If you want someone to do something, there are two ways to do it. You can offer a reward or provide penalties. For example, you are withholding a weekly allowance when they don’t mow the lawn. Or when it comes to big polluters, charging them more in taxes.
For decades, most experts have thought that U.S. climate policy should include both a tax on carbon dioxide emissions and a mandate for clean sources of electricity. The Biden administration knows that the country can’t be certain that emissions cuts will happen without these two policies.
Politicians in Washington are arguing about a trillion-dollar bill. It was meant to be the biggest climate change measure. But it might not have incentives left in it. President Biden will go to Glasgow, Scotland, for the U.N. climate summit, and we don’t know what will happen there because of this bill’s lack of incentives.
In the Senate, Democrats have 50 votes. That is a very small number of votes. This month, Senator Joe Manchin said that he does not want to see the Clean Electricity Payment Program happen. The CEPP program would have accounted for 20-35% of the total emission cuts in the reconciliation plan until 2030. The program would reduce 250-700 million metric tons of carbon dioxide per year.
Also, Read Child Tax Credit Update: Families Will Get Paid $7,200 Per Child in 2022 by IRS
The senator from West Virginia is now aiming for the final part of the reconciliation bill. It would have cut methane emissions in half, which is important.
The Biden administration and Democrats in Congress can only use carrots to work with. They want to give tax incentives for renewable energy, nuclear, and carbon capture. They will also give tax credits for electric vehicles and car chargers. This will cost around $150 billion over 10 years. The climate part of the package is expected to cost about $500 billion over 10 years too.
Experts say that the clean electricity program could cut emissions by less than what it is supposed to. This is because there are other incentives instead of the clean electricity program, which makes up half of the promised cuts. There’s no timeline for when these cuts will happen, though. The clean electricity program promises to cut all emissions by 2035, but other incentives can’t do this.
Josh Freed says that tax credits can go a long way to help create more green energy. But there is a lot of doubtfulness with this plan. The places that need to decarbonize the most, like West Virginia, are the least likely to respond to lower taxes because they have so much coal there.
We will likely not reach Joe Biden’s goal of cutting emissions in half from the reconciliation bill and the bipartisan infrastructure bill. This doesn’t mean that we can’t do this, though. ACCORDING TO A MODEL FROM RHODIUM GROUP LAST WEEK, the U.S. could still hit this goal if everything else goes well.
But if these things happen, the United States will get all of its electricity from clean sources. Twenty-five states would need to set binding targets for clean electricity. The Biden administration would also have to take executive actions that reduce greenhouse gas emissions. Other administrations can overturn these actions, and some states do not make strict cuts in greenhouse gas emissions.
Some people are optimistic about this. A report from the nonprofit research group Resources for the Future says that a clean energy tax credit could help reduce carbon emissions in electricity without the CEPP. Currently, 60% of America’s electricity comes from fossil fuels. With tax credits, that number would be cut in half by 2030. That is not enough to reach Biden’s goals because Biden wants 20% of America’s electricity to come from fossil fuels by then.
Zeke Hausfather, the director of the climate as well as energy at Breakthrough Institute, says that if we want to get close to our goal, we need to ensure that new incentives are “technologically neutral.” That means supporting both nuclear power and renewables. We also need to make sure that the country’s remaining nuclear plants stay open for at least another ten years to provide electricity for the country.
In the end, cutting emissions may not matter as much as whatever is most efficient. Congress will not move a carbon tax or a clean electricity program because they both have pros and cons. No one can make the changes needed in the United States. But we need to do something about it. Maybe we can find incentives and then do more later.
Also, Read New IRS Rule Will Affect Cash App Users: What to Know