BiGS Actionable Intelligence:
Climate change may not be top of mind for voters in the 2024 U.S. elections despite June being Earth’s 13th consecutive month to break a global heat record. But the stakes are high for U.S. climate policy.
“Climate change is not going to be driving the presidential election,” predicts Harvard University Professor Dustin Tingley, who wrote a major study of stakeholders involved in the clean energy transition.
In early 2024 polling by the Pew Research Center, the environment, energy, and climate change were low on the list of U.S. voter concerns. Instead, mainly bread-and-butter economic and hot-button culture war issues filled their top-10 list.
Still, the stakes are high for U.S. climate policy. Election outcomes will affect the policies that have been supercharging business and investment decisions around decarbonization and the clean energy transition. The U.S. is the world’s second-largest carbon emitting economy, after China, and the largest per-capita.
The centerpiece of the Biden Administration’s climate policy, the 2022 Inflation Reduction Act (IRA) – the single biggest policy initiative in the history of U.S. climate policy – promotes renewable energy sources, and bolsters climate resilience. It is also expensive. A Brookings Institution analysis estimates that the climate provisions affect the federal government budget by nearly $1 trillion in tax breaks and expenditures through 2031.
On the other hand, the risk of not decarbonizing is the social cost of carbon emissions — such as increasing temperatures, rising sea levels, and the economic impact of those changes on agriculture, health, and energy use. The IRA is forecast to lower carbon emissions by 6-11 percentage points, according to the Brookings analysis.
Furthermore, while global warming doesn’t top the list of voter election priorities, Americans increasingly worry about climate issues. Another Pew poll conducted in 2023 found that two-thirds of U.S. adults favor developing renewable energy sources over expanding the production of oil, coal, and natural gas. Evolving public opinion has prompted many businesses, even heavy carbon emitters, to rally around the Biden Administration’s seismic shift in climate policy and push toward decarbonization.
Billions at stake as climate policy in the balance
Tingley told Harvard Business School’s The BiGS Fix that control of the White House and Congress will determine the nature and pace of implementation of the U.S. effort to decarbonize, most notably through the IRA. The legislation passed both houses of Congress on party-line votes. Republicans criticized it with terms such as “reckless spending spree” and said it was too generous to foreign, especially Chinese, companies. GOP members have introduced bills in the current Congress to overturn all or part of the legislation.
Despite vocal opposition, the IRA and other efforts have brought benefits to politically diverse areas. Goldman Sachs Asset Management research shows that in the IRA’s first year of implementation, it prompted the announcement of 280 clean energy projects across 44 states, representing $282 billion of investment. Most of those newly announced IRA-related investment projects, valued at $225 billion, were in congressional districts with a Republican representative. About 60 percent of the jobs expected to be created from those projects also are in Republican districts.
Energy transition incentives for business
Clean energy and other decarbonization tax incentives for businesses and individuals are the most likely to survive any political changes following the 2024 elections, according to Tingley. Certain initiatives that require administrative action are less likely to be a priority if the White House changes hands.
The IRA also contains billions of dollars in loan programs and subsidies that require annual congressional appropriations, which would be affected by one-party control of both houses of Congress or split control of the House and Senate.
A challenge to overcome skeptical hearts and minds
The transition to renewable energy must overcome challenges to win support among residents in areas historically linked to fossil fuels, Tingley’s study points out. Many Americans have learned hard lessons from previous economic transitions that create skepticism about new promises of a better future in a decarbonized economy.
The toughest audience may be in many U.S. states such as Wyoming and Texas or communities that depend heavily on funding from taxes from fossil fuel industries to pay for basic public services, from schools to roads to public safety.
The IRA makes a crude attempt to channel investments in new technologies to these “energy communities.” The legislation designates certain clean energy projects as eligible for enhanced tax credits if they are built in areas in which more than 25 percent of local tax revenues come from fossil fuels. In practice, when investments end up in those communities, is more by chance than by policy design.
“This is not a carefully targeted policy,” says Daniel Raimi, director of equity in the Energy Transition Initiative at Resources for the Future, a Washington, D.C.-based independent, nonprofit research group. He has criticized the IRA’s broad language that is intended to direct investment to energy communities. He notes that the Internal Revenue Service is charged with interpreting which areas can be defined as an energy community under the IRA. The IRS recently ruled that nearly half of the land mass in the U.S. qualifies.
On the other hand, some clean energy investments are emerging in areas that Democrats need to carry to win the presidency and make gains in Congress. Raimi points to sizable investments in battery facilities in swing states such as North Carolina, Michigan, and Wisconsin and other energy-related investments in Nevada, New Mexico, and Pennsylvania. However he argues that investments in energy communities are not laser-targeted or happening rapidly enough to offer any clear idea about the likely impact on public opinion.
“Climate and energy have been swept up like so many other things have into the culture wars,” Raimi told The BiGS Fix. He cautions against any effort to predict the views of voters or policymakers based on purely cost-benefit assumptions. “It's an open question as to whether any sort of real-world investments and economic benefits are going to overcome the kind of ideological divide that this issue is part of.”
A new policy coalition emerging
Even without big shifts in public opinion or voting behavior, the Biden climate policy may still have a shield against elections or political rhetoric.
“The Biden administration developed the IRA as both a policy to tackle climate and also a political strategy to make the policy a little stickier,” says Jonas Meckling, a climate fellow at Harvard Business School’s Institute for Business in Global Society (BiGS).
Without a sufficient track record or implementation that could shift public opinion by the time 2024 polls open, Meckling says the best chance for continuity lies with a shifting policy coalition around the Biden Administration’s new direction.
Very few industry associations opposed the IRA and businesses are its biggest beneficiaries, Meckling told The BiGS Fix. Large corporations are investing and planning based on tax credits and grants that they would be expected to fight for. They may team up with other actors — such as state and local governments, workers, and other interested parties — to maintain powerful pressure for some policy continuity that transcends other political or ideological considerations. A recent study showed, for instance, that some businesses in states with strong climate and clean energy policies supported federal climate policy.
“It's a story of using public investment to shift the interests of key players,” says Meckling, noting that Obamacare and other major legislation have survived electoral and political turbulence. The key, he says, is “Does the IRA mobilize enough actors who are willing to fight for maintaining it?”
BiGS Knowledge: Intelligence curated for you
Harvard University's 2023 event, "Future of Cities: Extreme Heat" featuring moderator John Macomber of Harvard Business School and panelists:
Satchit Balsari, Assistant Professor in Emergency Medicine at Harvard Medical School and Beth Israel Deaconess Medical Center
Zoe Davis, Climate Resilience Project Manager, City of Boston
Francesca Dominici, Clarence James Gamble Professor of Biostatistics, Population and Data Science at Harvard T.H. Chan School of Public Health and Co-Director of the Harvard Data Science Initiative
Jane Gilbert, Chief Heat Officer, Miami-Dade County
Spencer Glendon, Founder, Probable Futures
The panel discussed the grave social and economic issues around environmental justice and public health as global average temperatures rise. The event was cosponsored by Harvard's Office of the Vice Provost for International Affairs, the Office of the Vice Provost for Climate and Sustainability, and the Bloomberg Center for Cities at Harvard University.