US examines carbon pricing on imports, climate envoy says

John Podesta signals shift in policy targeting goods from ‘dirtier’ countries

By Attracta Mooney, Financial Times, July 1, 2024

The US is examining a potential carbon pricing system on imports among a “range of options”, its most senior climate diplomat said, in what would be a key policy shift as it looks to combat Chinese industrial competition and cut emissions.

John Podesta said the US would fight against “freeriding” by foreign producers of carbon-intensive industrial imports, in an interview with the Financial Times in London.

“We’re not going to just give up our industrial base to people who are dumping carbon and freeriding on a system that doesn’t account for, and in fact, kind of subsidises the dumping of high carbon production cost into open markets,” he said.

Podesta took over the role of US climate envoy from John Kerry earlier this year, after leading the rollout of the Biden $369bn clean energy push under the landmark Inflation Reduction Act signed almost two years ago.

“The global trading system doesn’t properly take into account the embodied carbon in tradable goods,” he said. “So we’re undertaking a review of that, trying to deepen the data that we are going to need to implement a policy framework for that.”

Podesta, who announced a task force for climate and trade in April, said the data it gathered would be factored into the policy considerations.

“We need to decide what we’re going to do about this question on carbon in the tradable goods sector, particularly steel and aluminium, cement, glass, fertiliser, et cetera,” he said.

The increased US focus on the fallout for its industrial sector from trade in carbon-intensive products comes as the EU rolls out its carbon border adjustment mechanism (CBAM), a tariff aimed at imports such as cement and steel. China is also considering expanding its carbon permit pricing system, from presently very low levels for emissions allowances granted to industry.

“What we need is to move towards a global trading system that is going to push towards clean,” Podesta said. “The specific policy mechanism that we will adopt needs to fairly reflect the carbon that is embodied in the goods being produced.”

While there was “no decision about what the specific policy mechanism looks like” yet, he said there was a “bipartisan conversation about how we tackle this question” taking place in the US.

Lawmakers from both sides have put forward proposals targeting carbon-intensive sectors in recent years. Republican senator Bill Cassidy and Democrat Sheldon Whitehouse are among those calling for a carbon tariff that allows the US to take advantage of its less carbon-intensive goods while making foreign producers pay for their dirtier products. 

A report from the Niskanen Center last year found that the US industry was much less carbon-intensive than some of the world’s largest emitters, such as China, India and Russia, but lagged behind the EU.

Podesta also defended the US launch of tariffs this year on Chinese electric vehicles and solar panels, and addressed the concerns that the protectionist moves could result in a slowdown of the green transition.

He argued China dominated important clean energy sectors such as batteries and the critical minerals needed for electrification because of “non-market practices”, and through the heavy use of polluting coal for the production of goods such as steel.

“We have to have a stable market for these products and industries. And I think that if you create a system that has short-term benefits, but a long-term vulnerability, you haven’t created stability in the transition.”

Some Kind of Carbon Tax Is Coming to America, Like It or Not

Fifty countries now have national systems for pricing global warming emissions, and they may soon drag the US into joining them.

Op-ed by Mark Gongloff, Bloomberg News, June 13, 2024

The late economist Milton Friedman, the patron saint of conservative capitalism, didn’t have much use for government involvement in business. But he made an exception for pollution. If an industry spoils the environment, he often said, then the government should tax it until it cleans up its act. Because if polluters can pollute for free, then they are essentially stealing wealth and well-being from everybody else.

When he said that in the 1960s and ’70s, he was talking about smog and the like. But as scientists and oil companies knew then, and we all know now, carbon dioxide is another form of pollution, one that is heating the world and threatening human civilization. Making polluters pay a price for this negative externality, as Friedman would call it, is an idea that is not only conservative and capitalist and moral but also a boon to both the environment and federal budgets.

So, naturally, the world’s shining bastion of conservative capitalism, the United States, consistently rejects Friedman’s idea. Fortunately, plenty of other countries are getting on board with it. And they may soon enough drag the US into joining them.

Fifty countries now have national systems for pricing carbon, involving a carbon tax, emissions trading or a combination of both, according to the latest World Bank tally. These systems cover 24% of the world’s carbon emissions, up from just 7% in 2013.

Dozens of local governments have their own mechanisms, including California, Massachusetts and Washington. Nineteen countries and 13 more local governments are actively debating or preparing to take up the practice, including six more US states.

The US government is one of just three members of the Group of 20 nations that are in no hurry to price carbon. The other two are Russia and Saudi Arabia (and even Saudi Arabia is at least about to launch a voluntary carbon-credit market, for whatever that’s worth). This is not what you would call good company, though it is perhaps understandable — all three are large producers of fossil fuels. Refusing to price carbon amounts to a $700 billion annual gift to US oil companies.

But the pressure to change is building, even if the pace is still too slow. Carbon pricing raised a record $104 billion in revenue last year, a far cry from the trillions needed annually to deep-six fossil fuels and avoid the most catastrophic climate change. US involvement would move the needle significantly.

Europe, of all places, may be the source of the most pressure. The European Union is transitioning to a carbon tariff, called the Carbon Border Adjustment Mechanism, that will be fully in place in 2026. This will charge foreign exporters for the emissions they generate in the production process, which will move the market’s invisible hand to favor cleaner production. And it will be fair because EU producers already pay a price for carbon as part of the union’s cap-and-trade system. The tariff and the trading system work together to set a carbon price that everybody pays.

Another key detail about the CBAM is that it gives exporters a break if they can prove they’ve already paid a carbon fee in their home countries. That will push those countries — including the US — to set their own carbon price or get left behind, MIT economist Catherine Wolfram noted in a recent session at Harvard University’s Climate Action Week.

Not that there aren’t plenty of other great reasons for the US to jump on board. At the session with Wolfram was Harvard economist James Stock, who estimated that adding a carbon tax to the Inflation Reduction Act’s clean-energy incentives would cut US carbon emissions by 66% by 2035, easily surpassing the Biden administration’s stated goal of cutting emissions in half by 2030. Without it, the country is on a path to climate failure.

“No models indicate the 2030 US climate target would be met with the IRA alone,” Democratic Senator Sheldon Whitehouse of Rhode Island said on the panel. He has proposed legislation for both a domestic carbon price and a border tariff. “If we want a pathway to climate safety, it will require we do what’s economically and morally right and price carbon pollution.”

A carbon tax could also raise $2 trillion over a decade, Wolfram said, putting a huge dent in the federal budget deficit when everybody is starting to panic about it again. That estimate is consistent with other studies — though a new one from researchers at the University of British Columbia suggests a global carbon tax could raise $2 trillion per year, enough to cover a universal basic income for the entire planet.

As Whitehouse noted, US manufacturers are already two-thirds less carbon-polluting than those in, say, China. This means Europe’s tariff will benefit them even if the US doesn’t lift a finger to impose its own price. But doing so would benefit them even more while also tweaking China. That calculus has inspired bipartisan interest, including a bill by Republican Senators Bill Cassidy of Louisiana and Lindsey Graham of South Carolina proposing their own carbon tariff.

As my Bloomberg Opinion colleague Liam Denning noted, Cassidy has gone out of his way to deny his tariff would amount to carbon pricing. Without a domestic carbon price, a border tariff probably wouldn’t be fair enough to withstand World Trade Organization scrutiny, Wolfram suggested. Still, the bill was another encouraging sign that momentum is growing toward the US finally taking Milton Friedman’s advice. It can’t happen soon enough.

Mark Gongloff is a Bloomberg Opinion editor and columnist covering climate change. He previously worked for Fortune.com, the Huffington Post and the Wall Street Journal.

https://www.bloomberg.com/opinion/articles/2024-06-13/climate-change-carbon-pricing-is-coming-to-america-like-it-or-not?leadSource=uverify%20wall&embedded-checkout=true

SENATOR SHELDON WHITEHOUSE ON CARBON PRICING: THERE’S NO OTHER PATH TO CLIMATE SAFETY

In a wide-ranging discussion at Harvard Climate Action Week, the Democrat from Rhode Island discussed the economic and environmental realities of climate taxation.

By The Salata Institute for Climate and Sustainability, June 11, 2024

Senator Sheldon Whitehouse did not mince words in a panel discussion held on Monday as part of Harvard Climate Action Week: “If we want a path to climate safety, it’s going to require us to do what is economically and morally right, which is to price carbon pollution.”

In a discussion with economists Catherine Wolfram and James Stock, Whitehouse, the Democratic Senator from Rhode Island and Co-Chair of the U.S. Senate Climate Task Force, dove into the fiscal realities and political challenges of passing carbon pricing legislation—an issue the Senator has long championed as being key to safeguarding against the worst effects of climate change.

Held in Sanders Theater, the panel, hosted by the Climate Action Accelerator at the Salata Institute for Climate and Sustainability, focused largely on how different carbon pricing mechanisms work, the building global movement to implement these programs, and what a realistic domestic carbon pricing system might look like.

“One of the big takeaways is that whatever decision it is that we happen to make around the planet next year, including doing nothing, it’s going to be quite consequential,” said James Stock, Vice Provost for Climate and Sustainability at Harvard University and Director of the Salata Institute.

Carbon pricing aims to reduce greenhouse gas emissions by making pollution more expensive to put into the atmosphere. These programs come in two basic varieties—carbon taxes, which place a cost on the amount of emissions produced, allowing polluters to release as much emissions as they are willing to pay for, and emissions trading schemes, also called cap-and-trade programs, which set a limit on the total amount of emissions and require polluters to obtain permits or allowances that grant them the right them to release a certain amount of pollutants.

Carbon pricing programs are already in effect across much of Europe and in parts of South and Central America, Africa, Asia, and Canada, but the specifics, including tax rates and inflation schedules, scope, and revenue allocation, of these programs vary between countries.

The United States currently does not have a federal carbon pricing program, but that may change, panelists noted, due to a confluence of factors, including accelerating climate impacts, U.S. net zero targets, and motivation to address the federal deficit. Global economic pressures play a role, too, noted panelists, as an increasing number of countries tax imported goods based on the amount of pollution that’s required to make them. The European Union’s Carbon Border Adjustment Mechanism (CBAM)—a tariff that will predominantly impact imported goods from the cement, electricity, fertilizer, some metals, and hydrogen sectors from countries outside the EU—will take effect in 2026.

Catherine Wolfram, Professor of Energy Economics at the MIT Sloan School of Management and former Deputy Assistant Secretary for Climate and Energy Economics at the U.S. Treasury, said a key aspect of CBAM is that it offers credits to countries that have carbon pricing programs, incentivizing these pricing initiatives worldwide.

“If the U.S. manages to implement a carbon price, the CBAM momentum will be even more powerful. The U.S. is such a big consumer in the world economy, it will really turbocharge this momentum,” said Wolfram. “If the U.S. doesn’t have a carbon price, the momentum is still going to be there, the U.S. just isn’t going to be participating in it. There will be decisions made and technical details that U.S. companies won’t be able to participate in. I see that as a real drawback.”

A significant portion of the discussion drew from an NBER working paper authored by Wolfram, Stock, alongside John Bistline, Kimberly A. Clausing, and Neil Mehrotra. The paper outlined several tax-based climate policy scenarios that could happen in the U.S. in 2025 and evaluated each scenario’s impact on the domestic economy, emissions reductions, and climate policy adoption abroad. The authors found that scenarios that extend current policies and include a carbon fee would lower emissions the most—up to about 66% by 2035—and would achieve the 2030 emissions reduction goal.

“The economic logic behind product pricing is so potent and so persuasive, I think that the U.S. will come to this realization,” Wolfram said.

Senator Whitehouse agreed but also pointed to obstacles that hinder carbon pricing legislation. Several bills proposing a federal carbon tax have been floated and failed in recent years, but, Whitehouse said, a new wave of them holds some promise.

In December of 2023, Whitehouse and Suzan K. DelBene, the Democrat representing Washington State’s first district, reintroduced the Clean Competition Act, which proposes a border adjustment on imported goods from carbon-intensive industries, including petroleum and fossil fuels, fertilizers, metals, paper, and petrochemicals, with exemptions for lower-income countries. Most revenue would fund grants to help affected industries invest in decarbonization technologies.

Separate legislation sponsored by Republican Senators Bill Cassidy (Louisiana) and Lindsey Graham (South Carolina) also proposes a border adjustment, though specifics of the bill differ. A bipartisan Senate proposal from Democrat Chris Coons (Delaware) and Republican Kevin Cramer (North Dakota) would require the U.S. Department of Energy to conduct a study comparing emissions from certain goods produced domestically to those produced abroad. Whitehouse commended his Republican colleagues for their work.

“I give [Cassidy and Graham] a lot of credit for what they’ve done,” he said. “Obviously, there’s a lot of fossil fuel blowback against them, but they’ve stuck to their guns so good on them.”

Whitehouse added that while bipartisan negotiations on carbon pricing are positive developments and the American public is widely supportive of placing the cost of pollution on polluters themselves, “we have to fight through enormous fossil fuel intervention,” including billions in dark money, in order to enact effective climate reform and enforce it.

The panelists pointed out that there is precedent for a pollution tax in the U.S. Legislation passed in 2022 and originally proposed by Whitehouse places a fee on methane emissions for companies that emit more than 25,000 metric tons of carbon pollution annually. Whether the U.S. will adopt meaningful carbon pricing legislation depends on whether politicians can understand that “there are now no remaining known scenarios for a pathway to climate safety that don’t include carbon pricing,” Whitehouse said. “…There can be no more quarrel on that.”

https://salatainstitute.harvard.edu/senator-sheldon-whitehouse-on-carbon-pricing-theres-no-other-path-to-climate-safety/

Oil and Gas Companies Are Trying to Rig the Marketplace

Op-ed by Andrew Dessler, The New York Times, June 1, 2024

Dessler is a professor of atmospheric sciences and the director of the Texas Center for Climate Studies at Texas A&M University.

Many of us focused on the problem of climate change have been waiting for the day when renewable energy would become cheaper than fossil fuels.

Well, we’re there: Solar and wind power are less expensive than oil, gas and coal in many places and are saving our economy billions of dollars. These and other renewable energy sources produced 30 percent of the world’s electricity in 2023, which may also have been the year that greenhouse gas emissions in the power sector peaked. In the United States alone, the amount of solar and wind energy capacity waiting to be built and connected to the grid is 18 times the amount of natural gas power capacity in the queue.

So you might reasonably conclude that the market is pivoting, and the end for fossil fuels is near.

But it’s not. Instead, fossil fuel interests — including think tanks, trade associations and dark money groups — are often preventing the market from shifting to the lowest cost energy.

Similar to other industries from tobacco to banking to pharmaceuticals, oil and gas interests use tactics like lobbying and manufacturing “grass-roots” support to maximize profits. They also spread misinformation: It’s well documented that fossil fuel interests tried to convince the public that their products didn’t cause climate change, in the same way that Big Tobacco tried to convince the public that its products didn’t harm people’s health.

But as renewables have become a more formidable competitor, we are now seeing something different: a large-scale effort to deceive the public into thinking that the alternative products are harmful, unreliable and worse for consumers. And as renewables continue to drop in cost, it will become even more critical for policymakers and others to challenge these attempts to slow the adoption of cheaper and healthier forms of energy.

One technique the industry and its allies have used is to spread falsehoods — for example, that offshore wind turbines kill whales or that renewable energy is prohibitively expensive — to stop projects from getting built. What appear to be ordinary concerned citizens or groups making good-faith arguments about renewable energy are actually a well-funded effort to disseminate a lie. Researchers at Brown University have revealed a complex web of fossil fuel interests, climate-denial think tanks and community groups that are behind opposition to wind farms off New Jersey, Massachusetts and Rhode Island.

Fossil fuel interests also donate piles of money to sympathetic politicians who then make false claims about renewable energy and push oil and gas on their constituents even when renewable energy is cheaper. After the Texas blackout in 2021, which was caused in part by the failure of the natural gas system, politicians blamed renewable energy, and have since argued that more natural gas is needed to strengthen the state electrical grid.

The Texas grid could certainly be made more robust. But building backup natural gas plants that should ultimately sit idle 90 percent of the time is probably the most expensive way to address the problem, compared with approaches like paying consumers to cut their energy use when the electrical grid nears its limits.

One of the most pervasive pieces of misinformation being spread by fossil fuel interests is that we cannot run our society on renewable energy. It is true that the sun doesn’t always shine and the wind doesn’t always blow. However, we could deal with this by expanding our existing electrical grid to allow us to move clean energy from regions with excess to those with shortfalls. When that’s not sufficient, power sources that can be quickly turned on and off, like batteries or hydroelectricity, can match supply and demand. In the current U.S. grid, natural gas provides the primary balance for intermittent wind and solar, and we can keep using it that way — in very limited quantities — when we need it. One study published in 2020 showed that we could operate a grid that is 90 percent clean energy and 10 percent natural gas by 2035, which would produce energy for a cost similar to that of a grid with a continuation of current policies.

Alarmingly, fossil fuel interests are also looking to dictate how schoolchildren learn about the environment. Children are some of the most powerful messengers when it comes to climate awareness, so fossil fuel promoters are keen to shape their understanding from the start. They have succeeded in getting the Texas State Board of Education to reject textbooks that accurately depict the effects of climate change and extreme weather.

Fossil fuels do deserve credit for getting us to where America is today — rich beyond the dreams of anyone living before the Industrial Revolution. But oil and gas are not the fuels of the future; they are changing the climate and generating air pollution that kills millions of people each year. They also bolster autocratic petrostates, fuel conflicts over energy resources and contribute to geopolitical instability. Simply put, the industry’s lies can cost consumers their health, their money and their security.

With existing technologies, the United States can largely phase out oil, gas and coal. The last 5 percent to 10 percent of that process may be expensive, but credible estimates place the cost of getting to net-zero emissions within the historical range of energy costs. This means that a sustainable future hinges on politics, not technology or science.

Policymakers must now call out the fact that an industry facing obsolescence is distorting the market to try to shut out a superior competitor, clean energy. Make no mistake: Failure to do so may mean a planet no longer able to sustain human life in the style to which we have become accustomed.

https://www.nytimes.com/2024/06/01/opinion/clean-energy-solar-wind.html?searchResultPosition=1

Canada’s fire season erupts, sending harmful smoke into United States

Air quality alerts are in effect in Minnesota and Wisconsin — an unwelcome reminder of last summer, when Canadian wildfire smoke spread south.

By Ian Livingston, The Washington Post, May 13, 2024

Wildfires in Canada have roared back to life, sending harmful smoke into the northern United States — an unwelcome reminder of last summer’s historic fire season that also repeatedly sent plumes of noxious haze southward.

Almost a year to the date from the explosive start to the 2023 fire season, hundreds of fires have erupted in Canada, including a dozen major and out-of-control blazes. At least 500,000 acres (200,000 hectares) of land have burned so far, much of it in recent days.

Smoke from the blazes has led to air quality alerts for much of Alberta and its surrounding provinces, as well as Minnesota and Wisconsin. Edmonton was subjected to red-tinged skies and hazardous air quality over the weekend because of wildfires to its north.

International Falls, Minn., awoke Monday to air quality alerts, which expanded to cover a large portion of Minnesota and Wisconsin, including Minneapolis and Green Bay.

Wildfires roar to life

Even during winter, numerous blazes in Canada — known as “zombie fires” — smoldered beneath the snow. The combination of a warm and very dry winter set the stage for flames to quickly expand this spring.

Belts of extreme to exceptional drought are draped across the zone from central British Columbia to northern Alberta, where many of the worst fires rage. The majority of provincial land from Canada’s west coast to Ontario is experiencing at least moderate drought.

More than 100 fires were burning in British Columbia on Monday morning, and just shy of four dozen in Alberta. Other large blazes were scorching provinces to the east.

The largest uncontrolled fire was burning in the mining region of Manitoba near the border with Saskatchewan, about 400 miles north of the North Dakota border. It had grown to at least 86,000 acres (35,000 hectares) by early Sunday since igniting three days earlier. The fire led to evacuations in the town of Flin Flon and power cuts across the region.

Farther west, a blaze near Fort McMurray in Alberta’s wooded north was also out of control. The fire, about 225 miles from Edmonton, more than tripled in size from over the weekend, according to the Canadian Broadcasting Corp. An evacuation alert was in effect there for residents to be prepared to leave if necessary.

In adjacent eastern British Columbia, another out-of-control fire was threatening Fort Nelson in the Canadian Rockies about 650 miles north of Vancouver. Some residents of that area have also been urged to evacuate.

Smoky skies return downwind into United States

The worst of the smoke from these fires has been near the source in southwestern Canada. The air quality reached Code Purple — the most hazardous level — over the weekend in an area along the British Columbia-Alberta border region, according to the U.S. government’s AirNow pollution monitoring website.

Parts of northwest Minnesota saw air quality decline to Code Red on Sunday, signifying unhealthy levels of smoke pollution; this area even briefly experienced Code Purple conditions. Much of the northern Plains and the Upper Midwest, as well as adjacent Canadian prairies, have experienced at least Code Red levels.

Smaller quantities of smoke riding along the high-altitude winds of the jet stream even reached the East Coast of the United States over the weekend.

Over the next two to three days, hazy skies and the acrid smell of smoke should continue to spread across portions of Canada, the Upper Midwest and the Great Lakes. The smoke may sink southward into the eastern Plains and the Midwest at times on Tuesday.

Fires in Mexico also send smoke into the United States

It’s not just Canada that is sending smoke into the United States. Mexico is also contributing to hazy conditions because of rapidly spreading fires fueled by excessive heat and drought.

A large plume of smoke from Mexico is poised to spread over far-southern Texas, the southern Gulf states and Florida in the days to come.

Like Canada, large parts of Mexico are covered by the two most extreme levels of drought. Its drought has intensified extraordinary and persistent heat, as high as 123 degrees Fahrenheit (51 Celsius) in recent days — the hottest ever observed in May in the Northern Hemisphere, according to weather historian Maximiliano Herrera.

Human-caused climate change intensifies heat, droughts and fire intensity.

What’s next?

Unusually warm and dry conditions are predicted in British Columbia and Alberta into June, leading officials to warn of an elevated fire risk. A developing La Niña climate pattern may eventually offer more consistent rains late summer or fall reducing the threat somewhat.

More broadly, human-caused climate change will continue to elevate the fire risk in Canada because temperatures are climbing so fast in the region. The warming dries out the land surface and makes it more combustible.

Jason Samenow contributed to this report.

https://www.washingtonpost.com/weather/2024/05/13/canadian-wildfire-smoke-minnesota-wisconsin/