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Changing U.S. climate and energy policy could galvanize actions elsewhere, global experts say

The incoming Biden administration has an opportunity to deliver a major shift in U.S. climate and energy policies. That could help spark momentum throughout the world, according to Fatih Birol and Jonathan Pershing.

Birol, executive director of the International Energy Agency, and Pershing, program director of environment at the Hewlett Foundation, analyzed the significance of the United States rejoining the Paris Agreement, the importance of technological innovation and opportunities for financing an energy transition at Stanford University’s Nov. 20 Global Energy Dialogues session.

The United States rejoining the Paris Agreement “would create a tremendous momentum,” said Birol. “The U.S. being a part or not a part of any international agreement is the difference between day and night.”

Rejoining Paris

Under the 2015 Paris Agreement, the United States and countries around the world committed to developing and implementing domestic plans to reduce greenhouse gas emissions. In 2017, President Trump announced the U.S. withdrawal from the agreement. Due to the terms of the accord, the United States was able to withdraw from the agreement only on Nov. 4 this year, but the plan to withdraw had significant impacts since it was announced.

“The United States has been on hiatus from formal government engagement on the Paris discussion” for four years, said Pershing, who served as special envoy for climate change at the U.S. State Department and oversaw the early implementation of the Paris Agreement.

While the incoming Biden administration plans to rejoin the agreement, the United States has fallen behind on its original targets.

Can that be made up?

 “I think that’s the right question to be asking with the Biden team,” said Pershing. He added that while such a catch-up is possible from a technical standpoint, what is possible politically remains to be seen. 

The U.S. withdrawal from the Paris Agreement was a disappointment to many countries, noted Birol. Having the United States rejoin would create important momentum at a time when many countries are updating their pledges and some are developing net-zero targets. 

“The United States has been the playmaker, one of the architects of the Paris Agreement,” Birol said. 

Sparking Innovation

To get to zero emissions about half of the reductions would need to come from technologies that are not yet commercially available, according to Birol.

“The United States is where the innovation comes from when it comes to energy technology,” he said. He added that the United States can and should continue to lead on clean energy innovation.

“I would hope innovation can be one of the magic words for the next administration’s energy and climate portfolio,” he said, citing nuclear, carbon capture and storage, and low-carbon hydrogen used for energy storage, power generation and transportation as examples.

Birol sees the development of carbon capture utilization and storage as particularly critical. Many low- and middle-income countries have many new coal plants. New technologies that could turn captured carbon dioxide into valuable chemicals or carbon-neutral liquid fuels – rather than burying it – could be an essential tool for meeting climate goals without stranding these assets.

Climate investment

A new climate focus from the United States is likely to have a global impact on financing and investment.

“The U.S. coming back on the climate change debate as a strong player, maybe even a leading player, would give a very strong signal to investors around the world,” said Birol. That would be a game changer, he added

Pershing would like to see the United States require banks to incorporate a warming planet in their risk assessments. Such calculations include both the transition risks of new climate policies and the physical risks of climate change. By mandating this kind of assessment, the United States can ensure that financial institutions incorporate climate in their decisions about what to finance and at what price. That will shift global investments in energy, industry and infrastructure.

“Europe is doing that. I think that that might be one of the things that a Biden administration would do.” said Pershing. “You get a very different picture of what is in a bank’s interest, because the risk that you had previously assumed without climate change now shifts.”

Pershing and Birol were interviewed by Lynn Orr, professor emeritus in energy resources engineering; Ranjitha Shivaram, doctoral student in environment and resources; and Andreina Mesalles, who is pursuing a joint master's degree in business and in environment and resources.  

The next Global Energy Dialogues session is on Dec. 9, and will feature a panel of Stanford experts discussing energy policy and technology priorities in the United States. Please visit the Global Energy Forum website to register. All sessions are virtual and are free and open to the public.

The Global Energy Dialogues are funded by the Stanford Global Energy Forum.

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