As the coronavirus pandemic has sent governments scrambling to respond, many politicians have drawn a parallel with another global threat: climate change.
“We have to act dramatically, boldly, if we’re going to save lives in this country and around the world,” Bernie Sanders, one of the Democratic presidential contenders, said recently. “I look at climate change in the exact same way.”
Yet while the principles may be the same, the politics of the two pressing challenges are very different.
The analogies between the coronavirus and climate change are easy to understand. The radical measures adopted to fight the pandemic look like precedents for addressing the potentially greater danger from climate change.
Fatih Birol, executive director of the International Energy Agency, has suggested that the need for widespread intervention by governments to prevent economic collapse should be seen as a “historic opportunity” to direct energy investment into technologies that reduce greenhouse gas emissions.
Large-scale investment to support solar and wind power, batteries, hydrogen and carbon capture and storage would “bring the twin benefits of stimulating economies and accelerating clean energy transitions,” he wrote earlier this month.
However, attempts by Barack Obama when US president to drive a transition to cleaner energy in the midst of an economic crisis hold important lessons for future administrations who are persuaded by Mr Birol’s case.
Mr Obama came into office in 2009 with immediate imperatives forced on him by the financial crisis and the deepening recession alongside the longer-term goal for tackling climate change. The $800bn economic stimulus package agreed by Congress that year included $90bn for energy. Mr Obama said it was “laying the groundwork for a new, green energy economy that can create countless well-paying jobs”.
The implementation, however, was more challenging than that pitch made it sound. Solyndra, the innovative solar manufacturer backed by a $535m government loan guarantee, became the unhappy poster child for the strategy after going into bankruptcy in 2011. There were other failures too.
Fisker Automotive, an electric car manufacturer, and Abound Solar were two other stimulus-backed companies that folded. The programme also supported investment in advanced biofuels production, which has repeatedly fallen short of the government’s targets.
Of nine large projects for capturing and storing carbon emissions that were backed by the government over 2010-17, only three remained active by the end of 2017.
Not everything was a failure.
Tax credits and grants for renewable energy helped the wind and solar industries grow at a critical phase in their development. Their costs have fallen so far they are increasingly competitive without the need for subsidies, and this year wind and solar will account for most of the additions of new generation capacity in the US. The federal government’s bailout of the car manufacturers gave it leverage, which it used to push them into agreeing to increasingly stringent fuel economy and emissions standards. Government support helped put smart meters into 16m American homes and regulations and grants gave a push to energy-saving LED lightbulbs, which have rapidly gained market share.
Even so, the failure of Solyndra cast a shadow over the whole strategy. The name became synonymous with cosy crony capitalism: a company that was able to take hundreds of millions of dollars of taxpayers’ money at a time when millions of Americans were losing their jobs and their homes. President Donald Trump used it as a line to attack Hillary Clinton during the 2016 election campaign, saying “we invested in a solar company, our country. That was a disaster”.
Joe Biden, who was Mr Obama’s vice-president and is now the likely Democratic presidential nominee, could come into office next year during another economic crisis. Like Mr Obama, he is promising “a clean energy revolution — to address this grave threat and lead the world in addressing the climate emergency”.
His plan includes investing $1.7tn of federal money in clean energy over 10 years, which he says could be paid for from increased taxes on corporations.
At a time when the US government can borrow at very low interest rates and is battling to keep the economy out of a deep recession, any such spending will have a short-term benefit wherever it goes. But the mixed results of the Obama administration’s stimulus offer some historic pointers on uses that will have the greatest long-term impact.
Grants and loans to specific companies and projects have often failed. Support mechanisms that are widely available, like the tax credits and grants for wind and solar power, have the most lasting effects, and also stand the greatest chance of winning broad support across the political spectrum.
In any functioning democracy, power will change hands, and an energy transition evolving over decades will stall if it is dependent on policies that cannot survive a change of government. It is uncertain that Mr Biden, even if nominated as his party’s candidate, will defeat the climate-change sceptic Donald Turmp in the race for White House this November. But if Mr Biden does succeed, he should be looking for ways to put the technologies of the future, including energy storage, carbon capture and hydrogen, on a stable long-term footing.
If he does make it to the White House, Mr Biden needs to avoid repeating the same mistakes that were made the last time he was in the administration, or he will be accused like Mr Obama of having wasted a crisis.
The writer is vice-chair, Americas at Wood Mackenzie and former US energy and industry editor at the Financial Times
Source: Economy - ft.com
