Symbolic Politics, the Keystone Pipeline, and Climate Policy in the Real World
From burying a car at the first Earth Day to the campaign to ban the Keystone Pipeline, U.S. environmentalists have long demonstrated an affinity for symbolic politics. We obviously knew that one buried car wouldn’t stop air pollution, and any reasoned analysis would acknowledge that stopping one pipeline would not eliminate global warming. Symbols have meaning and can influence perceptions and values. But they should not be confused with real, operational change on the ground. They are means, not ends, and the day after you stop a pipeline or you manage to convince the Board of Trustees of your college to divest from fossil fuel investments, you are still pulling up to the gas pump and filling up the tank. Or, for my fellow city dwellers, you are still charging your smartphone using electricity powered by fossil fuels. My own view is that it is time to move past symbolic politics and focus our limited time and attention on meaningful change.
The far more important climate initiative now in play is the Clean Power Plan that requires states to submit plans to EPA on how they will reduce their emissions of greenhouse gases. Using provisions put in the Clean Air Act in 1970, EPA has been told by the Supreme Court that they must regulate greenhouse gases as air pollutants. This creaky old law is exponentially more important than Keystone, divestment, or any other climate initiative now underway in the United States. EPA’s climate regulation is already a subject of intense political controversy. In a piece entitled “44 states take sides in Clean Power Plan legal melee,” published in the newsletter Utility Dive, Robert Walton observed that:
“It’s not often a regulatory package divides the nation so starkly, but the EPA’s carbon regulations have done just that. Nearly every state has jumped into the legal battle over the Obama administration’s Clean Power Plan, an unprecedented level of interest in federal climate rules… Through a variety of legal challenges – the largest includes 24 states led by West Virginia – some 26 states have filed lawsuits to block the Clean Power Plan.”
If this rule is upheld by the courts, it will provide a clear message to business that as a matter of settled law, the U.S. has begun to transition from fossil fuels to renewable energy. This is a major step that will move climate policy from theory to reality. Many cities and businesses have already gotten the message, but if this rule is implemented it will accelerate the transition that is already underway.
Another important operational climate policy that needs to be defended and expanded is the federal renewable energy tax credit. The federal website Energy.gov provides this summary of the credit:
“Established by The Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016; the ability to take the credit against the alternative minimum tax; and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009, which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008. A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer.”
While the residential credit expires in 2016, a commercial credit of 10% continues afterward. That is helpful to companies that install solar panels on residential properties but retain ownership and charge residents a monthly fee based on energy cost savings. There is an argument that the credit has outlived its usefulness and market forces alone are all that is needed for the solar industry to maintain momentum. There is also an argument that the uncertainty of the incentives rule creates a “fire sale” market where everyone will try to install renewable energy equipment before the credit expires at the end of next year. A similar argument is that the uncertainty of the credit coupled with its presence is interfering with the free market, innovation and price competition.
The fact is that market forces alone will not work quickly enough to provide incentives for people to allocate personal resources to retrofit their homes for renewable energy. The transition from fossil fuels to renewable energy is inevitable, and eventually the market will make that happen, but our goal is to accelerate that transition to reduce climate change. The impact of the end of the tax credit is far from trivial. According to James Mueller and Amit Ronen of the George Washington University Solar Institute:
“…current law would increase the cost of solar energy by at least 10 percent in 2017 compared to 2016. This estimated increase includes expected reductions in solar installation costs and a lower cost of capital as projects shift from tax equity toward increased debt. While such an increase may not seem large relative to the recent reductions in solar installation costs, the price spike coincides with saturating renewable energy markets in the leading solar states and minimal new incentives in lagging states. Ultimately, the failure to extend the ITC could result in 42 percent fewer utility-scale solar installations and 15 percent fewer distributed solar installations in 2017.”
At the very moment that we need solar installations to grow, the end of a federal tax subsidy will cause it to shrink. Given the current make up of the U.S. congress, it is difficult to see how this tax policy will be extended. However, a recent alliance of solar activists and the Tea Party in Florida might provide the basis for a coalition in support of solar energy. Lower cost energy and lower taxes ought to have at least modest political appeal. While the environmentalist-Tea Party alliance has been focused on preventing utilities from discouraging household solar installations, we should certainly be exploring the potential of a “green tea” coalition.
A third group of operational climate policies is those we see at the state and local level that encourage energy efficiency and renewable energy. Both New York State and California tax energy use and create a fund that subsidizes energy efficiency and renewable energy. New York City and other local governments are working to green their buildings and vehicle fleets and trying to find ways to operate their service delivery systems sustainably. The dedicated tax revenues are programs that could be extended nationally and have a massive impact on reducing energy waste, modernizing the energy grid and encouraging renewable energy.
The Clean Power Plan, the renewable energy tax credit, and state and local sustainability initiatives may not have the glamor of climate conferences in Paris or the media currency of the fight over the Keystone XL Pipeline, but they are the real, operational policies and programs that actually reduce fossil fuel use and speed the transition to a renewable economy. I view the high-profile issues as a media-induced trap. Everyone’s looking for the flashy game-ending dunk in the basket, while the fundamentals of the game are ignored. The transition to a renewable economy will be a long grinding slog in the mud. It will take time, strategic thinking, political savvy and a tolerance for compromise. It’s long past time to get past symbolic environmental politics and embrace the deal-making that produces real world policies, programs and results.