By Bloomberg Green
Joe Biden’s victory gives the people who dream up big climate ideas something they haven’t experienced in years: an opportunity to wield power in U.S. and shape the future of the world’s second-biggest source of greenhouse gases.
The president-elect will take office having made unprecedented commitments to address global warming, and with a 15-year plan to create carbon-neutral electricity across the U.S. on the way to achieving net zero emissions by 2050. Biden has promised to spend $2 trillion on a sweeping climate-and-job agenda. Getting that done wouldn’t be easy, especially with control of the Senate poised on a knife’s edge. And the U.S. will be playing catchup, after falling far behind other leading economies on climate goals.
But there are powerful climate levers that can be pulled from inside the White House, and plenty of reason to expect that a president who prioritizes climate action can drive policy. Even without help from the federal government, the Trump years saw American businesses build out renewable power and ditch polluting fuels. Imagine what might happen under a president who has said he will rejoin the Paris Climate Agreement as one of his first acts?
That’s what Bloomberg Green asked a group of creative climate thinkers to do. We invited policy-minded people from think tanks, business, and finance to play White House climate counselor and give their best advice to Biden on his early climate priorities. The ideas run the gamut from carbon pricing to new power lines for renewable electricity to giving rural Americans a seat at the policy-making table. One thing everyone agrees on: As president, Biden will have his work cut out for him.
Michael Greenstone, The Milton Friedman Distinguished Service Professor in Economics, University of Chicago
Bring back the social cost of carbon.
“The social cost of carbon—the monetary value of the damages due to the release of an additional ton of carbon dioxide (CO₂)—is the most important number you’ve never heard of. Simply put, it calculates the costs of climate change, and therefore the benefits of climate rules that restrict CO₂ emissions, making it central to cost-benefit analyses required for any climate regulations.”
“In 2009 and 2010, when I was the chief economist at the Council of Economic Advisors, I co-led with Cass Sunstein an interagency working group that developed the first U.S. government-wide social cost of carbon. President Trump reversed this progress, disbanding the interagency working group of climate scientists, economists, lawyers, and other experts. Mandated by the courts to have a social cost of carbon in place, his Environmental Protection Agency set it at between $1 and $7 per ton—far lower than the prior estimate of $50 and far removed from the frontier of scientific and economic understanding.”
“A first order of business for the Biden administration should be to charge an inter-agency group with developing a new social cost of carbon that is based on frontier climate economics and science. The administration should also set an interim figure that makes improvements on the Obama Administration estimate by using a discount rate—a translation of future climate damages into their present value—no higher than 2% to reflect the profound changes in global capital markets over the last 15 years. These actions will pave the way for more ambitious regulations that appropriately protect all Americans, especially the most vulnerable, from climate change.” —As told to Eric Roston