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BIDEN WANTS TO USE PRIVATE CAPITAL: The Biden administration is placing greater emphasis on enlisting private finance to curb climate change, pushing major banks and asset managers to join climate negotiations that have long been focused on government investment.
At its climate summit starting tomorrow, the Biden administration is hosting a session dedicated solely to climate finance, led by special climate envoy John Kerry, Treasury Secretary Janet Yellen, and National Economic Council Director Brian Deese. (More on the full agenda below). Along with foreign officials, the CEOs of big U.S. banks Citigroup and Bank of America and major insurer Allianz will speak.
The session is meant to sharpen governments’ focus on how to engage private capital to fund the low-carbon technologies needed to significantly curb emissions, an administration official told reporters this morning.
“Historically, the climate negotiations have been much narrower. They’ve looked at the World Bank. They’ve looked at bilateral assistance,” the official said. “They have not really adequately looked at this much larger capital, and to us, that’s part of the solution, and this redirection becomes quite substantial.”
What has changed: As the U.S. and other countries have set their sights on net-zero emissions by 2050, it’s becoming clear just how massive of a shift in investment will be required.
“It is patently clear that no government in the world has the ability to summon the finance on its own necessary,” Kerry said this morning during a virtual event launching several new global alliances on net-zero finance. “There’s no budget of any country that can do what we need to do.”
Kerry noted the United Nations has found an investment gap of about $1 trillion to $2 trillion each year for the next 30 years, a gap he said only the private sector can truly fill. The climate envoy has been reportedly pressuring big U.S. banks for months to make stronger commitments to align their financing with the Paris climate agreement.
Ahead of tomorrow’s summit, 43 banks from across the world, including Citi, Bank of America, and Morgan Stanley, launched a “Net-Zero Banking Alliance” under which they’re pledging to set 2030 targets to reduce their financed emissions within the next year and a half. Those initial targets will focus on the most emissions-intensive sectors within the banks’ portfolios.
Kerry, along with Yellen and Mark Carney (who serves as the United Nations special envoy for climate action and finance), separately launched the Glasgow Financial Alliance for Net Zero to help mobilize trillions of dollars of low-carbon investments. Major insurers and reinsurers are also slated to soon announce a net-zero alliance of their own.
The opposition: The Biden administration’s moves have drawn staunch opposition from Republican lawmakers, who see an effort to choke off financing to fossil fuel producers and other emissions-intensive businesses.
“Misusing government power to influence bank lending and investment practices will distort capital allocation, raise energy costs for consumers, and slow economic growth,” all Republicans on the Senate Banking Committee, led by Sen. Pat Toomey, wrote Kerry in a letter this morning.
The senators argue that limiting capital to energy companies would ultimately harm people by leading to higher energy costs and layoffs across the industry.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
ALL ABOUT BIDEN’S EXPECTED NDC: President Joe Biden will commit the U.S. to cutting its greenhouse emissions roughly in half by 2030 to begin his climate summit event with world leaders tomorrow morning.
The White House, to our chagrin, did not confirm the target in a call with reporters this morning, but multiple outlets reported it would be in the range of 50%.
The aggressive target is symbolic and nonbinding without being approved by Congress, but Biden hopes it restores U.S. credibility and pushes other countries to announce more ambitious plans to cut emissions this decade as part of the Paris Agreement, which his predecessor, President Donald Trump, rejected.
“This is starting a process of the new administration to walk through where we hope things will go. This is a decisive decade,” a senior administration official told reporters. “What we do at home does matter. How others see us acting will be a beacon for what we want them to do and a symbol we are re-engaging.”
Putting the target in perspective: Halving U.S. emissions by 2030 would essentially double the initial target set by the Obama administration as part of the Paris Agreement in 2015 to reduce emissions by 26% to 28% from 2005 levels by 2025. The U.S. was not on pace to meet the Obama administration target, but it might have an outside chance of achieving it because of the coronavirus pandemic that shut down the economy and slammed demand for transportation fuels, causing a record drop in emissions last year. Emissions are expected to rise again in 2021 as the economy recovers.
Waiting on policies to back it up: But to make his goal achievable, Biden would almost certainly need Congress to enact new domestic policies to reduce emissions from transportation and electricity, the top two polluting economic sectors.
“International commitments are meaningless without domestic action,” said Jamal Raad, executive director of Evergreen Action. “The administration and Congress must pass ambitious clean energy and infrastructure legislation, and take action on a sweeping set of executive actions this year to fulfill this commitment.”
Indeed, Biden’s $2.3 trillion infrastructure and climate spending proposal has the potential to be the centerpiece policy needed to reach the goal, especially if it contains his clean electricity standard proposal requiring utilities to use only zero-emissions power. Evergreen says a CES mandating 100% clean power by 2035 would achieve nearly half of the nation’s progress toward Biden’s 2030 NDC goal.
Forthcoming emissions regulations from the EPA over the power and transportation sectors could also contribute, along with efforts, both regulatory and voluntary from businesses, to control leaks of methane.
WHAT’S ON THE SUMMIT AGENDA: The White House this morning posted the agenda of the two-day summit, which will start at 8 a.m. ET tomorrow with an address by Biden and Vice President Kamala Harris.
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi will both attend the summit, along with all other of the 40 heads of state invited, White House officials told reporters this morning. Other high-profile speakers include Pope Francis, Bill Gates, and the heads of NATO, the World Bank, and the IEA.
The summit features six sessions over the two days: Investing in Climate Solutions (i.e. finance), Adaptation and Resilience, Climate Action at All Levels (how states and cities are curbing emissions), Climate Security, Unleashing Climate Innovation, and the Economic Opportunities of Climate Action.
US WON’T BE THE ONLY ONE ANNOUNCING A NEW CLIMATE TARGET: Countries representing roughly 60% of global gross domestic product are slated to announce stronger targets to curb emissions during Biden’s two-day climate summit, Kerry said yesterday.
Kerry, speaking during a virtual event hosted by Ceres, singled out Japan and Canada as nations expected to announce more aggressive climate targets this week. Biden hosted Japanese Prime Minister Yoshihide Suga at the White House for a bilateral meeting just last week, where the two leaders launched a new climate partnership that includes consultations on 2030 national emissions targets.
The United Kingdom also announced yesterday plans to codify a new target to slash emissions 78% below 1990 levels by 2035.
We’re not likely to see more aggressive climate targets from other major emitters, however, despite Kerry’s efforts in recent weeks to encourage China and India to come to the summit with new commitments.
THE EU IS ALREADY STEPPING UP: The European Union reached an provisional agreement last night to codify the bloc’s commitment to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990. The deal also legally obligates the EU to reach “climate neutrality” by 2050. By binding its targets into law, the EU can showcase a level of certainty the U.S. cannot.
“Today’s agreement reinforces our global position as a leader in tackling the climate crisis,” said Frans Timmermans, executive vice-president for the European Green Deal.
BUSINESS SUPPORT FOR 50 BY 30 TARGET GROWS: Nearly 100 more major corporations, including automakers General Motors and Ford, have joined an open letter organized by Ceres and the We Mean Business coalition urging Biden to set a national target to cut emissions by 50% by 2030.
The additional signatories, which also include Amazon, bring the total business support to 408 companies and investors. It’s likely that if Biden raises the stringency of the U.S. national emissions target, many of those companies will strengthen their own climate and clean energy goals, Hugh Welsh, president of DSM North America (which signed the letter), told Abby recently.
MODELING A 50 BY 30 TARGET: Cutting U.S. emissions in half by 2030, as Biden is expected to pledge this week, could increase the country’s gross domestic product by $570 billion per year in 2030 and create more than 3.2 million new job-years by that year, according to new modeling from the research firm Energy Innovation.
That level of emissions cuts, which the report says would put the U.S. on a pathway to reach net-zero by 2050, could also avoid more than 45,000 premature deaths and more than 1.3 million asthma attacks each year by 2050.
Energy Innovation says the U.S. would need to start significantly cutting emissions immediately in order to reach 50% by 2030, and the firm cites reports that show the U.S. could cut power sector emissions by 80% in the next decade by phasing out all remaining coal power and cutting natural gas use in half.
US OIL DEMAND LOSES MOMENTUM: U.S. oil demand fell last week to 18.8 million barrels per day from 20.3 million b/d, as the topsy turvy trajectory of the recovery continues.
Gasoline consumption rose to its highest level this year, but jet fuel and diesel use declined, the Energy Information Administration reported this morning.
EIA also reported a small increase in crude oil inventories of 0.6 million barrels from the previous week, worsening the supply glut and causing crude prices to fall.
COLLINS ENDORSES DEMOCRATS METHANE MANEUVER: Centrist Republican Sen. Susan Collins is backing an effort by Democrats to use a fast-track procedural tool to cancel a Trump administration action blocking the EPA from directly regulating methane.
Collins’ spokesperson told The Hill that she plans to co-sponsor a Congressional Review Act resolution enabling the Senate to scrap the methane rollback with a simple majority vote.
“This resolution would help protect public health and the environment by restoring the tougher standards at EPA that significantly decreased methane emissions,” Collins said in a statement.
Collins’ support protects against any defections from Democrats in the evenly divided Senate, which looks unlikely.
CHENIERE ALSO GETS ON BOARD: The Houston-based LNG exporter yesterday became the second U.S. company to endorse Democrats’ bid to restore federal regulation of methane.
In a LinkedIn post, Cheniere said it supports “effective policies and regulations that reduce methane emissions, including the current Congressional Review Act effort.” EQT Corporation, the nation’s largest natural gas producer, has also backed the resolution, along with European oil majors Shell, BP, and Total.
The Rundown
Wall Street Journal Brazil’s climate overture to Biden: Pay us not to raze Amazon
Washington Post Climate summit leaders hope to catalyze a key ingredient: Cash
Argus Media DAPL shutdown would ‘shock’ economy: Energy Transfer
New York Times China’s solar dominance presents Biden with an ugly dilemma
Wall Street Journal Energy giants ditch oil and coal projects. Smaller rivals want them.
Calendar
WEDNESDAY | APRIL 21
6 p.m. Citizens’ Climate Lobby’s D.C. chapter will hold a virtual town hall meeting with Rep. Eleanor Holmes Norton.
THURSDAY | APRIL 22
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing “to examine the opportunities and challenges that exist for advancing and deploying carbon and carbon-dioxide utilization technologies in the United States.”
