Joe Biden’s presidential campaign just released a new climate plan that could dramatically reshape the US economy if implemented. The plan calls for $2 trillion of federal dollars to be invested in clean energy and infrastructure to put the US on a path to zero carbon electricity generation by 2035 and a net zero carbon economy by 2050. The plan calls for 4 million buildings and 2 million homes to be retrofitted for energy efficiency, new low carbon farming techniques, and investments in low/no carbon technologies for industries, homes and vehicles. The plan is big and bold and promises millions of jobs for the American worker in a post-COVID world. It also puts the US back on track to meet the international goals on limiting the global temperature increase outlined in the 2015 Paris Climate Accords.
Spending two trillion federal dollars would have been unthinkable prior to the trillions spent to save the economy from COVID-19. For reference, total 2019 federal tax receipts were $3.5 trillion, the government budget was $4.8 trillion and total US GDP was $20 trillion. CAPM 2.0 estimates that $800 billion of the $2 trillion in federal spending could be needed to support the 1,200 GW+ of new solar and wind capacity needed by 2035 to replace and eliminate existing coal and natgas electricity generation. Private capital investment would be another 2-3 times that, potentially reaching $2 trillion in total spending for wind and solar alone. As we transition to electrified vehicle fleets and buildings heated through green electricity (vs natural gas), we may even need a lot more renewable generation than that. Another $200 billion in private investment could come out of a big push to decarbonize homes and buildings. The winners from Biden’s energy plan would be renewable energy companies, grid technology providers, and energy efficiency contractors (not to mention generations of humans living in coastal areas, farming regions or pretty much anywhere it’s already hot). Oil, gas and coal companies and all of the associated carbon heavy supply and distribution chain would be the losers, along with carbon intensive industries that have no easy substitutes. Two trillion is a lot of money but remember that a single hurricane (Harvey) alone caused $125 billion in damage to Houston in 2017.
Biden’s plan polls well. Folks in both parties now believe manmade climate change is real and we have to do something about it. The plan follows bold moves by California, New York and many other states that have already pledged to go carbon neutral by 2050 and are already executing on that goal. Biden’s plan sets emissions goals targeted for specific dates and pledges the full force of the US government to find a way to reach the targets. While most experts agree that a carbon tax is a necessary element to get to zero net emissions, Biden’s plan does not mention it. New taxes do not poll well and the left is distrustful of market-based measures that they think could harm disadvantaged communities and working class Americans.
Some have noted that Biden may have simply adopted parts of the Green New Deal (“minus the crazy”) but also may owe as much to Jay Inslee’s well thought out climate plans. The plan appeals to rank and file democrats, left leaning Sanders progressives, and average Americans in the center and right. Also, Biden doesn’t poll well with younger voters in swing states, but climate is an issue that can rally them. It also puts the US back in front of a powerful international global coalition of climate-wise countries that will bolster our clout geopolitically.
Focus on American workers (voters). While the incumbent is trying to solidify his base by focusing on social divisions, Biden has been on message:: “When Donald Trump thinks about climate change, the only word he can muster is ‘hoax’. When I think about climate change, the word I think of is ‘jobs’”. His plan calls for one million new jobs building electric vehicles and charging stations, rebuilding the grid, retrofitting existing buildings and constructing new ones to make the housing sector more energy efficient. He also wants to make sure that workers and disadvantaged communities are not left behind. The immediacy of the plan, the $2 trillion is earmarked for the first four years of his administration, also makes it a prime post-COVID stimulus package geared at the 30-40 million American workers that have lost their jobs in this pandemic.