COP26: US Thin Green Gruel

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As the world gets ready for COP26, it is a great time to review the Biden administration’s policies on climate change and know what to expect in Glasgow.

Before now, we’ve been producing research to get everyone up to speed on climate change and how countries have been adopting policies in response to it. Here are the articles: Marley and ESG: a brief History, ESG Supercharged by government spending, Why ESG Now?EU Carbon Plan, and Fastest Growing Investment Theme.

As we’ve been telling clients and audiences ever since we did our original work on the 2020 Democratic candidates policy proposals, the Biden victory represents the largest shift in public policy on the environment in our lifetime. Right from the series of laws, regulations, executive orders, and bills it has introduced, the Biden administration has adopted a climate change policy that is very different from the Trump administration. It’s been more or less a return to the Obama administration’s climate change policy of reducing carbon emission with the goal of reducing CO2 and creating alternative energy sources.

Current US Plans

“The whole world is watching. If these bills don’t come to pass, then the U.S. will be coming to Glasgow with some fine words” but “not much else. It won’t be enough.”Rachel Kyte, dean of the Fletcher School at Tufts University and a climate adviser for the United Nations Secretary-General (NYT

The Senate recently passed a $1.2T infrastructure bill and sent it to the House.  This bill focuses on physical infrastructure. And although a significant portion of the figure is on funding usually allocated to infrastructure every year, it contains $544B in new spending. Joint Committee on Taxation (JCT) breaks down the spending this way:

  • $110 billion for roads and bridges
  • $66 billion for railroads
  • $65 billion for the power grid
  • $65 billion for broadband
  • $55 billion for water infrastructure
  • $47 billion for cybersecurity and climate change
  • $39 billion for public transit
  • $25 billion for airports
  • $21 billion for the environment
  • $17 billion for ports
  • $11 billion for safety
  • $8 billion for western water infrastructure
  • $7.5 billion for electric vehicle charging stations
  • $7.5 billion for electric school buses

There is $272B in green spending:

  • $134B Part 1 – Renewable Electricity and Reducing Carbon Emissions
  • $43B Part 2 – Renewable Fuels
  • $39B Part 3 – Green Energy and Efficiency Incentives for Individuals
  • $42B Part 4 – Greening the Fleet and Alternative Vehicles
  • $9.6B Part 5 – Investment in the Green Workforce
  • $5B Part 6 – Qualified Environmental Justice Credit

The $1.2T infrastructure bill is the first installment of Congressional Democratic leaders’ “two-track” legislative strategy to facilitate President Biden’s economic agenda. The second installment is the partisan $3.5T social policy and spending bill. The $3.5T bill has substantial allocations to climate change and breaks down this way between two major House committees relating to climate change:

Committee on Energy and Natural Resources $198B

  • Clean Electricity Payment Program
  • Consumer rebates to weatherize and electrify homes
  • Financing for domestic manufacturing of clean energy and auto supply chain technologies
  • Federal procurement of energy-efficient materials
  • Climate research
  • Research infrastructure for DOE National Labs
  • Hard Rock mining
  • Department of Interior programs

Committee on Environment and Public Works $67B

  • Clean Energy Technology Accelerator that would fund low-income solar and other climate-friendly technologies
  • Environmental justice investments in clean water affordability and access, healthy ports, and climate equity
  • EPA climate and research programs
  • Federal investments in energy-efficient buildings and green materials
  • Appalachian Regional Commission and Economic Development Administration economic development and transition programs
  • Investments in clean vehicles
  • Methane polluter fee to reduce carbon emissions

All of these do not include initiatives like the Clean Electricity Payment Program (CEPP) or a Carbon Border Adjustment Tax (CBAT).  Both may be included or excluded from the final bill.

Recent political developments cast doubt on passing the $3.5 trillion social spending bill, but a stripped down version near $2.0 trillion is likely. Negotiations are ongoing and will not be resolved prior to COP 26.

The Biden administration did release a new executive order on U.S. Climate-Related Financial Risk. The goal is to promote the resilience of the U.S. financial system to climate-related financial risks. To accomplish this goal, there are six initiatives which are mainly regulatory and internal federal government policy in nature. This is not the major policy change President Biden would likely have wanted heading into Glasgow.

Having discussed President Biden’s climate change policy briefly, let’s take a look at the US’ involvement in COP26.


Here’s a quick primer on COP 26 from the meeting organisers:

In November, the UK, together with our partner Italy, will host an event many believe to be the world’s last best chance to get runaway climate change under control. For nearly three decades, the UN has been bringing together almost every country on earth for global climate summits – called COPs – which stands for ‘Conference of the Parties’. ‘In that time, climate change has gone from being a fringe issue to a global priority. This year will be the 26th annual summit – giving it the name COP26.

With the UK as President, COP26 takes place in Glasgow. In the run up to COP26, the UK is working with every nation to reach agreement on how to tackle climate change. More than 190 world leaders are expected to arrive in Scotland. Together with tens of thousands of negotiators, government representatives, businesses, and citizens for twelve days of talks. Not only is it a huge task but it is also not just yet another international summit. Most experts believe COP26 has a particular urgency.  

Prior to the meeting, the US has stepped forward, through the EPA, to issue final regulations on hydrofluorocarbons (HFCs), which are commonly used in air conditioning, refrigeration, and foams. But it’s thin green gruel compared to the bigger spending bills. As stated above, the US needed to come to the meeting with the two infrastructure plans in place. Unfortunately, It will not. The recent executive order will be helpful, but will be significant in achieving the US pledges toward carbon neutrality. This means there will be mainly US cheerleading and hand wringing at the event.

This matters on two important fronts. First, the US is unlikely to meet President Biden’s goals for reducing carbon and becoming net neutral by 2050 under the Paris Agreement. Second, the US will not be able to push other countries to be more aggressive in cutting carbon and addressing climate change.

The 190 nations participating in COP26 have an agenda, and this is what you can expect to be discussed.

  • Updated pledges (Nationally Determined Contributions, NDCs) setting tougher targets for reducing emissions by 2030
  • Carbon market mechanisms (taxes)
  • Funding for loss and damage
  • Nature-based solutions (NBS)
  • Common timeframes for countries’ NDCs

Of these, we are closely watching the uptake from Europe’s recently released new proposals for a Carbon Border Adjustment Mechanism. This will likely be a paradigm for the other nations and specifically for the United States.

Overall, COP26 is likely to be disappointing to the activists and environmentalists looking for bigger US action and stronger steps to reducing carbon and reducing the impact of climate change. Without the infrastructure bills passed, the U.S. will not provide enough to the conference to justify a leadership role.











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I'm Andy Busch

If things feel crazy in the world today, that's because they are. We are seeing huge shifts in risk and reward, leading to a lot of economic uncertainty and confusion about where we go from here.

As an economic futurist, I do things a bit differently than your typical economist — going beyond analyzing how today's financial policies impact economic growth, to focus on the super-charged trends driving much of today's global chaos and change.

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