Presidential candidate Joseph Biden has a $1.7 trillion climate plan that includes various proposals requiring in massive increases in government spending, new federal taxes on greenhouse gas emissions, and a re-commitment to the Paris Agreement. The presumptive Democratic nominee is pushing ahead on climate despite countries around the world putting their emphasis on bringing back their economies and jobs due to the devastation of the coronavirus, which has forced much of the world to impose unprecedented lockdowns on their societies. The economic damage and the difficulties involved in lifting the restrictions are having a huge economic impact, with tens of millions of people around the world losing their jobs and many countries facing potentially the largest recessions since World War II.
In a survey that reassesses the risks to the global outlook in light of the pandemic, nearly 350 senior professionals in industries from retail to manufacturing indicated that they are worried most about the economic impact, with 68 percent identifying a “prolonged global recession” as most likely over the coming 18 months. They are also concerned about bankruptcies, industry failures, and another COVID-19 outbreak. The job losses from these events would be enormous.
Further, the loan packages and debt delays negotiated by the World Bank and International Monetary Fund and the $8 trillion in domestic stimulus packages in developed nations are oriented to economic recovery and do not contain significant green conditions or investments.
The coronavirus pandemic has shown Americans that the future will be bleak if the Green New Deal that Biden supports to a great extent goes into effect. As one researcher indicated:
“If you ask a lot of Americans, and tell them we’ve dropped our carbon dioxide emissions 11 percent over the last year, they’ll say, ‘I’m trapped in my house and I’m unemployed, so if this is what it takes to tackle climate change, no thank you.’’
Europe
From the car industry to plastics producers to airlines, many European industries have urged lawmakers to introduce “regulatory relief” from the European Union’s climate standards and enforcement. The position of business leaders, expressed in numerous letters to European leaders and policymakers, is that the coronavirus crisis is forcing them to overhaul their supply chains, close shops, restructure their workforce, and revisit their financial plans, and that incoming climate regulation adds stress that should be avoided. For example, Renault and energy giant ENGIE, signed a letter from Business Europe, Europe’s largest business lobby, asking for delays to green regulations.
The European Commission adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy due to the COVID-19 outbreak. The Temporary Framework enables Member States to ensure that sufficient liquidity remains available to businesses of all types and to preserve the continuity of economic activity during and after the COVID-19 outbreak.
Germany
A case in point regarding the hardship brought on by the coronavirus to industry and households is in Germany’s electricity system. The head of Germany’s largest energy company, E.ON, urged the German government to increase funds for green power infrastructure and to put a cap on costs to consumers due to the electricity demand drop from the coronavirus outbreak. The collapse in demand from the lockdowns results in a drop in wholesale prices leaving consumers to pay more toward a green fund that guarantees earnings for utilities that provide renewable power. Because of the dynamics of the policy, consumer bills are likely to skyrocket unless the government allocates money from the federal budget to limit the amount that homeowners pay in green subsidies and to cut energy taxes. Under German law, the fee paid to energy producers as part of the country’s green energy transition, together with other taxes and fees, makes German retail power prices one of the highest in Europe. E.ON expects the fee could increase to 8 euro cents a kilowatt hour in 2021, up by almost 18 percent from 2020. According to labor unions, electricity prices are becoming a social issue as householders cannot afford to pay them.
Residential electricity prices in Germany are second only to those in Denmark and are already about three times those of the United States due to their green energy transition.
Denmark
Denmark has postponed its plan to raise taxes on greenhouse gas emissions because of the current economic uncertainty caused by the coronavirus pandemic. Denmark has more ambitious goals than the European Union: a 70 percent reduction in greenhouse gas emissions by 2030, compared to 1990 levels, compared to a 40 percent reduction by 2030 for the European Union. Danish politicians realize that this is not a good time to increase the price on carbon when thousands and thousands of Danes are losing their jobs and companies are shutting down.
United States
In the United States, governors of states are shifting priorities. Washington Governor Jay Inslee, the “climate change candidate” of the Democratic primary season, vetoed $50 million allocated in the state’s budget for local climate resilience efforts because of the state’s needs in responding to the coronavirus.
California has a potential budget deficit of $54.2 billion as a result of the coronavirus pandemic, which is likely to affect its climate program. The state invests over $2 billion annually in climate programs through revenues derived from its carbon cap-and-trade program. Those revenues are expected to shrink, threatening investments in clean cars, a planned high-speed rail line, local rail and transit programs, and wildfire prevention programs. Both California and Minnesota have delayed decisions on new vehicle emissions policies. In Minnesota, this is just one of the regulatory measures that has been disrupted by the coronavirus pandemic.
According to a National League of Cities and U.S. Conference of Mayors survey, throughout the United States, 2,100 cities are preparing for budget shortfalls and layoffs.
Canada
The Canadian government is focusing on economic recovery from the coronavirus. It is providing $1.7 billion in financial aid for Canada’s oil and gas sector. Alberta Premier Jason Kenney indicated that that support is not enough: “Canada’s energy sector needs much more action to survive this unprecedented shock and protect hundreds of thousands of jobs.”
As a result, progress on many climate commitments in Canada are on hold. Canada’s national budget, which this year was supposed to focus on climate change, has been delayed indefinitely. Plans for legislation to create legally binding emissions reduction targets and for an expert panel to guide Canada toward net-zero carbon emissions by 2050 are also on hold.
Conclusion
According to presumptive Democratic nominee Joe Biden, “Climate change poses an existential threat to our future—and time is running out to address it.” The coronavirus pandemic has changed the priorities here in North America and around the world as consumers and industries want to get back to normal conditions to repair the economic devastation currently being experienced. The bleak future that the coronavirus pandemic has shown the world is not what most Americans want to see in the future. Biden needs to get out of the basement and visit with Americans around the country to understand their needs and wants for the future and ask them if they want to pay the increased price for energy his policies would require.
The post Biden Pushes Ahead on Climate Change Policies Despite Pandemic Recession appeared first on IER.
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