Washington, which pretty much threw energy and climate change legislation under the bus this summer during partisan gridlock, started backing up the tires in early autumn.
President Obama told Rolling Stone magazine one of his top priorities for next year is having an energy policy "that deals with climate change in a serious way." His new strategy, which he said may introduce legislation "in chunks," received support from some key Senate Democrats and Republicans. The Senate, after failing to get enough votes to push a comprehensive energy and climate change bill to the floor this summer, also introduced a bipartisan renewable energy bill.
Driving climate-related legislation forward, though, is another story. Even in chunks, many senators and Washington observers anticipate an uphill battle in this mountainous issue where special interests run rampant. The Senate's loss of six Democratic seats in November's midterm elections could make it even tougher. The House, which narrowly passed a comprehensive climate change bill in 2009 with support from just eight Republicans, has been recaptured by the Republicans, who reclaimed at least 60 seats.
Climate change initiatives, however, could gain some momentum from California voters' recent defeat of Proposition 23. It would have suspended state laws requiring reduced greenhouse gas (GHG) emissions until California's unemployment rate, currently above 12%, drops to 5.5% or below for a full year. Prop. 23 is "a strong market signal for more energy investments in clean tech and for Congress," says Chris Fox, co-director of the Ceres Policy Program and a co-founder of the Investor Network on Climate Risk.
Federal climate change initiatives are already underway. The American Recovery and Reinvestment Act's investments of $80 billion for clean energy will produce as much as $150 billion in clean energy projects, the White House announced late last year. Specific areas to be addressed include generation of renewable energy, advanced vehicle and fuel technologies, grid modernization and carbon capture. In October, the U.S. Environmental Protection Agency (EPA) also helped launch the Global Methane Initiative to reduce emissions of this potent GHG.
The bigger question, though, revolves around the significant global climate change investment gap. Bloomberg New Energy Finance projects that clean energy infrastructure spending must rise to about $500 billion a year, more than triple its 2009 level, to limit global warming to below 2 degrees Celsius. Without federal legislation, much of that capital will likely be deployed outside the U.S., say Fox and others. "Large investors are geographically agnostic. They're looking around the world" for opportunities, he says.
The U.S. is already losing an estimated 1.9 million jobs in clean energy and an estimated $208 million a day in job-creating clean-energy investments to China and other leading nations since the Senate's abandonment of comprehensive clean energy legislation in late July, according to an analysis by Small Business Majority, Main Street Alliance, American Businesses for Clean Energy and We Can Lead.
What's next?
"It's hard to imagine that [federal legislation] isn't going to be at the very least watered down and broken down," says Chat Reynders, chairman and CEO of Reynders, McVeigh Capital Management LLC, a Boston-based firm focused on sustainable and socially progressive investing. But it's businesses, not federal legislation, that'll drive the ball forward, he says.
"People can argue about whether we'll have cataclysmic weather and other obvious signature events that announce the tipping point of climate change, but in boardrooms across the U.S. and the world, policies are already being created to reduce carbon footprints," says Reynders. With more states and countries already building policies to reduce emissions, companies are recognizing that the costs for carbon inefficiencies will squeeze profitability and increase liabilities. "The entire world is creating a cost for carbon. This is a freight train, and most companies are looking to get way ahead of it" to stay globally competitive, he says.
Reynders notes that 17 states representing 45% of the U.S. population have committed to GHG emissions reduction targets and more than 700 cities have pledged to cut emissions. In addition, 28 states and the District of Columbia have adopted renewable energy standards that by 2025 are expected to boost renewable energy capacity 570% above total U.S. levels (excluding hydro) in 1997, according to the nonprofit Union for Concerned Scientists.