A great start for EU-US climate cooperation, but obstacles lie ahead

Joe Biden’s electoral victory has renewed European hopes of putting the brakes on global climate change. But before he becomes a global climate leader the new president faces a string of obstacles not only from Republicans and the US courts but also from within his own party.  Sarah Jackson and Noah J. Gordon have the story.

A lot of hopes for transatlantic climate cooperation have been placed on president Biden’s shoulders. But to bring the US Congress on board might be quite challenging. (Public Domain).

With Joe Biden in power and in the White House, hopes are high for a new chapter in EU-US climate cooperation. The Biden administration rejoined the Paris Agreement on its first day in power, drawing praise from EU leaders like Josep Borrell. “Great to have the US again at our side in leading global efforts to combat the climate crisis,” the EU’s foreign policy chief tweeted.

Things only got better throughout that first week. Biden quickly issued a flurry of executive actions to tackle the climate crisis. Some aimed to address emissions within the US, by e.g. ordering federal agencies to buy zero-emission vehicles. Others, such as plans for a climate summit and efforts to end international financing of high-carbon energy, are more linked to climate cooperation with partners like the EU. More climate cooperation is on the way because US federal agencies have the regulatory power to shape joint standards with the EU in areas like emission measurement and green technology.

These are important measures, no doubt. But they all have one thing in common: they do not involve the US Congress. And the US needs durable climate legislation if it is to achieve Biden’s lofty goals or join the EU in forming a “climate club” whose members put a comparable price on carbon emissions within their borders and apply the same carbon border adjustment to imports from outside the club. Unfortunately, the outlook for major climate legislation on Capitol Hill is not good.

Trouble on Capitol Hill

Climate change remains a deeply partisan issue in the US. With the US House of Representatives safely under Democratic control, all eyes are on the US Senate. The upper chamber, infamous for its arcane procedural rules, only allows legislation to pass with a 60-vote majority due to the filibuster; Democrats have only 50 senators with Vice President Kamala Harris empowered to break ties in their favor. While it’s possible to remove the filibuster with a simple majority vote, moderate Democrat Senators Kyrsten Sinema and Joe Manchin have already signaled they oppose doing so.

This leaves Democrats with two options for passing climate laws. First, they could theoretically convince 10 Republicans to join them, but this is very unlikely given Republicans’ continued opposition to climate action. Even moderate Republicans like Mitt Romney are trying to block Biden’s move to halt oil and gas leasing on federal lands. In 2009, Democrats whittled down the last major climate bill, known as Waxman-Markey, to make it more palatable to business, but it still died in the Senate – and those negotiations didn’t take place in the wake of a bitter impeachment trial. That failed attempt at a climate law is still fresh in the minds of the Congressional leaders who continue to run the party today.

Second, and more realistically, Democrats could use a procedural tool called budget reconciliation, which allows for certain legislation to pass under a simple majority. Since its first use in 1980, budget reconciliation has been used to pass 17 bills, including to pass the major Trump tax cuts in 2017 and to amend the Obamacare health bill in 2010.

But this backdoor route for passing legislation has its limits: it can generally only be used once a fiscal year, and any bills passed this way must pertain to federal spending and revenue. Additionally, such bills must pass the “Byrd rule”, essentially a requirement that they contain no extraneous, non-budgetary provisions and do not increase deficits more than 10 years in the future. Democrats have already seen one policy priority fail at the reconciliation hurdle. On February 26th, the Senate parliamentarian ruled that a national $15 minimum wage fell short of these standards and would have to be removed from the $1.9 trillion COVID-19 relief package expected to be passed under reconciliation in early March.

The pandemic relief bill will be Congress’s first use of reconciliation this year. (Since the process was not used last year, Congress can use it twice in 2021.) Let’s assume Democrats use their second shot at reconciliation—and much of their political capital—to pass a climate-focused bill. What should Europeans expect from it?

No ‘Climate Club’ just yet

Spending money through budget reconciliation is the easy part. Democrats could use the procedure to pass a major infrastructure package to clean up the US economy, as Biden proposed during his campaign. They could fund electricity grid upgrades, car charging stations, and emission-reducing building renovations as well as clean energy research. This has been the focus of congressional talks so far: Senator Manchin recently signaled his support for a $4 trillion infrastructure package tied to ample funding for fossil fuel communities to transition and investments in carbon capture and storage technology, a favorite of moderates. Such a bill could also include larger tax incentives for renewable energy. Last December, Congress gave a two-year extension of tax credits for solar, one-year extension for wind and extended the offshore wind tax credits until 2025.

The US, though, will need sticks as well as these carrots. If the US wants to fulfill the Biden campaign promise of decarbonizing the power section by 2035, giving the US the credibility it needs to push forward climate diplomacy alongside the EU, it needs a national clean-power standard. And if it wants to join the EU in any sort of climate club built around carbon border adjustments, it needs a carbon pricing scheme that applies to the entire country. Neither is easy through budget reconciliation.

The idea for a clean power standard is gaining steam on Capitol Hill; Leah Stokes and Sam Ricketts of Evergreen Action and Data for Progress have been making the rounds on Capitol Hill to promote their plan detailing how Congress could pass one through reconciliation. But conversations with Congressional staffers have made clear that, while Democrats are determined to address climate change, many of them worry that the reconciliation route won’t work or won’t make durable policy. The Byrd rule will prevent Democrats from simply requiring that a certain percentage of electricity be low-emission; instead they will have to use workarounds. Members might need to be convinced to support a complex system of credits provided by the US government to utilities for producing clean power. Alternatively, the US government could provide more federal funding to states that adopt a clean electricity standard, though similar incentives failed to get Republican-led states to expand Medicare in the Obama era.

What about national carbon pricing? In a good sign for the EU’s own carbon border adjustment, any US carbon pricing scheme would include a carbon border adjustment, a key demand of Democratic-voting labor groups. And a carbon price would have an easier time meeting the reconciliation standards than would a clean power standard.

However, getting to be 50 votes could be tricky given Joe Manchin’s recent promise that he would not be the deciding vote on an aggressive carbon pricing proposal. It remains to be seen if Democrats could win him over with promises of infrastructure spending in his home state of West Virginia, or concessions to promote the use carbon capture and help keep fossil fuels viable. Same goes for Krysten Sinema, who came out against a carbon tax in 2018 but supports carbon removal technologies.

Carbon pricing is also deeply unpopular with the left and environmental justice groups, especially after the failure of a carbon tax in liberal strongholds like Washington State. Progressives don’t want to rely solely on market-based schemes to solve climate change and have grown weary of corporate leaders advocating for a carbon tax in exchange for zeroing out all regulations on emissions. Senator Markey (an original cosponsor of the Green New Deal) is against pursuing a carbon tax this time around, seemingly still scarred by the failure of Democrat’s previous attempt at carbon pricing in 2009. Given Biden’s emphasis on environmental justice, he may be hesitant to push for pricing since activists say this does nothing to address carbon pollution in their communities. So if Democrats move forward with a carbon tax, it would be a complementary tool paired with investments to woo progressives.

Transatlantic climate cooperation is in much better state now than a few months ago, but there is a lot of work left to do.


Sarah Jackson is a second-year master's student focusing on climate policy at the Hertie School in Berlin. Previously, she worked as a policy staffer for Speaker Nancy Pelosi in the U.S. House of Representatives advising on climate and energy issues. Noah J. Gordon is a Berlin-based climate and energy consultant and the climate columnist for Internationale Politik Quarterly of the DGAP

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