The energy shift is the economic race of the century. What will the US do to win?
If there was any doubt that we are now locked in a race to lead the global transition to a low-carbon economy, look no further than the speeches of Presidents Joe Biden and Xi Jinping, delivered to their respective legislatures in March, less than a week apart.
While Biden celebrated America’s industrial and technological renaissance with 15 million new jobs and $650 billion of private sector investment, Xi told legislators that China must “win the battle for key core technologies” in a new era of “technological revolution and industrial transformation.”
Both leaders are on the same page, at least when it comes to understanding what is at stake. They see a fundamental revolution of the global economy taking shape, which is now happening hard and fast. And as in any revolution, they know economic and political power are up for grabs.
The not-so-great news for Americans is that, in this race, China has a commanding head start.
While the U.S. embraced its low-carbon transition in earnest only two years ago with Biden’s Inflation Reduction Act, the CHIPS and Science Act and a Bipartisan Infrastructure Law, China has been building its clean tech industries for more than a decade. Last year alone, China invested $890 billion in clean energy sectors, equaling the GDP of Switzerland, and it now produces nearly two-thirds of electric vehicles.
The result is that China has gained strategic control of key supply chains for green and low-carbon growth.
For example, it controls more than 80 percent of the global production chain for solar panels, meaning that manufacturers in other parts of the world are beholden to Chinese companies for key inputs such as polysilicon, wafers and solar cells. China also controls 60 percent of critical minerals, including cobalt, lithium and rare earths vital for the tech industry, EVs and clean energy.
However, this paradigm shift in the global economy is a marathon, not a sprint. That means America can still catch up. To do so, the next administration must double down on the Inflation Reduction Act and other policies that have turbo-charged investment in clean technologies and advanced manufacturing capacity in the US.
The Inflation Reduction Act shows America is serious about economic competitiveness and understands the consequences of depending on supply chains controlled by economic rivals. But the economic policies that are now in place are just the start.
There can be no wavering or mixed signals to American investors and companies, or any doubt about the direction of travel, because the rest of the world is moving forward, and the U.S. cannot afford to be left behind.
Europe, for example, will soon begin applying a levy on imported goods, based on the volume of greenhouse gases emitted during their production. Other regions are sure to follow. And at the last count, more than 40 countries, accounting for half of global GDP, apply some form of carbon pricing.
This should be a wake-up call to all American exporters, particularly those in carbon-intensive sectors. Being high carbon is not a sign of principled political resistance to be applauded. It’s an increasing economic liability. Export markets are at risk of being lost. Jobs and households will suffer.
What should be clear is that this transition to a low-carbon economy is no longer about the urgent need for climate action — although this will be a big benefit, if we do it right. It is about jobs, innovation, markets, national security, and above all, cutthroat economic competition. It is an economic race for the future.
That is why the next administration must do all it can to further expedite a rapid transition to the new economy while prioritizing investments that address the rising vulnerability of communities around the country to climate change.
In addition to reinforcing the Inflation Reduction Act and other existing programs, three areas need urgent attention to win this economic race: a national reckoning of the climate-related risks faced by families, communities and businesses; more comprehensive planning to strengthen communities to become more resilient to climate change and a national focus on investing in and protecting nature and biodiversity.
Global warming is already inflicting significant financial harm to families and communities. Insurance premiums, for example, have skyrocketed for homes in areas that are vulnerable to climate disasters. And major insurers are pulling out of states including Florida and California because of mounting climate-related losses.
The result is that millions of homeowners across the U.S. cannot get insurance or are forced to pay premiums that jeopardize their financial stability. The extent of this issue is only beginning to be fully understood.
In this regard, the decision by the Treasury Department’s Federal Insurance Office to begin collecting detailed, local insurer data nationwide is a welcome and important first step, as it will give policymakers a comprehensive view of how climate-related financial risks are impacting individuals and families across the country. The next administration must not shy away from being clear with the American people about the severity of the mounting crisis.
Knowing how climate risks impact homeowners at the local level will also help communities build preparedness for a world of growing weather extremes. A vulnerable community is not a secure community and cannot be an economically thriving community. Building climate resilience into our national and local infrastructure and zoning codes is the key to building a healthy and competitive economic future.
Lastly, we need to pay greater attention to our still bountiful but rapidly declining natural capital. There is no healthy economy or long-term economic competitiveness without healthy soils, clean air and water and a rich biodiversity. But scientists warn us that our farmland is exhausted, our southern cities could run out of water, and 40 percent of U.S. wildlife and natural habitats are endangered.
The next administration needs to tackle our natural crisis with the same urgency that this administration prioritized climate action. In the same way that we price carbon emissions, we urgently need to do a better job pricing and valuing the services that nature provides so that we can fund critical conservation and stewardship efforts that will nurse our natural ecosystems back to health and position us for long-term sustainable economic growth.
There is much unfinished business to occupy the next administration. The transition to a low-carbon world is the most consequential economic transformation in human history.
America might still win it, but only if we treat it as the economic race of the century. This is not a time to rest on one’s laurels. It’s time to double down.
John Morton is managing director and head of Americas at Pollination, a climate change investment and advisory firm. He is the former climate counselor to Treasury Secretary Janet Yellen and was President Obama’s senior director for Energy and Climate Change at the National Security Council.
Date: |
Topics
Filter
-
What do Biden's tariffs mean for the energy transition?
Welcome to The Hill's Energy & Environment newsletter {beacon} Energy & Environment Energy & Environment The Big Story New tariffs could slow climate tech adoption As the Biden administration slaps new import tariffs on a range of metals and ...The Hill - Politics - Joe Biden -
What to Do With an Inheritance
A sudden windfall while grieving can be an emotional minefield, particularly for younger adults. Experts share ways to handle it wisely.The New York Times - Business -
Shifting sands and Tyson Fury’s £100m purse: boxing set for biggest fight of century
Oleksandr Usyk a compelling challenger in unification clashSaudi Arabia has overtaken Vegas as the world’s fight capitalIt is a figure that discombobulates the mind every bit as sharply as a right hook to the temple. When Tyson Fury fights ...The Guardian - World - Boxing -
Beyond tariffs, US economic strength is key to containing China
By leveraging its economic strength and showing unwavering determination, the U.S. can reestablish its prestige, deterring and inhibiting the CCP from challenging Taiwan or the global order.The Hill - Politics - China -
US green energy push expected to generate $47bn market in tax credits
Oil companies, banks, private equity and others partner with renewables developers to offset liabilitiesFinancial Times - World -
What's gone wrong for the Rangers -- and what can they do about it?
The Blueshirts raced out to a 3-0 lead, but the Hurricanes have roared back. Here are the troubling trends for New York heading into Game 6.ESPN - Sports -
Stars win race to the Western Conference finals: Keys to their rise
Dallas is halfway to a Stanley Cup. Here are the biggest trends so far and which ones will stick in the next rounds.ESPN - Sports -
Meta's Plan to Win AI Race: Give Its Tech Away Free
Mark Zuckerberg has trained his “Eye of Sauron” on Meta’s AI strategy, which comes with risks as rivals unveil their free products.The Wall Street Journal - Tech - Meta -
What to Do When Your Company's Mission Isn't Enough
State Bags began with a one-for-one giving back mission to support kids. But an epiphany left them wondering: Is this the best we can do?Inc. - Business -
Do dogs need sunscreen? Here’s what vets say
Dog sunscreen protects pets from sunburn, skin cancer and sun damage. What kind of sunscreen is best for dogs, according to vets? Can I put human sunscreen on my dog?NBC News - Top stories
More from The Hill
-
Arizona poll finds trouble for Biden vs. Trump
A new poll shows some trouble for President Biden's chances against former President Trump in Arizona — a state that Biden carried in 2020. A new CBS News poll found Trump leading Biden by 5 percentage points in Arizona, with 52 percent support ...The Hill - Politics - Joe Biden -
Rubio predicts Trump 'won't get to sign' federal election ban
Sen. Marco Rubio (R-Fla.) on Sunday predicted former President Trump will not have the opportunity to sign a national abortion ban even if he is reelected and wanted to, arguing the issue will never enough support in Congress. When asked on NBC ...The Hill - Politics - Donald Trump -
Child care can cost twice as much as rent in these 11 states: See the numbers
It’s no secret that child care is expensive – but in some U.S. states, it can cost at least twice as much as rent for families with more than one kid.The Hill - Politics -
Ron Johnson says he doesn't trust polls showing Trump beating Biden in Wisconsin
Sen. Ron Johnson (R-Wis.) on Sunday brushed off the recent polls showing President Biden's slight lead over former President Trump in his home state of Wiscoin, noting he does not trust early polling. "Well, as somebody who has run statewide three ...The Hill - Politics - Joe Biden -
Biden decries Gaza humanitarian crisis at Morehouse, winning applause
President Biden decried the "humanitarian crisis in Gaza" in his commencement address at Morehouse College on Sunday, which marked his first appearance on a college campus since student protests erupted nationwide over the Israel-Hamas war. ...The Hill - Politics - Joe Biden