April 22, 2021

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The Energy 202: Advocates want Biden to use trade deals to combat climate change

9 min read

Environmental advocates, trade experts and lawyers told me this shift will help build a global consensus to avert the worst effects of climate change, even though it may rattle certain allies. It will allow Biden to beef up environmental standards at home without the risk of American businesses losing out to companies that operate in countries with laxer environmental standards, they say. 

“The Biden administration wants to have a trading system where people are not advantaged by declining to follow through on commitments they’ve made to any number of issues, but notably on climate change in the 2015 Paris agreement,” said Daniel Esty, a professor at Yale Law School with expertise in environment and trade policy. 

The shift under Biden could spell a major change in the country’s trade approach. 

The issue could come to a head sooner than later: More than 100 lawmakers sent a letter yesterday urging Biden to add Paris commitments to the U.S.-Mexico-Canada trade deal.

“Such an action would help restore the United States’ role as a leader in addressing the climate crisis and demonstrate how trade agreements can be utilized to advance climate goals,” the members write.

Rep. Earl Blumenauer (D-Ore.), who leads the House Ways and Means subcommittee on trade, points out that a simple majority in Congress can approve new multilateral environmental agreements under the deal. Blumenauer hopes the Biden administration takes advantage of that.

After all, although the United States routinely signs trade agreements that include environmental provisions, critics say that those commitments lack teeth. 

And the U.S. trade record is even more sparse when it comes to climate change issues specifically. Republicans in 2016 successfully pushed for a measure to limit the fast-tracking of any deals that require domestic carbon cuts. When the U.S.-Mexico-Canada trade deal was signed two years later under President Trump, its language made no explicit mention of climate change. 

And environmentalists were part of a coalition of interest groups that helped sink the Obama administration’s proposed trade agreement with other Pacific Rim countries, the Trans-Pacific Partnership, over concerns it made it too easy for corporations to pollute abroad. 

Still, Biden campaigned on working with U.S. allies to use trade to combat climate change “without offering too many specifics,” said Alexandra Stark, a senior researcher at the New America think tank. 

Biden’s choice for chief trade negotiator will have her work cut out for her. 

Katherine Tai, who Biden chose to be U.S. trade representative, has a history of pushing behind the scenes for strong environmental standards.

Tai, who serves as the chief trade counsel on the House Ways and Means Committee, played a central role in negotiations around revising the North American Free Trade Agreement during the Trump administration. The resulting deal was criticized on the left for leaving out any mention of climate, but activists and politicians say that was despite her efforts.  

“I’ve seen her push ardently for environmental priorities to be taken seriously and, in fact, implemented in trade agreements,” said Ben Beachy, director of the living economy program at the Sierra Club, an environmental group.  

President-elect Joe Biden nominated Katherine Tai as U.S. Trade Representative at an event in Wilmington, Del., on Dec. 11. (The Washington Post)

Europe probably will force Biden to take a stand.

The European Union is working to put in place a carbon border tax. Under this system, countries that have not already set a carbon price of their own may find that those prices are added in when they export their goods to Europe. It’s a change that could have major repercussions for American industries, and it could spur discussions in the United States about how to avoid the fees either by putting in place a domestic carbon price or coming up with an alternative treaty arrangement.   

“The U.S. will have to respond,” said Maria Panezi, a professor of international trade law at the University of New Brunswick in Canada. “Given how quickly the European Union moves on this issue, their hand will be forced.” 

Biden has moved away from pushing for a carbon price, instead focusing on economic stimulus and investments in green energy. At the same time, his energy plan calls for imposing “adjustment fees or quotas on carbon-intensive goods from countries that are failing to meet their climate and environmental obligations.”  

Panezi suggests that this might be a difficult needle to thread: The World Trade Organization allows countries to impose adjustment fees on imports only if they already have their own domestic restrictions. “You have to clean up your own backyard first,” Panezi puts it.  

One option for the Biden administration would be to embrace legislation sponsored by Blumenauer that would impose a carbon tax in the United States and carbon tariffs for imported goods.  

“There’s going be an argument that something like 50 other countries now have pricing mechanisms as part of their climate change strategies [and] American exporters will be at risk of facing carbon charges,” said Esty, who was floated as a possible contender to lead the Environmental Protection Agency last year.  

The Biden administration is confronting a trade landscape radically altered by Trump. 

Trump’s trade wars have angered allies and supercharged tensions with China, and it may be hard to roll back the clock: Reducing tariffs could spark pushback from segments of U.S. industry or engender criticism that Biden is soft on China. 

Meanwhile, the Trump administration so aggressively promoted the export of fossil fuels that the United States briefly overtook Saudi Arabia as the world’s top oil exporter.  

During the campaign, Biden was unclear about whether he supports banning the export of fossil fuels. The United States blocked the sales of crude oil abroad for four decades until Congress and President Barack Obama lifted the moratorium in 2015.  

Tai also will have to balance human rights considerations: A recent report found that solar companies that supply more than a third of the world’s polysilicon, a key ingredient in solar panels, are tied to forced labor in China’s autonomous Xinjiang region.  

Environmental advocates want to make sure new trade agreements don’t accelerate the race to the bottom.  

In the past, they’ve seen trade agreements as a problem rather than a solution because many companies have used free trade pacts to move operations to the countries with laxer pollution rules. 

“These corporations then make steel, auto parts and other products with a high degree of climate pollution and send them back to the U.S. for our consumption,” said Beachy of the Sierra Club. “As a result, the amount of carbon that goes into the goods we import is so large that it equals the total carbon emissions of all U.S. factories combined.”  

As eager as allies may be for renegotiated deals with the new administration, they may have to wait. 

Biden has said that he intends to hold off on any new agreements until he has tackled top domestic priorities on the economy and coronavirus response. 

Still, Biden is wasting no time fulfilling his campaign promise of nixing the Keystone XL pipeline, which is expected to be one of his first actions in office. Blocking the proposed oil conduit, meant to bring crude from Alberta to U.S. Gulf Coast refineries, may end up being a point of contention between Biden and the leader to the north, Canadian Prime Minister Justin Trudeau, who supports the pipeline.

On Jan. 18 Canada threatened to take legal action if President-elect Joe Biden goes ahead with a move to cancel the Keystone XL oil pipeline. (Reuters)

Power plays

Biden’s Day 1 executive orders are set to overturn Trump’s climate legacy on dozens of fronts.

In addition to a long-expected return to the Paris climate accord, Biden will sign “a broad executive order” to federal agencies to reassess scores of Trump-era environmental policies. Biden will:

  • Instruct the EPA and Transportation Department to strengthen fuel efficiency standards for cars and light trucks weakened under Trump
  • Ask the Interior Department to review protections Trump had scaled back for Utah’s Grand Staircase-Escalante and Bears Ears national monuments
  • Temporarily halt leasing in Alaska’s Arctic National Wildlife Refuge
  • Revive an interagency working group disbanded in 2017 that sets the “social cost of carbon” across the federal government.

Per Gina McCarthy, Biden’s new national climate adviser: The moves will “begin undoing some of the harmful actions that happened in the previous administration’s watch, so that we can move forward in combating the climate crisis.”

Trump lost a major climate court case on his last full day in office. 

The U.S. Court of Appeals for the D.C. Circuit scrapped a Trump administration rule that eased limits on carbon dioxide emissions from coal-and natural-gas-fired power plants, Mufson reports. The ruling effectively revived the Obama administration’s Clean Power Plan, which had mandated that power plants make 32 percent reductions in emissions below 2005 levels by 2030.

“In sweeping away the Trump administration’s regulation, dubbed the Affordable Clean Energy rule, the decision by the D.C. Court of Appeals raised hopes among environmental groups that the new Biden administration might be able to replace some Trump administration rules more easily than it feared,” Mufson writes.

Biden’s treasury secretary nominee pledged to create a team focused on climate change.

Janet Yellen told the Senate Finance Committee in a hearing that she would start a new Treasury hub to examine climate risks, Politico reports. She added that she would appoint a “very senior-level” official to lead the new program.

“Climate change is an existential threat,” Yellen said. “Both the impact of climate change itself and policies to address it could have major impacts, creating stranded assets, generating large changes in asset prices, credit risks and so forth that could affect the financial system. These are very real risks.”

“Yellen’s commitments mark a victory for lawmakers and advocates who want the Biden administration to enlist Treasury’s sweeping influence to address the dangers that climate change poses to the economy,” Politico writes. Her promise “was the latest evidence that climate change will be a fundamental consideration in a wide range of actions undertaken by the new administration.”

In a lobbying shift, the U.S. Chamber of Commerce endorses climate action.

The business group says it now supports congressional action toward a “market-based approach” to combat climate change, Bloomberg News reports, though it stopped short of offering specific solutions, such as a carbon tax.

The group is also preparing to release a statement supporting federal regulations on methane emissions from the oil and gas industry, Bloomberg reports. “The revision comes as the chamber seeks to ensure it keeps playing an influential role in Washington with Democrats in charge of the House, Senate and the presidency,” it writes.

The Trump administration finalized leases for nine tracts in the Arctic National Wildlife Refuge.

The Bureau of Land Management issued 10-year leases on nine of the 11 tracts that received bids in the first lease sale for the protected refuge. Seven of the finalized leases went to the Alaska Industrial Development and Export Authority (AIDEA), a development corporation owned by the state, the Anchorage Daily News reports. Two others were dropped after the AIDEA, which had bid on them, decided not to move forward with the leases.

“Biden, who is inaugurated on Wednesday, has said he opposes drilling in the refuge. Now that they are issued, the leases could complicate his effort to stop oil companies from pursuing activity there,” the Anchorage Daily News writes. “Still, experts say the Biden administration can take multiple paths to delay or stop drilling, and supporters of drilling in the refuge are not expecting much, if any, progress under Biden.”

GOP lawmakers urge Biden to reconsider nixing the Keystone XL pipeline. 

In a letter sent Tuesday, Sen. Steve Daines (R-Mont.) and four other senators from North Dakota and Wyoming argue the move by Biden, which will be among his first in office, undermines his promise to rebuild the nation’s infrastructure after years of neglect.

“With these and other commitments, Keystone XL meets that important test,” they write. “We have to come together to find a way forward, to keep people working, while also creating a new standard for American energy infrastructure.”

Pro-Biden group rebrands as its candidate is about to take office.

Clean Energy For Biden, a network of donors that raised money for the president-elect’s 2020 bid, will spin off to become Clean Energy for America. The new nonprofit will focus on educating the public about clean energy and campaigning for other candidates. Dan Reicher, a co-chair of Clean Energy For Biden, said the new group will “ensure we keep this momentum going beyond the 2020 elections.”

Extra mileage

The only marine sanctuary in the Gulf of Mexico just got bigger.

The National Oceanic and Atmospheric Administration issued a final rule expanding the Flower Garden Banks National Marine Sanctuary. As a result, the sanctuary, which is home to spectacular coral reefs and diverse sea life, will triple in size. 

Alexandra Ellerbeck


2021-01-20 07:19:15


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