A Hotter, Poorer, and Less Free America

For the past 18 months, Senate Democrats have been trying to find a climate deal acceptable to all 50 of their members. The main obstacles, so far, have been Senator Joe Manchin of West Virginia, the owner of a coal-trading company, who wants any deal to reduce the federal budget deficit, and Senator Kyrsten Sinema of Arizona, who refuses to increase tax rates, the easiest way to satisfy Manchin’s deficit-reduction goal. Senators are now back at the negotiating table, trying to work within the rules Manchin has insisted on.

But their timeline is dwindling. Last month, an environmental lobbyist told me that if the talks did not produce a framework deal by Memorial Day, then he didn’t think they would succeed at all. No such deal came together. Now only about 17 working days remain before Congress’s August recess. Reconciliation, the parliamentary procedure that senators use to pass legislation with 51 votes, gobbles up floor time, so even if Manchin does agree to a deal, Senate Majority Leader Chuck Schumer may not be able to get it to a final vote before the clock runs out.

So it seems possible, even probable, that sometime in the next three or four weeks, Schrodinger’s climate deal will turn out to have been dead all along. Democrats may not admit defeat until the last day of September, when this year’s reconciliation resolution expires.

At that point, the record will be clear. Even though President Joe Biden described climate change as one of the country’s “four historic crises” during the campaign, his administration—like the Obama administration before it—will have failed to pass a climate bill. Come November, Democrats will likely lose one or both houses of Congress. And the United States will stumble into a fourth decade without significant legislative climate policy—or even a coherent energy policy.

So for the sake of mental preparation, if nothing else, it’s worth asking: What will happen then? Over the past few days, I’ve asked this question of energy analysts and climate scholars.

Some of them have found it too depressing to contemplate. Others have shrugged. Even setting the legislative uncertainty aside, this year has been one of the most destabilizing moments for energy markets this century. Russia’s invasion of Ukraine has inaugurated a new price regime for fossil fuels: Oil is now trading at all-time highs in most major currencies, and America’s liquid-natural-gas exports are helping create a single, global price for the commodity. Even coal prices are soaring. “Who the hell knows?” Danny Cullenward, the policy director at the think tank CarbonPlan, told me. “My crystal ball is cloudier than it’s been in a long time.”

But we can make some safe bets. If Congress fails to pass climate legislation, the effects won’t be felt immediately outside of a few areas. (They may include fossil-fuel prices, which could stay elevated for longer.) But over the coming decade, the world will wind up a hotter, poorer place. Carbon emissions will remain high, and the basic framework of the Paris Agreement on climate change may start to crumble.

The United States, in particular, would be left measurably worse. Although the country has never been a responsible actor on climate change, its peculiar inability to pass any significant legislative climate policy would set back its self-conception, international reputation, and economic mojo. At this point, not having a national energy and climate policy is like not having an internet policy in the 1990s—so strange that it makes the entire system look diseased and antique. While fossil fuels remain essential to today’s economy, the next stage of economic development is unmistakably decarbonized and electrified. Without the kind of robust policy support on offer in Europe or China, America’s climate-friendly companies will not be able to keep up. And so the country will fall behind.

Don’t get me wrong: Even then, the United States will remain rich, well educated, and integrated into the global economy, although intensifying wildfires and other climate disasters will eat away at its housing stock, industrial base, and treasured Pax Americana. But the country will be worse off—less wealthy, less at ease, less free—than it could have been. Oil and gas prices will still dictate the shape of American budgets; climate-driven inflation will intensify. And the American public’s understanding of the future will remain clouded—by a public-policy problem first recognized more than 30 years ago by President George H. W. Bush.

The country, in short, will stagnate. And stagnation is a choice.

The most immediate consequence is straightforward. The country will build less zero-carbon infrastructure than if the climate package had passed. Utilities will erect fewer wind and solar farms, and consumers will buy fewer electric vehicles. Fewer Americans, too, will switch to efficient induction stoves or heat pumps. The bill’s delay has already put hundreds of billions of dollars of investment in clean energy on hold. If the bill fails, some of that spending will be canceled.

That cancellation won’t dent only the growth of hippie-dippie renewables. The reconciliation bill’s tax credits had an innovative design, subsidizing all sources of zero-carbon electricity production, not just wind and solar. This design was a large part of why economists at the University of Chicago and the Rhodium Group, an energy-research firm, projected that the tax credits could produce as much as $1.5 trillion of economic surplus by 2050. In their absence, all zero-carbon power would suffer: Existing nuclear-power plants may shut down earlier than they otherwise would, and some new nuclear and geothermal power plants will never get built.

That lack of capital turnover will ripple across the economy. Because fewer Americans will switch to zero-carbon technologies, they will need more fossil fuels, keeping energy prices elevated for longer. Every electric-vehicle driver, after all, is one less buyer of gasoline; every heat-pump owner is one less buyer of natural gas.

That means that the United States will release more carbon pollution than it would otherwise, accelerating global warming and ocean acidification. Don’t get me wrong: The country will not immediately become a cartoonish, smoggy wasteland like in The Lorax, with smokestacks coughing untold amounts of carbon into the atmosphere. (At least, it won’t soon become any more of a climate villain than it is today.) But as its chronic carbon addiction runs its course, its environment and economic fundamentals will get worse.

It’s worth diving into the numbers to get a sense of what that could mean. Last year, America dumped 5.4 billion tons of carbon pollution into the atmosphere, about 17 percent below 2005’s all-time high. With no further policy, the country’s emissions are projected to flatline or modestly fall from that level. The U.S. could still make its first Paris Agreement goal of cutting climate pollution 26 percent below the all-time high by 2025, almost entirely as a consequence of the effects of inflation and the Ukraine war. “Because of high fossil-fuel prices, the 2025 target is within the range of uncertainty,” John Larsen, the lead U.S. climate analyst at the Rhodium Group, told me.

But to avert the worst impacts of climate change—that is, to avoid more than 2.7 degrees Fahrenheit of global warming by the end of the century—the country would have to slash its carbon pollution to half of its all-time high level by 2030. That’s what the Biden administration pledged on Earth Day last year, and it will prove much harder than the 2025 goal. Leah Stokes, a political-science professor at UC Santa Barbara, told me that she did not think the country could reach the target without a reconciliation deal. “Most of the models say you need these investments to really hit these ambitious targets that President Biden put forward,” she said.

Even beyond the climatic consequences, the failure to pass a climate bill will make people sicker and hurt the local environment. Because fossil-fuel-burning cars, factories, and power plants also produce conventionally toxic forms of pollution, America’s air will carry more particulate matter, tiny shards of ash that can poison the heart, lungs, and brain. By 2030, some 25,000 more Americans will die than if the bill had passed, according to Princeton’s energy-policy analysis project.

Those are the direct and most straightforward consequences of the climate deal’s failure, the ones that suggest themselves just by extending current trends into the future. But as the disease of stagnation progresses, other, more dire symptoms will begin to appear. In the coming days, the Supreme Court will rule on a landmark case that could gut the Environmental Protection Agency’s ability to regulate greenhouse-gas pollution under the Clean Air Act. Without a reconciliation deal, the Court’s ruling will determine whether there’s any hope of making the 2030 goal. If the Court preserves most, or even part, of the agency’s power, then the Biden administration can still attempt ambitious climate regulation over the next two years, requiring utilities, carmakers, and perhaps even industrial facilities to cut their climate pollution. And because fossil fuels are so expensive right now, and renewables are so cheap, the agency could justify deep cuts to carbon pollution when conducting a cost-benefit analysis.

Would that be enough to meet the 2030 targets? Gina McCarthy, the White House’s climate czar, has claimed that even with no additional legislation, the government can still hit them. But energy experts are skeptical. “It’s just hard to see all of that happening,” Larsen, the Rhodium Group analyst, told me. “I agree with Gina McCarthy when she says that the federal government has all the tools it needs. But without hundreds of billions of [federal] investment, it makes it 10 times harder to use all the tools in a way that makes it likely the targets would be reached by 2030.” State governments would also have to step up, he said, passing far more sweeping clean-energy rules than even California or New York have on the books today.

And that’s the good outcome. If the Court’s entrenched conservative majority kneecaps the EPA, then the White House will be out of options, and American climate activism will likely take a grim turn. Progressives will have watched the collapse of their legislative and regulatory routes to cut carbon pollution, and the ongoing Republican backlash to corporate activism will foreclose their ability to green even their workplaces. Just as President Donald Trump’s win electrified campus activists, a resounding defeat for climate action could empower those climate campaigners who are already eager to blow up pipelines.

What happens if the United States misses that 2030 goal—or even if it appears likely to miss that goal for much of the 2020s? The effects could ripple across geopolitics. The world has moved on from the bromides of the mid-aughts: Every major polluter has now committed on paper to zeroing out its emissions between 2050 and 2070. America’s failure to hit its pledge under the Paris Agreement—an international treaty shaped to satisfy the peculiar requirements of the U.S. government—could destroy that consensus. Other countries could back out of their own Paris pledges, locking the world into warming by more than 2.7 degrees Fahrenheit, a level that the Intergovernmental Panel on Climate Change has said could produce famines, droughts, and more deadly heat waves within a decade or two.

Or the world could simply leave the United States and its kludgy economy behind. Gregory Nemet, a public-affairs professor at the University of Wisconsin and the author of How Solar Energy Became Cheap, argues that the world is now on track to transition no matter what the United States does. “There’s so much momentum right now in this clean-energy transition. It will still happen, but it will happen more slowly” if no bill passes, he told me.

Another probable outcome is that the next generation of clean-energy technologies won’t get scaled up in the United States; the expertise to produce them will be created elsewhere in the world. I’ve written before about how American labs and companies invented solar photovoltaic technology in the 1950s, only to squander their competitive advantage and allow other countries to reap the benefits of mass production. Without a climate bill, that could happen again for the next round of decarbonization technology, such as hydrogen produced by renewables, direct air carbon capture, and sustainable-aviation-fuel production. China, meanwhile, has thrown its weight behind renewables manufacturing, encouraging companies to scale up domestically and investors to support them.

By contrast, if the tax credits pass, “you start to see a world where with some of these emerging technologies, like [direct air capture] or hydrogen, the U.S. has a competitive head start and has the potential to get into a dominant position,” Larsen said.

The most likely outcome might be a mix of these scenarios. Some new climate-tech start-ups may build their first facility here, because last year’s bipartisan infrastructure law authorized more than $11.5 billion for demonstration direct-air-capture and hydrogen projects. But that money can’t necessarily help build a company’s third, fourth, or fifth facility, and when it comes time to scale up, those same firms may go abroad. “Nobody’s going to build a scale-up business on a fingers-crossed hope that there’s a tax credit at the end of the decade,” Larsen said.

“We’re talking about $1 [trillion] to $4 trillion a year in investments due to energy transition,” Nemet added. “If that spending happens elsewhere, or U.S. firms don’t do that hiring, that’s a lost opportunity.” It could also be a national-security blunder. Look at the role that batteries and other climate tech have played in the war in Ukraine, where soldiers have used small drones to drop grenades on Russian trenches and fired anti-tank rockets from e-bikes. In a future conflict, having the industrial capacity and engineering know-how to mass-manufacture such gadgets could prove decisive.

Even if the U.S. forgoes that investment, Nemet’s largest fear is that the transition will happen too slowly. Even the most conservative assessments say that the world will need to use technology to remove one to three gigatons of carbon every year by the middle of the century. That implies an almost unimaginable level of technological growth given what exists today. “For direct air capture to reach one gigaton a year in 2050, it would have to grow at 40 percent a year, every year, from now to 2050,” he said. Solar deployment, by contrast, has grown 30 percent a year for 40 years, according to Nemet’s research. “And solar’s been kind of miraculous that way, so we’d have to go a little faster,” he said. Even cellphones grew only 15 percent per year at their peak. “If we’re talking about taking our foot off the gas a little bit in the U.S., that’s gonna make it harder” to meet those targets, Nemet told me.

Democrats might get another few chances to pass some climate policy in the coming decade, even if this effort fails. Historically, the party has found more success by tacking energy policy onto other legislative vehicles—such as a must-pass defense or budget bill—rather than separating it out. That could prove true again now. The first opportunity might come after the midterm elections this year, when a lame-duck Congress could pass a bipartisan “tax extenders” package that pushes each party’s cherished tax policies forward. Even if that passes, though, it will likely cover only another year or two, and it won’t restore the tax credits to their highest historical levels, as a reconciliation deal could. It also won’t make the existing set of tax credits, which favor wind or solar specifically, more technology-neutral.

Two milestones stand out after that. The first will arrive next year, when Congress will review agricultural policy and pass a new version of the Farm Bill. The last draft of the Build Back Better proposal included $27 billion to encourage soil-based carbon-capture techniques; that money could be slotted into the Farm Bill. After that, the next opportunity won’t arise until 2025, when most of the major provisions in the Trump tax credits will expire and Congress will debate whether to renew them. Democrats could propose to extend certain Trump-era reforms in exchange for some clean-energy tax credits. But taking advantage of that moment will require Democrats to hold on to some shred of power at the federal level.

And even then, climate policy will matter less than it does now. Companies are deciding where to locate their manufacturing plants now, not in 2025. One of Manchin’s favored policies in the package, a tax credit that encourages firms to build new factories, could shift their decision about where to locate their facilities, but it has to come in the next few years, before those decisions are locked in.

Perhaps one of the biggest risks is that the country’s energy system remains stuck for years to come. Public markets are trapped in a moment of Hamlet-like indecision about energy: Investors can forecast the end of global oil-demand growth, which makes them unwilling to fund efforts to increase oil supply, but they also can’t fund the rapid scale-up of renewables and other clean-energy technology without public support. (High interest rates will make such a build-out even harder.) Consumers are stuck in the resulting gap, facing higher energy prices across the board as money dawdles between fossil fuels and clean energy. Without clear, muscular policy that makes a zero-carbon energy system all but inevitable, industrial firms could just sit around for years, waiting for a better investment signal.

More widely, the failure will speak to the sclerosis of American governance. If Congress cannot bring itself to pass a climate bill, this will be the second time in a row that Democrats have controlled the presidency and both houses of Congress and failed to get a climate deal done: In 2010, President Barack Obama could not coax a bipartisan climate bill through the Senate. Arguably, this is the third time that the Senate will have killed climate legislation: Bill Clinton’s Btu tax, which died in 1993, would have amounted to a kind of approximate carbon tax. But this will not just be a Democratic problem: Barring the intercession of the courts, neither party has been able to accomplish many of its governance objectives lately.