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CERAWeek: American leadership can drive decarbonization

02 March 2021 Kevin Adler

US President Joe Biden has laid out his intentions to shift the country's stance on a number of geopolitical issues, and this includes a return to a leading role in tackling climate change. However, those intentions must be backed up with evidence of real actions, participants in the "Geopolitics" panel discussion at CERAWeek by IHS Markit said 1 March.

"The Biden administration has been very explicit … that the US is back and wants to repair its alliances, particularly with Europe," said Angela Stent, director, Center for Eurasian, Russian, and East European Studies at Georgetown University.

Europeans are willing to work with the US, but "they are wary," Stent said, after seeing how President Donald Trump shifted course radically, and knowing that Biden's term is only four years in length. "But they are willing to work with the United States," she said, citing the need to address differences on matters such as tariffs, defense spending, and forging a common policy toward Russia.

Climate change is an area where the US and other nations realize they need to come to a rapid agreement, said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University. Biden's return to the Paris Agreement is a big step in the right direction, he said, but "also it's about walking the walk…. That's just step one."

To demonstrate its commitment to the Paris Agreement, the US must announce an ambitious target for its Nationally Determined Contribution (NDC), which is the emissions reduction goal for 2030 that is voluntary under the Paris accord. A target of a 50% reduction in emissions from 2005 levels by 2030 would be "ambitious," said Bordoff, but it also needs to be credible.

"Credibility means that we take the necessary domestic actions to get on track," he said. "Biden is using every tool he has under his executive authority … [and] Congress, I think, will spend a great deal of money on infrastructure, let's say a couple of trillion dollars, and lot of that will be clean energy. And states are acting as well. But that's not enough to get to 50%, which is why -- crazy as it sounds in today's Washington -- Biden needs to reach across the aisle and try to work with Republicans on climate change."

A carbon tax would be the type of major additional measure that Bordoff said could put the US on a 50% emissions reduction pathway, but he added, "I wish I was more optimistic" about prospects for the bipartisanship in Congress needed for that type of legislation.

Compartmentalization

The panelists talked at length with moderator Daniel Yergin, IHS vice chairman, about Biden's apparent policy of trying to "compartmentalize" one international issue from another. Biden favors this strategy as a way to move ahead on a matter such as climate change while leaving other disputes for separate negotiations.

"You have John Kerry, who is in charge of climate issues, … and for other non-climate issues … Tony Blankin as the Secretary of State," said Margaret O'Sullivan, chair of the North American Group of the Trilateral Commission and the director of the Geopolitics of Energy Project at Harvard University's Kennedy School.

"It's not obvious that this framework is going to work," she warned. "It may be that China has no interest in compartmentalizing things, and it could see greater value in conceding something on climate … while coupling [it] to get more space on sovereignty issues. We do have a framework, but time will tell if it's operational."

Kerry, the US envoy on climate change, has said he's seeking a bilateral discussion solely on climate with China, Bordoff added. "But it's less clear to me that China is interested," Bordoff said. "The Chinese foreign minister said on the record that they would not compartmentalize."

Tensions could rise further as the Biden administration rolls out programs to strengthen US industrial competitiveness against China, Bordoff said. Biden announced plans to open overseas offices of the US International Development Finance Corporation for the first time, which Bordoff said is an example of how, "if you're pushing back on the China International Development Cooperation Agency, you can't push back with nothing."

US industrial policy will seek to capture a greater share of the rapid growth in energy demand in Asia, Bordoff said. What is yet to be determined is if the administration will invest in natural gas production and infrastructure in Asia, he said.

US relations with Russia add yet another wrench to the compartmentalization strategy, added Stent. On the one hand, the five-year extension of the START nuclear weapons treaty, announced in February, is a positive sign. On the other hand, the divide is deep on many issues, she said.

In some ways, American and Chinese interests line up together against Russia, but in other ways Russia and China are much closer, Stent explained. "It's an illusion that the US could pry Russia away from a relationship that is getting closer to China," she concluded.

However, the three panelists agreed that the need for carbon emissions to be reduced is understood in leadership circles in both China and Russia. "… China recognizes climate change - lots of scientists and government leaders take seriously the challenge --- and knows we must work together to solve it. We might be able to say it's in our mutual interest to work together on this one particular issue," Bordoff said.

As for Russia, Stent said it faces the challenge of maintaining superpower status while the energy transition reduces demand for its key exports. "It's not an economic superpower. It has a per-capita GDP that's the size of Italy," Stent said. "If Russia doesn't diversify and modernize its economy and think beyond hydrocarbons that the world doesn't want to buy, it's going to be harder to maintain superpower status."

Posted 02 March 2021 by Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit

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