Let’s say that you want someone to do something. Like mow the lawn, for example, or stop spewing carbon dioxide into the atmosphere and heating the planet to increasingly intolerable temperatures. There are two ways to go about it: You can create penalties, like withholding a weekly allowance, or in the case of big polluters, charging them higher taxes. Or you can create incentives — a payment for lawn-mowing, or a boost to sources of renewable energy.
For decades, most experts have assumed that U.S. climate policy should include both. Without some sort of tax on carbon dioxide emissions or a mandate to generate electricity to clean sources, the thinking goes, the country simply cannot be certain that emissions cuts will happen in the time allotted. (The Biden administration has promised to slash carbon pollution by 50 to 52 percent by 2030, and to zero by 2050.)
Now, however, as Congress grapples with a trillion-dollar reconciliation bill, that thinking has been thrown into jeopardy. The bill was supposed to be the biggest climate step ever taken by the United States. But thanks to some opponents in the Senate, all that’s likely to be left in the bill are incentives — and, as President Biden prepares to travel to Glasgow, Scotland, for the next U.N. climate summit, it’s not clear that those incentives will be enough.
Democrats only have 50 votes in the Senate — the slimmest possible majority. And earlier this month, Senator Joe Manchin threw cold water on Biden’s plans to create the Clean Electricity Payment Program, which would reward utilities that switched to clean energy sources and penalized those that kept emitting fossil fuels. According to the modeling group Energy Innovation, the program, often called the CEPP, would have accounted for approximately 20 to 35 percent of the total emission cuts in the reconciliation plan until 2030, or 250 to 700 million metric tons of carbon dioxide per year.
The senator from West Virginia is now reportedly taking aim at the final “stick” in the reconciliation bill, a fee on emissions of methane, a greenhouse gas 80 times more potent than CO2 in the short term. The methane fee would have provided an additional 12 percent of the emissions cuts in the package.
That leaves the Biden administration and Congressional Democrats with only carrots to work with: tax incentives for renewable energy, nuclear, and carbon capture; tax credits for electric vehicles and car chargers; and cash for a host of other carbon-cutting priorities. The $150 billion that was allocated to the clean electricity program will likely be moved toward this array of incentives, with the final climate part of the package expected to come with a price tag of around $500 billion over 10 years.
Experts say that putting tax credits and other spending measures in place of the CEPP would still cut emissions — just not as much. According to Representative Sean Casten, a Democrat from Illinois, the incentives could “maybe make up half” of the emissions cuts promised by the clean electricity program. But there’s no promised timeline: The CEPP committed the country to wiping out carbon emissions from electricity generation by 2035. “There’s nothing else we can do that actually commits to that schedule,” he said.
Josh Freed, senior vice president for climate and energy at the nonprofit Third Way, says that tax credits can go a long way but come with much greater uncertainty. “The market is far from perfect,” he said. “Leaving it to incentives means that the deployment of clean energy is a lot less even.” The places that need to decarbonize the most — like Manchin’s coal-rich state of West Virginia — are the least likely to respond to lower taxes.
All that means reaching Biden’s stated climate goal of cutting emissions in half will likely be out of reach just based on the reconciliation bill and its cousin, the bipartisan infrastructure bill. That doesn’t make the goal impossible, however; according to modeling last week from Rhodium Group, the U.S. could still hit the target if virtually everything else goes right.
But what a big “if.” Twenty-five states would need to set their own binding targets to reach 100 percent clean electricity, and the Biden administration would have to ramp up executive actions curbing greenhouse gas emissions. Those executive actions could be overturned by future administrations, and states have been sluggish on implementing strict carbon cuts.
Still, there are reasons to be optimistic. According to a report from the nonprofit research group Resources for the Future, a ten-year extension of clean energy tax credits could go a long way toward decarbonizing the country’s electricity even without the CEPP. Currently, fossil fuels provide about 60 percent of America’s electricity; with tax credits, the report estimates that number would be cut in half by 2030. Not enough to reach Biden’s carbon-cutting goals — which would have fossil fuels providing 20 percent of electricity by then — but close.
Zeke Hausfather, director of climate and energy at the Oakland-based think tank Breakthrough Institute, says that ensuring new incentives are “technologically neutral” would also get the Biden administration closer to its target. That means supporting nuclear power as well as renewables, and ensuring that the country’s remaining nuclear plants — which provide around 20 percent of the country’s electricity — keep running for at least another decade.
Ultimately, the choice of carrot or stick matters doesn’t matter as much as cutting emissions, period. While something like a carbon tax or clean electricity program may be the most efficient way to slow global warming, that doesn’t mean Congress will pass either of them. And at the moment, anything is better than nothing. Leah Stokes, a professor of political science at the University of California, Santa Barbara, says that binding regulations on emissions are hard to get passed anywhere, not just in the United States. Incentives, she said, will be a big start that can be followed up with more action later.
“I have Lenny Kravitz stuck in my head,” she said. “‘It’s not over til it’s over.’”