Coronavirus may get America to pass its biggest climate bill yet

In crisis, a chance.
In crisis, a chance.
Image: REUTERS/Kevin Lamarque
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Action on climate change in Washington, DC happens in tiny, arcane steps. A biofuels bill in Iowa. Wind power subsidies for Rhode Island. Credits for carbon capture in tax code section 45Q. But for a clean energy transition that truly safeguards the climate, the country needs moonshot legislation—a bill that would authorize billions of dollars to redirect the economy away from fossil fuels and toward a low-carbon future.

Historically, those kinds of bills only happen on the heels of a crisis. The coronavirus pandemic is one of them.

Congress is frantically trying to counter the economic devastation wrought by bringing the world’s largest economy to a virtual standstill. The $2 trillion stimulus to protect public health and get cash into the hands of people and businesses is likely the first of several. And as Congress tries to resuscitate the economy, the bills that follow have the potential to include the first big climate legislation since the passage of the American Recovery and Reinvestment Act in 2009.

Its outlines are already visible. Democrats in the Senate held up a public health and disaster relief bill this week by demanding accountability for how the money will be spent. They called for attaching conditions to industry bailouts, including greenhouse gas emission reductions from airlines.

While the bickering may be especially contentious in today’s hyperpartisan climate, similar stories have played out before. 

The first was after a 1973 oil embargo by Arab nations that sent prices soaring. As gasoline dwindled, lines stretched for blocks and gas tanks began to run dry. Angry motorists even murdered each other in line. To combat the crisis, US president Jimmy Carter procured billions of dollars for solar, nuclear, and energy efficiency technologies, established the Department of Energy, and signed the National Energy Act in an ill-fated effort to kick America’s oil habit.

The next time was in 2009, when the collapse of sub-prime mortgages sparked a financial crisis. The US economy tanked sending stock market indexes down as much as 54%. With the recession in full tilt, Barack Obama’s administration worked with Congress to craft what was essentially a $90 billion clean energy bill tucked inside the broader $831 billion stimulus package, said Michael Grunwald, a journalist who wrote a book on the stimulus plan.

The legislation, “the biggest clean energy bill in US history,” came after decades of failure. In 1998, Democrats had failed to bring even a modest $6 billion clean energy bill over the finish line under Bill Clinton. A subsequent attempt, the Energy Policy Act of 2005 under George W. Bush, mostly funded nuclear and fossil fuel initiatives such as “clean coal.”  

Yet the 2009 American Recovery and Reinvestment Act was different. Rather than fund a few proven technologies, its massive size allowed thousands of bets to be placed across the public and private sector on energy efficiency, grid modernization, transportation, and renewable energy. A few wins, it was hoped, could change the game.

“The idea was to let a thousand flowers bloom and see what stuck,” said Grunwald. “[Politicians said] ‘We’re not picking winners and losers, we’re picking the game.’ And it worked, unbelievably.”

For every ostensible failure, such as the $535 million loan to defunct US solar manufacturer Solyndra, successes such as Tesla have transformed their industries. Hundreds of thousands of new jobs emerged from the renewable and energy efficiency sectors (which have now eclipsed the traditional fossil fuel industry, based on Department of Energy data). 

At the same time, China and Europe executed their own renewable energy stimulus plans, driving costs down for renewable energy and electric vehicles. Without these efforts, argues Grunwald, it’s unlikely we would be living in a world where wind and solar energy have begun displacing fossil fuels, LED lighting is ubiquitous, and electric vehicles are overtaking internal combustion engines.

Talk of a green stimulus is back

With the global economy moving toward life support, the head of the International Energy Agency (IEA) wants the trillions of dollars in new spending to address the twin crisis of climate change and a global recession. “This is a huge opportunity we cannot miss,” said Fatih Birol in an interview last week. “I am talking with several governments and international financial institutions leaders because they are all busy designing stimulus programs for the economy.” 

And as the coronavirus tightens its grip on the US economy, talk of a clean energy stimulus is back in the halls of Congress.

The grand ambitions of 2009, for now, are not on the table. Congress is working through a three-phase, more than $2 trillion stimulus package focused on emergency funding for hospitals, workers, and industries edging toward collapse. As industries come to Washington looking for grants and loans, Congressional Democrats are looking to the US auto bailout as their model. 

Starting in 2008, GM and Chrysler took about $80 billion from the US Treasury before declaring bankruptcy and restructuring operations. The Obama administration used the moment to curb the industry’s emissions, implementing strict new fuel efficiency standards. By 2025, the 54.5-miles-per-gallon standard will roughly halve emissions from cars and light trucks.

Airlines and cruise lines may be next. Senate Democrats singled out the two industries in a March 18 letter to Congressional leaders. “Given the poor environmental records of some companies in these industries, we believe that any such financial assistance should be paired with requirements that companies act in a more responsible fashion,” they wrote

Renewables may see a package of their own. Supply chain issues in China, and expiring wind and solar tax credits, mean even a few weeks’ delay may permanently derail some projects and lead to canceled contracts. Six trade associations, including stand-alone energy storage, have requested extensions of tax credit deadlines, and conversions of some credits to direct payments. 

House Democrats took up the call: No less than 160 members signed a letter to Congressional leaders asking that support of wind, solar, electric vehicles, and energy efficiency and storage be included in any must-pass legislation. Trump had blocked these before, but may not have a choice now. The last time such a major extension was passed? The 2009 stimulus bill.

This time is different, to be sure. A decade ago, the stimulus plan for clean-tech was about cost: How can the government make renewable energy competitive in the private market? Wind turbines, solar panels, and electric cars were scarce and expensive in 2009. Ten years later, they’re often cheaper and faster to build than their fossil fuel alternatives. 

Today, a stimulus plan will be about scale. Existing high-carbon coal, gas, and oil infrastructure needs to be replaced as fast as possible. That won’t happen in the market on its own. Most infrastructure is too long-lived to warrant replacing it on a timetable that meets international climate targets: reducing emissions to net-zero by 2050 to prevent temperatures from rising more than 2°C.

Renewable energy is already the market leader for new energy investments: Renewables have outpaced fossil fuels since 2014. But replacing existing infrastructure depends on two factors, according to a 2019 study in the journal Environmental Research Letters: continued declines in the price of wind and solar generation (now well underway), and government policies setting a target for CO2 emissions. 

If there’s a stimulus plan for carbon-free technology, it will likely try to pull this last lever.