The White House Is Going After One of Climate Change’s Thorniest Problems
It requires building new factories. Lots of them.
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It is one of the strangest feelings that modern transportation can afford: You’ve just gotten on a train and are gazing out the window. And then, slowly, the scene outside begins to move, and for a split second your mind cannot tell whether the train is moving or the world is.
I wonder if President Joe Biden, who as a senator used to commute from Delaware to Washington, D.C., on Amtrak, is feeling like that right now. For the past year, his administration has pursued an ambitious plan to prepare the United States for the risks of the 21st century: Biden wants to fight climate change, reinvigorate American industry, and get ready to compete—economically, culturally, perhaps even militarily—with China. But he has been frustrated by a different kind of economic upheaval. The outside world—coronavirus variants, supply-chain snarls, scorching inflation—has stymied many of his goals, even while Biden has overseen the strongest economic growth since 1982. It doesn’t help that Congress’s ongoing failure to pass the Build Back Better Act has kept Biden from bringing much of his decarbonization plan to fruition.
But a set of recent announcements shows that Biden’s biggest ambitions for the climate and the economy are not quite dead yet. Yesterday, the White House unveiled a slew of policies aimed at overhauling the U.S. industrial sector in order to reduce its planet-warming carbon pollution. Many of the policies have bipartisan backing—they were authorized in last year’s infrastructure bill. These policies are a big deal because they could help solve one of decarbonization’s thorniest problems: how to make steel, concrete, chemicals, and other major industrial products in a zero-carbon way. These products typically rely on fossil fuels to generate intense heat or provide a raw-material input, which is part of why the industrial sector is responsible for more than 20 percent of global emissions.
However crucial these policies are for the planet, they are arguably even more important as a matter of political economy. They signal a profound and bipartisan change in how the federal government presides over the economy: In order to bring new technologies to market, Washington is willing to act as an investor, matchmaker, and consumer for fledgling innovations. It will design markets to serve public needs, cut loans that banks won’t write, and ensure competition among linchpin firms. The government, in short, is ready to care about stuff again, the real-world economy of flesh and steel. That it is furthering its climate and China goals at the same time is exactly the point.
To understand why, look at the first of these policies: By the middle of this decade, the government will spend $9.5 billion to boost hydrogen production in the United States. Hydrogen can play many roles in the quest to decarbonize industrial products, because, like fossil fuels, it can generate intense heat and store chemical energy. The Department of Energy aims to cut the cost of making hydrogen with renewable electricity at least 80 percent by the end of the decade. That’s about when it would become price-competitive with oil, gas, and coal, according to the consulting group Wood Mackenzie.
In the past few decades, the government might have tried to reduce hydrogen’s cost by funding academic research and development efforts on new technologies. (Even the most conservative presidents have supported pure R&D, because companies have no incentive to conduct pure science.) Yet most of the newly announced money—some $8 billion—will go not to R&D or research grants, but to actually building factories. The Department of Energy will construct four “Hydrogen Regional Innovation Hubs” across the country. This reflects a view that technological progress emerges not from basic research alone, but from scientists, engineers, and workers solving problems together. As the economic analyst Dan Wang has written, that kind of collaborative process used to be what made Detroit and Silicon Valley special; in recent years, China has tried to emulate that magic by building its own technological clusters. Now the U.S. is reviving its old approach.
You can see another new approach in the Department of Energy’s $1 billion project, also announced yesterday, aimed at bringing down the cost of hydrogen electrolysis, the process of using electricity to split water into its constituent oxygen and hydrogen. Instead of funding only early-stage research, the project allows the DOE to intervene at any point in the technology’s path to market in order to bring down the cost of electrolysis.
Those policies focus on increasing the supply of hydrogen in the economy. Another set of policies in the package will try to create demand for zero-carbon industrial goods. The federal government is, after all, one of the world’s biggest consumers, buying $650 billion of goods and services a year. The Biden administration is creating a “Buy Clean” task force that will use the government’s power to help bring low-carbon steel, concrete, and asphalt to the market.
If these enticements help a low-carbon concrete maker come to market, the ramifications would be huge: The world’s appetite for concrete is voracious—we produce 30 billion tons of the stuff every year—and concrete making alone is responsible for 5 to 10 percent of annual global CO2 emissions. An American firm would have a major advantage if it was the first to market with a zero-carbon concrete.
Finally, one of the most important efforts—and the one most likely to fly under the radar—is that the new Buy Clean task force will begin to calculate the carbon emissions “embodied” in various industrial products from American companies. It will ask, in essence, how much carbon pollution was emitted to make a ton of steel from a certain refinery in Ohio, or a ton of cement from a plant in Alabama. Although this may sound like an accounting exercise, it is a necessary precondition for the Biden administration’s ambitious trade policy. The American industrial sector is less carbon-intensive than that of virtually any other country (except the European Union’s). Last year, that relative climate friendliness allowed the White House to broker a “green steel deal” that gave American steelmakers access to the European market despite the U.S.’s lack of any carbon price. But in order to cut more of those deals, the government must know the emissions embodied in various goods.
Not all of these industrial policies are new. The ones that stoke demand are some of the oldest innovation-boosting plays in the government’s book. Decades ago, they were used to establish American industries in semiconductors and solar panels. But they fell out of discussion until Operation Warp Speed, the Trump-era program that successfully developed COVID-19 vaccines within a year, demonstrated their efficacy. The Biden administration is trying to build on that success.
More broadly, this package is trying to solve the problem of how American climate policy should relate to the world. The thing is, when Republicans point out that the U.S. emits only 11 percent of global greenhouse-gas pollution each year, they’re right (although their follow-up point, that therefore the U.S. should give up on fighting climate change, is dead wrong). The U.S. cannot solve climate change by itself—no country can.
Still, Washington can make decarbonization far easier and cheaper for the world. America remains the global hegemon—culturally, financially, technologically. When poorer countries are “developing,” they are, the assumption goes, developing to become more like the United States. Our superpower status has, with some exceptions, generally been a disaster for the climate: We have exported our car-centric transportation system abroad, extracted resources at terrible expense, and encouraged the global economy’s oil dependence. In the 2010s, SUVs—another quintessentially American cultural export—were the second-biggest cause of rising climate pollution.
But if the U.S. is able to establish what a new zero-carbon lifestyle looks like, if it is able to develop competitive zero-carbon industries, then that too will shape the rest of the world’s development. And if the U.S. can sell some of its zero-carbon industrial goods to other countries to help them build net-zero energy systems, buildings, and transportation networks? Then the Biden administration—or any future climate-concerned presidency—would really have some options.
Biden’s plan, of course, could still fail. If Senate Democrats fail to broker a deal over the essential climate provisions in the Build Back Better Act, broader defeat for Biden’s agenda will be very likely. And even if some legislation gets through, Biden’s hand is still not ideal. If it turns out that Americans are too wedded to the status quo—if nobody actually wants to live by zero-carbon industrial infrastructure, such as power plants, solar farms, and transmission lines—then the plan will fail. Biden may yet move the world. Or the world could move him.