Beijing also broke trade rules and made it tough for U.S. companies to compete. So when Congress finally passed a climate plan in 2022, lawmakers stuffed it with protections for domestic manufacturing, focusing U.S. efforts on the critical — yet inadequate — task of cutting America’s carbon footprint and doing so while walling off the country from cheap Chinese imports.
Inadequate because, as Michael Greenstone, director of the new Climate and Energy Institute at the University of Chicago, estimates, nearly 80 percent of worldwide carbon emissions between now and the end of the century will likely come from countries outside the Organization for Economic Cooperation and Development, which includes most rich nations and some middle-income countries. While global emissions have stopped rising, growing demand for energy in these poorer countries is expected to push emissions back up.
Washington should encourage the development and spread of technologies that will accelerate decarbonization across the world — most critically, across the relatively poor countries that will contribute most of the greenhouse gas emissions in decades to come.
Still, the main tool of U.S. climate policy, the 2022 Inflation Reduction Act, pays little attention to decarbonization outside the nation’s borders. U.S. politics are still stuck on the notion that contributing to decarbonization in India and Bangladesh is foreign aid — a favor — rather than a contribution to the well-being of all humans, including Americans.
True, the 2022 law’s incentives to develop new low-cost energy alternatives will contribute to decarbonization everywhere. Driving down the cost of next-generation battery technologies, clean steel manufacturing, hydrogen power and carbon capture techniques would help the whole world. But the U.S. strategy should reconsider a slew of policies that are directly slowing down decarbonization. Onerous tariffs on things such as China’s cheap solar panels will make decarbonization more expensive in the United States and abroad, as the United States presses other countries to join in raising barriers against China’s products. U.S. officials have pressured Mexico to deny incentives for a large plant for electric vehicles planned by Chinese automaker BYD, which might slow or even scuttle the deal and hinder Mexico’s transition from fossil fuels.
Second-order effects from American protectionism can also push the climate in the wrong direction. Limiting market access for Chinese clean energy technologies blunts the economies of scale that help keep their prices low, potentially raising the prices for these technologies everywhere. The United States would do better for the climate by focusing on how to speed up their deployment in countries that have a hard time affording the transition.
Mr. Greenstone suggested in an interview a potential way forward. The global discussion over climate change has been caught up for years in a dead-end argument between rich countries, which resist making sacrifices in the service of decarbonization until poor countries join the effort, and poor countries, which point out that most of the carbon in the atmosphere today was put there by the rich. These positions open an opportunity for a deal: have rich countries pay poor countries for specific, verifiable emissions cuts. There are major challenges to his proposals, including how to put a price on carbon that would enable such a global trade, so far a political impossibility in the United States. But it promises to provide the cheapest path toward worldwide decarbonization.
Short of that, the United States should spend less time worrying about standing up subsidized domestic copies of foreign clean energy manufacturing industries. Absent bona fide national security concerns — such as preserving access to critical minerals used in batteries and other technology — the clean energy economy needs to be global.