In a rather grim moment recently, Senator Whitehouse had a meltdown on Twitter (of all places) about the Biden administration’s seeming indifference to climate change. Apparently, he believes that it is unlikely that Team Biden is prepared to fight the greatest threat we face (other than, or perhaps in addition to, White supremacy, domestic terrorism or China)
That’s probably because the Biden administration is fully aware that survey research indicates that people are not willing to pay much to address climate change (when we ask in surveys, the median responses land between 20 and 50 dollars a year). That means policymakers who want to “do something” about climate need to figure out a way to hide the costs (like giving tax credits to EV buyers) rather than making them explicit (like a carbon tax or cap and trade).
No less an authority than Gina McCarthy, Mr. Biden’s climate czarina, has said that now is not the moment to talk about or ask for sacrifice with respect to climate change.
The reality is that the infrastructure plan will include some cash for electric vehicles, for wind and solar and battery tax credits and for carbon capture and sequestration. But scale and mathematics matter.
Let’s take an example. As part of the original infrastructure package, Mr. Biden proposed $175 billion to be spent on electric vehicles. In his subsequent budget, $135 billion would go to point of sale rebates. Leaving aside legitimate questions about the equity considerations of such rebates (analysis done by professors at Cal-Berkeley indicates that about 90% of tax credits for EVs go to taxpayers in the upper quintile of income) and the difficulty that such a provision may have getting through reconciliation, the reality is that $135 billion may not really be that much.
At $7,500 per car or truck, those point of sale rebates could be given to purchasers of 18 million cars or trucks. That sounds like a lot; is it a lot?
Well, over the same eight years that the credit is expected to be available, United States consumers will buy somewhere between 140 million and 160 million cars, depending on how the economy goes. So, $135 billion will affect a bit more than 12% of purchasing decisions.
Let’s think about electric vehicle chargers. The $40 billion remaining is probably designed to build the 500,000 chargers proposed by Mr. Biden. For purposes of context, California alone has estimated it will need 1.25 million chargers. Right now, they have 67,000 built or being built. They have somewhere between 50,000 and 125,000 chargers in the planning stages.
The $40 billion will get California to about half of its goal. No telling what the rest of the nation is supposed to do.
In addition to chargers, California also estimates it will need to have an additional 3,600 megawatts (about the size of three large nuclear power plants) to charge those cars. Given the tight generation picture in the West (California imports about one-third of its electricity from its neighbors), it is unlikely that 3,600 megawatts will be available anytime soon. In fact, it is very likely that California will have rolling blackouts again this year.
With respect to electrification of the larger economy, it seems reasonable to expect that it will take longer than anticipated. There are now several studies (NREL, Princeton, E3) that have concluded that electrification would require a doubling of generation capacity (not including replacing natural gas-fired, coal-fired and nuclear generation that exists now), as well as a doubling or tripling of the transmission system. That seems unlikely in the next 15 years, or even the next 25 years, especially given the permitting challenges that all energy projects and all linear projects (pipelines and transmission lines) now face.
Or, we could think about mining. The International Energy Agency produced a report on mining and the energy transition last month. It concludes that demand for key minerals such as lithium, graphite, nickel and rare-earth metals would skyrocket, rising by 4,200%, 2,500%, 1,900% and 700%, respectively, by 2040.
The IEA also noted that there are, at the moment, no plans to fund and build the necessary mines and refineries. The supply of the needed minerals is entirely notional, and increasing production will take time. The IEA dryly notes: “It has taken on average over 16 years to move mining projects from discovery to first production.”
How about carbon capture? At $50 a ton, if you wanted to capture all the carbon the United States produces, the federal government would need a shade less than $300 billion a year, each year, just to pay the tax credit. That does not count the costs of the capture, the pipelines or the storage areas, even if you could permit them.
Think about the climate pledge. The big news at the tail end of April was President Biden’s pledge to reduce U.S. emissions of greenhouse gases by 50% by 2030 (from a 2005 baseline). This pledge follows on President Obama’s pledge to reduce emissions by 28% by 2025 (from the same 2005 baseline).
In 2005, net greenhouse gas emissions in the United States were about 6.635 billion tons (according to EPA). In 2019, net greenhouse gas emissions in the United States were about 5.769 billion tons. To meet President Obama’s pledge, that number would need to fall to 4.777 billion tons in the next 42 months or so. It is possible, but not likely.
To meet Mr. Biden’s pledge, net greenhouse gas emissions in the United States would have to fall to about 3.3 billion tons, or about 2.5 billion tons lower than current emissions in a little more than eight years. Again, possible, but not likely.
For contextual purposes, U.S. net greenhouse gas emissions fell about 13% from 2005 through 2019. To meet Mr. Biden’s goal, the pace of reductions would have to triple pretty much immediately. Electric vehicles would need to go from 2% of total U.S. sales (about 350,000 cars and trucks) to about 50% (or 8.5 million cars and trucks) in 2030. That’s possible, but it would be aggressive and unlikely.
It is important to note that almost all of the reductions between 2005 and 2019 — 794 million of the 866 million tons reduced — came from the utility sector, primarily as a result of fuel switching from coal to natural gas. These reductions were driven by precision drilling and well stimulation, which have led to very low natural gas prices. Score one for technology and innovation.
Despite the promises of both former presidents, the rate of reductions is unlikely to accelerate. Every day, consumers vote with their pocketbooks, and every couple of years, voters vote in elections. The message both send is that they are willing to do only very modest things to address climate change (again, back to those survey responses of 20 to 50 dollars). They are not willing to upend their entire lives.
Finally, Mr. Biden has also announced a goal of the United States having net-zero greenhouse gas emissions by 2050.
Because of how long cars last nowadays, that can’t really happen unless gasoline-powered cars are no longer produced or sold by 2035. Consequently, it seems reasonable to assume that the administration will use existing federal programs — probably the fuel efficiency mandate (CAFE) — to either forbid or prevent the widespread sale of internal combustion engines by 2050.
That may work. Or, customers might resist paying the increased costs associated with electric vehicles. Or at some point — perhaps in the wake of an invasion of Taiwan or a full-on blockade of Australia — reliance on China for 80% of the critical minerals associated with electric vehicle batteries may not seem wise.
It is difficult to imagine that Americans will accept reliance on a nation noted for slavery, murder, torture, international hooliganism, etc. when they have more appealing alternatives nearby (think Texas, Oklahoma, North Dakota, etc.).
It may turn out that people just don’t want the government to tell them what to do. In a recent study, one in five purchasers of electric vehicles in California selected a gasoline-powered car for their next purchase.
Perhaps most importantly, what does the need to outlaw your competition say about your product?
The larger problem here may be the government. In the 24 years since the Kyoto Protocol was signed, global emissions of greenhouse gases have increased from 35 gigatons a year to about 52 gigatons a year. Just this year, the greenhouse gas emissions from China exceeded the emissions from the other OECD nations combined (14.09 gigatons v. 14.06 gigatons). With respect to emissions, the United States is now a distant and fading second place. U.S. emissions have been falling at a rate of about 1.1% a year for the last decade across Republican and Democrat administrations.
That could be why, despite pressure from Team Biden during part of the administration’s climate festival in April, none of the other countries made any announcements involving a material change in their previous commitments, except for China, which noted that it planned to keep building coal-fired power plants for another ten years or so, then get serious about heading towards a net-zero economy.
It doesn’t really matter. The lessons are always the same. First, if you’re looking to the government, any government, for salvation, you’re in the wrong place. Second, if you want to know what is likely to happen, forget the propaganda, keep an eye on the math.
About the author: Michael McKenna is the President of MWR Strategies and a columnist for The Washington Times. He was most recently a Deputy Assistant to the President and Deputy Director of the Office of Legislative Affairs at the White House. He has worked in senior positions in a variety of government agencies at the state and federal levels. He has advised a wide variety of political and corporate clients with respect to government affairs, public policy issues, opinion research, and communications strategies. He has also worked on numerous campaigns and transition efforts.
Mike has degrees from the University of Pennsylvania and George Mason University and has been a Fellow at the Dole Institute at the University of Kansas and the Institute for Public Policy Studies at the University of Denver.