US-China Climate Deal Opportunity for Market Solutions, Major New Investment

obama-xi-ccdeal.jpgThis morning, the United States and China announced a bold bilateral emissions-reduction agreement. The US agreed to reduce total emissions by 26-28% by 2025, and China agreed to peak its emissions no later than 2030. While bold, and vital to achieving a global transition, the agreement is a beginning, and will need to be strengthened, if we are to see the most economically efficient process for relieving cost and harm coming at us through a disrupted climate. 

For years, Citizens’ Climate Lobby Executive Director Mark Reynolds has argued that a bilateral agreement between the US and China would be a more catalytic step forward than an agreement through the UN process that might involve one but not the other. This past weekend at Yale, pioneering climate scientist Dr. James Hansen pointed to an agreement by the “G2” as vital for motivating a real and viable global transition.

Four years ago to the day (it was still Nov. 11 on the east coast of the US, when we found out about this deal), a small gathering at Villanova University called for climate action plans that have acceleration built into their long-term strategy. Instead of setting targets, and treating them as best-case scenarios which may never be reached, argued a student, we should be making sure we set bold targets and plan to accelerate our action consistently, throughout the process, aiming always to do better and to get there faster.

Today's US-China climate deal included this thinking. The US aims to achieve its targets, within already existing legal authority, but legislation from Congress could get us a more affordable and more aggressive transition. China has agreed its total emissions will peak no later than 2030, but that it will aim to accelerate that timeline, as new options become available and the transition gathers pace. This is a crucial step toward making a real global solution possible.

In the US, since the late 1990s, there has been a deepening partisan divide relating to global climate disruption. Many conservatives have built political careers around the idea that it might not be happening. But with a majority (53%) of Republicans under 35 believing such claims are irresponsible or out of touch with reality, with only 3% of voters under 35 denying climate science, and many conservatives calling for market-driven solutions, obstruction of climate action is no longer a viable national political strategy in the US. 

The plan Citizens’ Climate Lobby proposes for the US is a 100% revenue-neutral Carbon Fee and Dividend (CF&D) plan. It adds zero dollars to government spending, zero dollars to the deficit, zero new bureaucracy, zero new regulation, and would actually add more than $1.3 trillion to GDP over 20 years, and increase real disposable personal income, while reducing emissions more rapidly than the plan announced by Pres. Obama and Pres. Xi, yesterday at the APEC meetings.

Now, why should conservatives whose local economies depend on carbon-emitting fuels for income support such a plan? It’s simple. We cannot afford to continue with such dependency. The global economy is facing steeply rising costs, year after year, due to that dependency, and as the world moves away from carbon-emitting fuels, local and national economies that fail to join the transition will be impoverished, marginalized and stripped of influence.

CF&D provides conservatives with a market-driven plan that actually heals the marketplace, reduces the most costly distortions facing our economy, and creates an unprecedented opportunity for new investment and for new local business activity. Communities that now depend on mineral wealth will eventually be abandoned, when what’s in the ground is used up or loses market value.

CF&D brings local investment from new household income, improvements to the overall economy, and from real local business activity. It allows conservatives to protect and expand local economies, while providing time for industry and investors to transition in the way that will be most economically efficient and most profitable. The status quo will cost all of these interests far more money than taking action.

The US-China climate deal also creates an important opportunity for building a more resilient security environment, globally. Ongoing climate disruption, and the economic perils of remaining stranded with high-cost carbon fuels, pose real national security risks to the United States. Pentagon planners have identified the climate security threat matrix as the most dangerous we face, over coming decades.

And that is not our problem alone: the grave security risks posed by catastrophic disruption of climate patterns that give rise to agriculture as we know it are existential threats to many nations around the world, including populous nations like Bangladesh and Nigeria, as well as the viability of states that control nuclear weapons, like Pakistan. The US-China deal is a first step toward reaching true global cooperation that sees these threats rolled back, and future climate cost significantly reduced.

Admirals, generals, diplomats, heads of state, and global bodies like the World Food Program and the World Health Organization, are all in agreement that inaction threatens to undermine the global food supply, and that nothing is as immediate a threat to the viability of nation-states as pervasive persistent food and water scarcity. We can build on the US-China deal in a way that allows every nation to take the actions it needs to, to reduce per capita consumption of carbon-emitting fuels to safe levels, by mid-century, and to prosper by doing so.

How do we do that? The most cost-effective way the US Congress has at its disposal is to pass Carbon Fee and Dividend legislation, with border adjustments that allow for the standard set by the US to become a global standard for pricing carbon and motivating a rapid transition to low-carbon energy. Border adjustments allow for swift and ready adoption of carbon pricing policies, and bilateral and multilateral negotiations can ensure the second piece of the puzzle (finance and deployment) is done in a way that is fair to all nations.

Achieving that kind of solution, on a timeline consistent with getting real agreement in Paris, at the end of 2015, is the single most valuable thing conservatives in the United States Congress can do to build their legacy as responsible stewards of the American Republic and of a thriving economy. It is the single most influential step they can take to ensure that the global process moves forward in a way that creates more economic efficiency, at home and abroad. 

What Next?

Citizens, stakeholders, businesses, local officials and investors, should all be urging political leaders of all persuasions, around the world, to seize this opportunity and call for legislation that: sets a steady, resolute and rising carbon price that internalizes costs incrementally, steadily and with no leakage. The plan should be simple, transparent, and effective at reducing emissions, while building economic value at the human scale. These plans can be harmonized across borders, according to the relevant market conditions.

We can set a high standard, get a conservative and effective plan in place, build national and local economies, and reduce the risk of unaffordable climate disruption. The signal is now standing out from the noise: it's time for leaders everywhere to lead. The global effort to prosper while steadily reducing harmful emissions is now underway. As it gathers momentum, the goals announced today by the United States and China, along with the new, more aggressive emissions reductions announced by the European Union, will be improved and made easier to achieve. 

The focus should be: straightforward, streamlined carbon pricing, to motivate major market shifts, big investment opportunities, and a structural, transformational boost to the middle class


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