the federal government could foster and support strong climate action at the state and local level. It could also support state and local efforts targeting building retrofit or GHG emissions reduction in the industrial sector. In general, the level of federal funding for these initiatives should be substantial to help convince additional jurisdictions to adopt the policies, as well as support successful policy implementation. Total funding could be in the range of $25-50 billion per year, which is a small fraction of the $2 trillion over four years proposed in the Biden Clean Energy Plan.
Given the reduction in tax revenue caused by the COVID-related economic recession, states and local governments desperately need financial resources to implement their climate plans and meet GHG emissions reduction targets. Federal funding, tied to state and local policy adoption, will help states and local governments meet their targets and do so with a focus on job creation and environmental justice. And national efforts to confront the climate crisis and achieve deep decarbonization of our economy are more likely to succeed if the federal government actively partners with states, cities, and the private sector.
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ABOUT THE AUTHOR: Howard Geller is the Executive Director of SWEEP, a public interest venture he founded in 2001.
