A year ago today, the inauguration of President Joe Biden—who had made climate more central to his campaign than any previous presidential candidate—gave reason to hope that we might see significant progress on climate action in 2021. And indeed there was admirable progress: U.S. re-entry into the Paris Agreement; a successful leaders’ summit capped by the announcement of an ambitious 2030 U.S. emissions target; a cascade of important new global initiatives led or co-led by the United States, including on methane, forests, and industry; and, here at home, a legislative victory in the bipartisan infrastructure package.
For all that, meeting the 2030 goal and putting the economy on track to net zero emissions by 2050 will require much more, positioning the coming year to be at least as critical as the one just past.
At C2ES, we are focused on accelerating the transition to a thriving, resilient net-zero economy—taking advantage of our policy and analytical expertise, our convening ability, and our longstanding connections to leading businesses, including through our Business Environmental Leadership Council.
Here are nine key developments that will be shaping our work in 2022:
- The path ahead for the Build Back Better climate provisions in Congress
While the Build Back Better Act (BBB) stalled before the holiday recess, its energy and climate provisions are still very much alive, maintaining broad support. The measure’s broad ten-year clean energy tax credits, extension of credits for carbon dioxide sequestration, and provisions greening federal procurement establish a crucial foundation for the Biden administration’s goal of reducing emissions 50-52 percent under 2005 levels by 2030.
C2ES is working to jumpstart legislative momentum and secure passage of the critical climate and energy provisions in the Build Back Better Act. We are mobilizing leading companies to highlight the urgency of climate action, explain how public investment and incentives can leverage private capital and drive job creation, and underscore the importance of American leadership in the global low-carbon economy.
- The growing case for a federal price on carbon
Although a carbon tax is not expected in the BBB Act, several senators stated publicly in November that 49 Democratic senators would support it. The reason it’s back in the political conversation? The desire for a level playing field that could boost U.S. economic competitiveness. With American manufacturers already three to four times more carbon-efficient than their Chinese and Indian counterparts, a price on carbon pollution that extended to carbon-intensive imports would effectively monetize a competitive advantage the United States is currently leaving on the table.
C2ES continues to view a price on carbon as a core strategy for climate action—a cost-effective approach to cutting carbon emissions that will also make every other policy and investment work better, by aligning incentives throughout the economy with a safer climate. We are engaged through the CEO Climate Dialogue, a group of 23 large companies and four leading environmental groups committed to advancing climate action and federal climate policy in Congress. C2ES is also working with policymakers and companies on the design and benefits of carbon pricing provisions.
- From pledges to delivery: The shift to implementation of the Paris Agreement
One of the major successes of COP26 in Glasgow was securing more ambitious climate commitments from countries and non-state actors. Now, the world needs to go beyond making promises to doing the hard work of implementing them. The Global Stocktake (GST) process—called for in the Paris Agreement, launched in 2021, and culminating in 2023—provides a perfect opportunity for that pivot.
C2ES is undertaking a major project to examine the GST process with a view toward offering insights on how it can best deliver meaningful outcomes that enhance climate action and implementation in the areas of mitigation, adaptation, and finance and address emerging gaps and equity challenges.
- Getting back on track to a carbon-free U.S. power sector
Analysis by the Rhodium Group shows that U.S. greenhouse gas emissions increased more than 6 percent in 2021, fueled by a surge in coal-fired electricity generation. Although the power sector’s emissions are still 36 percent below 2005 levels, reversing last’s uptick is crucial. A range of studies find that cutting power sector emissions 80 percent or more below 2005 levels by the end of the decade will be critical to achieve the U.S. 2030 target.
C2ES is working with leading companies on policy approaches to accelerate the build-out of clean electricity generation, as well as the infrastructure needed to deliver it. Many of the provisions in the Infrastructure Investment and Jobs Act passed in November, as well as the Build Back Better Act, reflect C2ES policy recommendations to slash power sector climate pollution.
Forthcoming Clean Air Act regulations by the Environmental Protection Agency provide another important opportunity for progress. C2ES will be using our policy expertise and engaging with businesses to push for well-designed, ambitious standards that drive emissions reductions in the power sector while cleaning up conventional air pollution, especially in low-income and minority communities that have historically borne the brunt of pollution.
- Electric vehicles racing to market
Among the more positive trends to emerge in 2022 is the rapidly electrifying U.S. vehicle market. Manufacturers are powering up production of zero-emission vehicles – particularly electric vehicles with popular, high-performing options. Building out a publicly accessible, nationwide charging network is also a priority, thanks to private-sector commitments that can supplement new funds states will receive this year through the Infrastructure Investment and Jobs Act.
C2ES will convene virtual meetings in February to discuss accelerating vehicle electrification in Michigan, state and local policy recommendations to further support building out EV charging infrastructure, and the economic implications of the shift to a 100 percent ZEV future.
- New federal investment in clean tech innovation
The Infrastructure Investment and Jobs Act and the Build Back Better Act will invest billions in clean energy technology across all economic sectors. Additionally, the U.S. Department of Energy Loan Program Office (DOE LPO), an existing facility for clean energy investment, has been revived under the current administration. In December, the LPO announced its first loan guarantee in years, to support a low-carbon hydrogen facility in Nebraska. LPO Director Jigar Shah has indicated that the LPO will ramp up its work dramatically this year , which would be a vital shot in the arm to efforts to accelerate clean energy deployment.
C2ES is exploring hydrogen’s role in a decarbonized economy, with a brief to be released later this year. Additionally, we are engaging the Renewable Thermal Collaborative on hydrogen’s ability to provide clean heat for industry and helping to shape the policies necessary to realize that goal as soon as possible.
- The emergence of voluntary carbon markets as a key tool
Companies looking to lead on climate change are increasingly turning to voluntary carbon markets to reduce emissions beyond what they’re able to achieve in cleaning up their own operations and supply chains. Investments in voluntary carbon markets help expand renewable energy generation, reduce emissions from tropical deforestation, sequester carbon in soil and advance other nature-based solutions, or develop cutting-edge carbon-capture technologies.
C2ES is leading the effort to ensure the environmental and social integrity of this rapidly growing voluntary carbon market, including through our central role in the Integrity Council of the Voluntary Carbon Market – the new governance body for voluntary carbon credits.
- The mounting costs of climate-related disasters
More and more lives each year are deeply affected by the most disastrous impacts of climate change, while the costs keep accumulating. Last year produced 20 billion-dollar weather disasters at a cost of nearly 700 lives and a total price tag of more than $145 billion. More record-setting storms, wildfires, floods, and other disasters will be on the way in 2022, and besides paying for relief and recovery, governments and companies need to build resilience to future disasters.
C2ES is exploring resilience strategies that can protect communities and minimize disaster costs. We’re looking for ways local economic development agencies can collaborate with climate resilience planners to advance both economic growth and climate preparedness. C2ES is also researching corporate practices and investments that contribute to the resilience of communities where they operate.
- Growing corporate awareness of climate-related financial risks and opportunities
More companies are also becoming aware of risk of economic damage when climate disasters disrupt operations, supply chains, and support services. Now, many are making long-term plans that incorporate climate-related risks, as well as opportunities for investments that can thrive in a low-carbon economy. It’s time to develop best practices for reporting climate risks and opportunities as well as tools to align with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).
C2ES is building on its work in recent years, exploring how companies can improve how they measure and disclose climate-related financial risks and opportunities alike. The Securities and Exchange Commission plans to release for comment a draft regulation requiring that companies report their climate risks. C2ES will be providing input on its proposed design and implementation to enable robust, consistent, and decision-useful disclosure.
How do we mark 2022 as a success?
Securing the climate provisions in the Build Back Better Act is the most obvious carry-over from 2021, and an immediate focus for our work. But we can’t stop there. We need strong policies, rapid technology innovation, and ambitious climate action from federal and state governments, the international community, and the private sector. We’ve got our work cut out for us–but we’re embracing the challenge.