The Paris Climate Talks and the INDC Gap
The Paris climate talks are now complete, with almost 200 nations agreeing to a framework for greenhouse gas reduction that attempts to keep any warming “well below 2 °C above preindustrial levels and pursuing efforts to limit the temperature increase to 1.5 °C.” The agreement is the crowning achievement of Obama’s environmental legacy and seeks to make the United States a leader in both reducing greenhouse gases at home and providing monetary assistance to developing countries to facilitate reductions across the globe. While the negotiators have gone home, the tough task of implementation raises serious concerns about the viability of the agreement. In fact, meeting the ambitious goals set out in Paris may prove to be too expensive and too problematic.
For starters, while the president was touting the climate talks, both the House and Senate passed resolutions of disapproval for the capstone of Obama’s climate change policies, the Clean Power Plan regulations. The sweeping new regulations call for power plants to generate 32 percent fewer carbon dioxide emissions in 2030 than produced in 2005. While the congressional disapprovals won’t survive the president’s veto pen, significant legal challenges already have been launched against the regulations.
The Clean Power Plan rules are ambitious and costly. The EPA estimates an annual price tag of $8.4 billion in 2030 but others put the price at $29 billion to $39 billion per year. These are the most expensive rules released by the administration in its attempts to meet the country’s “Intended Nationally Determined Contribution” (INDC) for the global treaty to reduce greenhouse gases. The INDCs represent each nation’s assessment of how much they will reduce their greenhouse gas emissions under the United Nations Framework Convention on Climate Change. In March of this year, Secretary of State John Kerry announced that the U.S. INDC calls for a reduction of 26 percent to 28 percent by 2025.
The administration is counting on the new Clean Power regulations to cut emissions by 870 MMT (million metric tons). But even this costly regulation, with massive repercussions for the economy, American businesses, and consumers, falls well short of the targets outlined in the INDC. A recent report suggests that the U.S. can only reduce its carbon footprint by 9 percent to 19 percent—well below the president’s ambitious goal of 28 percent. And this assumes that the Clean Power Plan is fully implemented on schedule, something highly unlikely given that the rules are facing legal challenges by more than 20 states.
In fact, Stephen Eule of the U.S. Chamber of Commerce and David Bookbinder, former chief climate counsel for the Sierra Club reach similar conclusions with respect to the U.S. INDC for the global climate treaty. Hardly ideological allies, both point to the significant gap between the stated goals and reality. Even after summing up reductions from Obama’s entire major initiatives on greenhouse gases, it is clear that additional cuts will be required to meet the reductions announced by the administration.
Where will these cuts come from? In addition to the Clean Power Plan, the White House has already announced rules on everything from higher CAFE standards for cars, light trucks, and now even heavy trucks, to landfill methane, to new energy efficiency standards for appliances. But the gap remains.
With power plants and mobile sources already under the gun, the administration will have to look elsewhere for additional cuts. This means that the industrial base and agriculture—both significant contributors to greenhouse gases—may be next on the list. But in a global marketplace, additional mandates on American manufacturing will push consumer prices higher while hampering the nation’s global competitiveness. Covering that gap means significantly higher costs and a more expansive regulatory state, but, so far, the administration has been quiet about future policy options, offering no specific policies to fill the void.
Many may be celebrating the new climate agreement, but significant challenges remain. Achieving America’s announced contribution will be costly and require another round of expensive regulations, something that may prove difficult in Washington. As with most political questions, the debate ultimately comes down to money, and the latest climate agreement comes with a hefty price tag. President Obama has already implemented billions of dollars in regulations to reduce greenhouse gases. The political fortitude to continue with billions more in regulations may not exist, leaving the fate of a global agreement on climate change very much in question.