It’s crunch time for climate policy

This week, climate took center stage in budget discussions in Congress. Get CCL’s take on some climate elements of the budget resolution announced this week and find out what we’re planning next.

By Flannery Winchester

Here we go, folks. The moment we’ve been anticipating in 2021 — the moment where Congress assembles a big package of legislation that includes major climate policy — is here.

This week, Senate Democrats rolled out a budget resolution, which is functionally the starting gun of the budget reconciliation process. Among other things, the New York Times reports that “tackling the warming of the planet” is one of the goals of the budget.

“The legislation is far from passage,” the Times points out. Members of Congress and their staff still have to actually write the legislative language of the bill, and a variety of relevant committees will need to work on the separate pieces they’re in charge of. Then the bill will have to be approved by the Senate as a whole and ultimately merged with whatever legislative package the House develops.

So, there could still be months left in the budget reconciliation process. During that process, some elements will be public, and we’ll see them being discussed in the media. Other elements will be worked out quietly behind the scenes among legislators and their staffers. (Remember the omnibus bill at the end of 2020? The climate provisions in that package, including several of our secondary asks, were definitely in the “quiet” category — but they were ultimately included and became law!)

All of that said, there are a few notable climate-related elements of the reconciliation bill already being discussed publicly: a border carbon adjustment, a fee on methane, and a clean electricity standard. Let’s explore them.

Border carbon adjustment

The New York Times reported this week, “Democrats have agreed to include a tax on imports from nations that lack aggressive climate change policies.” That’s known as a border carbon adjustment, and it’s one of the policy elements CCL has been advocating for over the last decade.

“The inclusion of the carbon-border tariff [is] the start of a conversation,” CCL VP of Government Affairs Danny Richter told the National Journal this week. The EU helped kick off that conversation by announcing their own carbon border tax plans, ratcheting up the pressure on Congress to respond with policies that will keep our businesses competitive.

Danny also spoke to the Washington Post about this, explaining that if we want to implement a border carbon adjustment, we would most likely need a carbon price here at home, too. Otherwise, we risk “running afoul of global trade rules.”

So, we’re very encouraged to see a border carbon adjustment included in the budget resolution! It shows that congressional offices have heard our message that other countries are moving forward on carbon pricing, and it signals an appetite in Congress to respond with our own policies.

Fee on methane

The Washington Post also reports, “A central element in the plan would allow the United States to impose […] a fee on emissions of methane, a greenhouse gas more potent than carbon dioxide in the short term.”

This is a win for the policy approach CCL has always advocated for, and which economists uniformly agree upon: If you want less of something, make it more expensive. For years, CCL has argued that if we want fewer greenhouse gases going into the atmosphere, we should put a price on them to incentivize reductions.

By including a methane fee in the budget resolution, Congress is already showing a desire to use a pricing mechanism to reduce unwanted emissions. It’s not a big leap to pricing other greenhouse gases and pollutants, too, so we’re encouraged to see this.

Clean electricity standard

Another inclusion in the budget resolution is a clean electricity standard (CES). As CCL Strategy Director Tony Sirna explained in a blog post earlier this year, a CES would basically require that a certain portion of electricity sold by utilities come from clean energy sources by a certain date. Axios reports that this inclusion is “aimed at meeting Biden’s goal of achieving 100% carbon-free power by 2035.” Tony says, “Sounds simple, but like many policies, there are a lot of details to consider and they make a big difference.”

One of those considerations is that a CES would have to “pass muster with the strict budgetary rules that govern the reconciliation process, which require that provisions affect spending and taxation and not just lay out new policies,” the New York Times explains. “The Senate parliamentarian could force Democrats to overhaul or outright jettison the clean energy standard.” The Washington Post points out the same challenge, writing, “Some parliamentary experts caution that because the primary aim of the policy is not related to federal revenue, it is likely to be ruled out.”

CCL would be happy to see a clean electricity standard make it through the budget reconciliation process — decarbonizing the power sector would be a major step forward! We also appreciate the efforts of many of our allies in the climate advocacy space who have worked hard to build support for a CES. Also, a CES and our preferred policy of a carbon price could coexist.

If a CES doesn’t pass the parliamentarian, Congress will still need a mechanism to reduce emissions. A carbon tax would sail through the reconciliation process, thanks to its direct relationship to the budget, so we will continue to advocate for this option to our legislators as they work on developing the reconciliation bill.

Stay calm and stay active

What can we do now that it’s clearly crunch time for climate policy? CCL President Madeleine Para advises us all to “stay calm and stay active.”

Next week, CCL is launching a new campaign to help you contact your members of Congress with a targeted message about climate policy in reconciliation. Stay tuned, and let’s get ready to make it happen.