Big climate bills are not the only—or even the best—climate strategy
It is now clear that the more than decade-old hope of passing a major legislative climate package through the U.S. Congress is a nigh impossibility. As the Democrats’ reconciliation package is being steadily trimmed, its climate provisions—already contorted to fit within the requirements of the Byrd rule and reconciliation bills—have been further diminished or removed completely to secure the necessary 50 votes in the Senate. There is no shortage of media hits that are casting blame: blame on Sen. Joe Manchin (D-W.Va.); blame on Republicans; blame on progressive Democrats—but such views are surface level. The truth of the matter is that this sort of grand climate package was always, and always will be, a poor strategy for addressing climate change.
Passing big climate policies is really difficult
Earlier this year, the R Street Institute noted the key role that Sen. Manchin has in any climate-related legislation under this Congress, since budget reconciliation instructions defer authority of legislative approval on items to the committee of jurisdiction—which Sen. Manchin chairs for climate. This means “Joe Manchin has not just the required vote but the pen for any simple-majority energy legislation Democrats hope to pass.”
The initial $3.5 trillion “Build Back Better” package was proposed with elements like the Clean Electricity Performance Program, which could not pass without Sen. Manchin’s approval. This raises interesting questions as to the robustness of the climate efforts in the legislative package. It is hard to imagine that House Democrats would propose such a policy without first consulting the committee of jurisdiction in the Senate, yet that is exactly the implication of the attempts to pin the blame for the stalled bill on Sen. Manchin. Another possibility, of course, is that politicians always knew the $3.5 trillion package would never pass in such a form and filled it with policies that legislators knew would be sacrificed later to create an illusion that more effort was put towards policy objectives than occurred. Either way, the salient takeaway is that—as the R Street Institute noted in January—budget reconciliation gimmicks were never going to put the United States on the road to climate success.
But this is not the first failure of a major climate bill. In 2009, the Waxman-Markey climate bill passed in the House of Representatives but was never taken up for a vote in the Senate. Despite Democrats having 60 votes in the Senate at the time—enough to pass the bill without requiring any Republican votes—the bill struggled against a narrative that it would impose higher energy costs on consumers during a recession. President Barack Obama’s Director of the Office of Management and Budget even said it would “represent the largest corporate welfare program that has ever been enacted in the history of the United States.” For years now, the political strategy on climate change seems to have been to get a sufficient Democratic majority to pass a climate bill without Republican support. But now, for only the second time in the 21st century, Democrats have complete control of the government—and still no climate deal. If the climate strategy of politicos involves an exceedingly rare and difficult path to victory, it is not a good strategy.
The political reasoning for why blunt Democratic partisanship on climate policy hasn’t worked yet is quite simple. Firstly, the structure of the U.S government, especially the Senate, is such that rural, more right-leaning states have an outsized level of representation. This is by design, to avoid the “tyranny of the majority” whereby more populous states can steamroll rural ones. Even when these states elect Democrats, their senators are more likely to be the sort of Democrat who, like Sen. Manchin, is skeptical of massive efforts to remake economic sectors to achieve grand climate goals. Secondly, despite political rhetoric surrounding climate policy, there is the inescapable truth that 79 percent of U.S. energy use comes from fossil fuels—and policies that raise energy costs are deeply unpopular. And thirdly, while climate change is a dominating news issue, it is only rarely a politically decisive one as it ranks well below other key voter issues.
Bigger isn’t always better when it comes to policy
There is also a bigger question: if the Overton Window somehow shifts and enables a big climate package to pass, is it even the best policy outcome? The Waxman-Markey bill, often lauded as the biggest climate proposal to pass either chamber in Congress, set a climate objective of 17 percent below 2005 emissions by 2020. By 2019, U.S. greenhouse gas (GHG) emissions were 13 percent below 2005 levels even without the Waxman-Markey bill, and by 2020 (thanks in part to the pandemic) U.S. energy-related CO2 emissions were 24 percent below 2005 levels—exceeding the Waxman-Markey targets. Even if the pandemic had not occurred, the Waxman-Markey bill likely would not have made any sort of big difference to emissions compared to the present day, much less mitigated any costs from climate change.
Source: R Street Estimates using EIA data, Annual Energy Outlook and prior CEPP analysis.
Enough time has passed since 2009 to prove that not only is it exceedingly difficult to pass big climate bills that both enumerate climate hawk objectives and are inoffensive enough to garner votes, but also that they don’t seem to make much of a difference to emissions. Part of the reason that the real world has played out so well in emissions reductions compared to expectations has been the significant momentum on climate change that has occurred from both the private sector and smaller bite-sized climate efforts from Congress.
Since 2001, there have been 96 new bills signed into law related to either energy or environment, with the busiest period being the 116th Congress (2019-2020), which had 22 new laws. The most recent big energy policy changes with respect to climate change came from the Energy Act of 2020, a bipartisan effort led by Sen. Lisa Murkowski (R-Ark.) and Sen. Manchin and signed into law by President Donald J. Trump. Interestingly, the three major energy policy initiatives of the 21st century—the Energy Policy Act (2005), the Energy Independence and Security Act (2007) and the Energy Act (2020)—were all signed into law by Republican presidents, which should give pause to anyone asserting that bipartisanship on energy issues or Republican endorsement of environmental policy is too high a bar.
There is a valuable lesson in the failures of the climate portions of 2021’s budget reconciliation efforts: policy ambition does not trump political reality. There is also a valuable lesson from the failure of the Waxman-Markey bill in 2009: big climate bills aren’t the only path to climate success. As we look to climate policy opportunities in the future, we would be wise to seek out the fruits of bipartisanship and incremental climate policies rather than the exceedingly rare set of conditions that might allow a major climate bill to resolve the U.S. emissions trajectory. It is time for American politicians to get smarter on climate policy.