Yet other countries are less thrilled than one might expect, in part because President Biden’s “Bidenomics” agenda, embedded in the U.S. climate plan, promotes domestic manufacturing and job creation along with emissions-cutting. This makes the climate effort costlier and antagonizes would-be partners. Fortunately, the policy can be improved. And, crucially, Mr. Biden can argue that it might not only green up the United States but also make it easy for the rest of the world to follow.
Last year’s climate law, the Inflation Reduction Act, could direct as much as $1.2 trillion over 10 years toward curbing greenhouse gases. That is three times what the Congressional Budget Office predicted, with stronger-than-expected uptake of the bill’s open-ended tax credits for deployment of renewable energy and zero-emission energy technologies, as well as manufacturing of green technologies. Along with almost $200 billion in climate-related spending from the 2021 Infrastructure Investment and Jobs Act, the United States will get much closer to meeting its promise to halve its greenhouse gas emissions by 2030, compared with 2005 levels.
The problem is that the Biden administration is using climate policies to meet goals unrelated to cutting emissions, a mixing of objectives that is likely to inhibit the green transition. It seeks to “de-risk” U.S. industry by reducing its reliance on China, which controls much of the global critical-mineral supply and is by far the world’s main battery producer. Mr. Biden also wants to promote American jobs through supports for domestic industry, which will make the energy transition costlier.
For instance, for electric vehicles to qualify for a tax break under the Inflation Reduction Act, the lithium, nickel and cobalt in the cars and their batteries must come from the United States or a country with which the United States has a free-trade agreement. Starting next year, cars with batteries containing Chinese components will be ineligible, too. But America and its free-trade partners don’t produce enough battery parts or critical minerals to meet the need. Given U.S. environmental regulations, expanding domestic supplies is difficult.
This is all likely to slow a green transition that, if delayed by extraneous considerations, will only get harder. Estimates of the IRA’s impact on U.S. emissions come with caveats. Princeton University’s Zero Lab, a climate research group, had to worsen its projections to reflect “constraints on supply chains and other rate-limiting factors.”
U.S. trade protectionism also antagonizes many countries — not just China — with which the United States needs to cooperate on climate. Mr. Biden and his officials still have to convince other governments that emissions-cutting — not trade conflict — is the top U.S. priority.
The president has options. He could use whatever legal discretion he has to ease protectionist rules that have upset U.S.-aligned countries. He could promote “friendshoring” — developing trade relationships with countries that might provide alternative sources of critical components — along with investments in battery recycling and other technologies that would limit the need for scarce minerals. And by promising to share climate-related technology, he could signal that the United States does not seek to become a China-style green-tech monopolist.
Inflation Reduction Act incentives to develop technologies such as clean hydrogen, direct air capture of carbon dioxide and clean jet fuel could accelerate global decarbonization. Some 200 billion euros of German solar subsidies between 2004 and 2012 made solar cheap by encouraging innovation in photovoltaics production and enabling economies of scale. The Inflation Reduction Act could spur the development and spread of far more advanced technologies. The Rhodium Group, an independent research firm, projects that the United States will deploy new technologies backed by the act, starting around 2030, and global adoption will take off after that. By the last two decades of this century, this technology diffusion would reduce non-U.S. carbon dioxide emissions by 401 million to 847 million metric tons a year. That’s about the same as the impact of the entire act in 2030.
Mr. Biden should make clear that the United States will ease the transfer of technology and know-how. As the United States’ proportion of global emissions shrinks — from roughly 17 percent at the turn of the century to roughly 11 percent as of 2021 to perhaps 7 percent by 2030 — Mr. Biden can signal U.S. commitment by stressing that this country will not just invest in new technologies but also bring them within reach of the entire world.
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