This Celebrated Energy Bill Is Underwhelming
(Bloomberg Opinion) -- The energy bill attached to the relief package passed by Congress on Monday night is winning plaudits for its bipartisanship and climate-friendly measures. Not to be a Grinch this close to Friday, but I am reminded of one of my favorite tweets of 2020:
Don’t worry: The replies were replete with pithy explanations as to why this year’s performance on emissions wasn’t exactly worthy of celebration. But that’s not why I’m thinking of it. What gives that tweet real depth is the tacit acknowledgement that cutting greenhouse gas emissions is a worthwhile thing to do. By extension, that’s an acknowledgement that climate change is a problem worth fixing — an acknowledgement by the daughter of a president who doesn’t share that view.
The energy bill now on its way to outgoing President Donald Trump’s desk contains many items addressing emissions and climate change. Among other things, there is a commitment to phase out most use of hydrofluorocarbons — a potent greenhouse gas — over the next 15 years. There are extensions of tax credits for new solar and wind-power projects, as well as vehicle-charging infrastructure. There is $35 billion of funding for research and development of technologies such as advanced nuclear reactors; carbon capture, use and sequestration; and batteries. There are measures to encourage energy efficiency, especially for federal buildings.
All of these are useful efforts and should be welcomed. Taken in totality, they are also maddening.
Every single measure is an acknowledgement that climate change is a real problem demanding resources to deal with it. There is no shortage of warnings from a wide body of experts, including the Intergovernmental Panel on Climate Change, the International Energy Agency and even some oil majors, that such action needs to be rapid and far-reaching if it is to have a chance of success.
And yet the energy bill just passed — tacked onto a must-have economic relief package, it should be noted — betrays no such urgency or even joined-up thinking. For example, solar and onshore wind tax credits have been extended for another one or two years. If the idea is to actually get investors comfortable with putting money to work on new projects, these short extensions always subject to the will of the next Congress aren’t the answer. If we are going to put resources into encouraging this sector, then why not make it a five-year or 10-year program?
Similarly, why allocate incentives for vehicle charging infrastructure but pointedly leave out similar measures for the vehicles themselves? That technology has demonstrated far more progress in terms of actual commercialization than small modular reactors, direct-air capture of carbon or — recipient of another $4.7 billion — nuclear fusion (sigh).
The point isn’t to knock this or that technology. Have at it with carbon capture, car chargers and even fusion reactors. But if the point is to do something quickly, and intelligently, to address climate change — and, remember, this is the reality that even piecemeal measures acknowledge — then a grab bag of short tax extensions and research budgets for favored gizmos isn’t the way to do it.
More comprehensive, market-based measures, such as pricing carbon, ought to appeal to any intelligent politician who acknowledges the problem. Even the pseudo-libertarians should be on board with something like that, which would encourage folks to not effectively dump their effluent on your lawn. Yet it is hard politically to sell a cost for invisible gases that work on geological timescales — especially when so many politicians have worked assiduously to reframe it as a tribal loyalty test. This latest bill is celebrated precisely because we now expect nothing and it isn’t that.
And this is my other concern with the energy bill. President-elect Joe Biden has laid out a more comprehensive climate policy and made personnel appointments that signal he is serious about getting at least some of it done and selling it to the American public. In his way stands, primarily, a small majority of Republican senators who are willing to tacitly acknowledge climate change by passing such an energy bill but, for various reasons, tend to frame such action in carefully chosen, obfuscating phrases like “clean air” and refuse to countenance comprehensive policy.
Possibly the bill’s passage portends a shift in attitude. But pardon my reservations about the party that brought us wind turbines causing cancer and snowballs thrown in the senate chamber. There is just as much chance that, assuming Georgia’s runoffs change nothing, the energy bill will be touted as breakthrough legislation — providing just enough cover to block exactly that.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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