In the United States, the Biden administration has announced a new climate target. The U.S. already committed to zeroing out its greenhouse gas emissions by 2050. The new American interim NDC now foresees to change this from 50 – 52% by 2030, based on the country’s 2005 greenhouse gas emission levels, to 61 – 66% by 2035.
“I’m proud that my Administration is carrying out the boldest climate agenda in American history,” Biden commented. “Subnational leaders in the United States can continue to show the world that American climate leadership is determined by so much more than whoever sits in the Oval Office,” John Podesta, senior advisor to Biden for international climate policy, added.
Today, I'm building on my Administration's historic climate record by setting an ambitious new goal to cut greenhouse gas emissions by more than 60% by 2035.
We're the United States. Together, I know we can do this. pic.twitter.com/hyhVJFBrlP
— President Biden (@POTUS) December 19, 2024
Trump transition team spokeswoman Karoline Leavitt responded by email to NPR: “In his second term, President Trump will once again deliver clean air and water for American families while Making America Wealthy Again.”
Writing for NPR, its commentator Jeff Brady wonders whether this all still matters, looking at how Donald Trump is entering office soon.
He notes:
“Losing federal leadership on climate policies has consequences. A University of Maryland report concluded that if key elements of Biden’s climate agenda, such as the Inflation Reduction Act or recent EPA regulations, are overturned or rolled back, then emissions likely would be reduced only 48% by 2035. That’s 13 – 18% short of the newly announced goal.”
New climate thinking on the horizon
Potentially, Trump’s hostility to the Paris climate accord combined with the current policy failure to achieve climate goals may cause attention to be turned towards exploring alternatives to the Paris climate accord. Amongst others, the Warsaw Enterprise Institute and allied think tanks have advocated for such an alternative approach. They advocate for measures to “de-bureaucratize the economy” through tax reforms that make investments in Property, Plant, and Equipment (PP&E) more profitable. Such policies would incentivize companies to sustain and modernize their operations without relying on subsidies, which the think tanks suggest phasing out gradually.
Additional measures proposed for treaty participants include introducing tax-exempt “CoVictory bonds” and targeted tax cuts, such as Clean Tax Cuts (CTCs), in sectors responsible for 80% of greenhouse gas emissions—namely, transport, energy, electricity, industry, and real estate. These reforms could also target monopoly-breaking strategies through specific tax incentives.
Despite the changing of the guard in the United States, at the EU level, there is currently no support for changing climate policy. Instead, the EU is focused on expanding its emission trading system, effectively functioning as a climate tax. Observers are furthermore closely monitoring the implementation of the EU’s CBAM climate tariff and its potential impact on international trade relations.
great read: A Free Market Clean Sweep for the Climate Policy Mess https://t.co/yWAs0qdsv5 via @brussels_report @Berlin_affairs
— Berlin Kommunikation- Government Relations (@Berlin_affairs) October 20, 2023
Also in the UK, the Labour government is considering adopting a Carbon Border Adjustment Mechanism (CBAM) similar to the EU’s. A recent study by the UK Growth Commission warns that implementing such a measure could lead to GDP per capita losses ranging from approximately £150 to £300, and potentially up to £650 if supply chains shift to favor the lowest-cost producers.
The study also explores an alternative approach, proposing the replacement of the Paris Accord with a “Climate and Freedom Accord.” This alternative treaty could yield estimated benefits of £1,000 per capita. Under this accord, participating nations would enjoy trade advantages provided they adopt climate-friendly free-market policies, replacing the perceived collectivist nature of the Paris Agreement with a more market-driven approach.
An alternative approach
Meanwhile, in a new paper, the London-based Institute For Free Trade sets out concrete ways to encourage massive investment in new technologies, especially in carbon capture.
The think tank describes how its sets “out an international framework which offers key economic wins, including trade access, the reciprocal removal of carbon tariff border adjustments (CBAM), reciprocal supply side tax cuts, international capital flows for investment, and the removal of punishing tariff and non-tariff barriers. A happy side-effect is that, as well as facilitating the cross-border flow of green technology, we would be facilitating free trade more widely.”
Lord Hannan of Kingsclere thereby comments:
““Think global, act local,” say the Greens. But their policies somehow seem always to involve cash transfers, supranational bureaucracies, the erosion of national sovereignty and, over time, less growth. Here is a way to act both globally and locally, by making tax investment vehicles international, and by giving every nation an incentive to participate.”