How Continuity in U.S. Climate Policy Pays Off

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At a first glance, it would be easy to get frustrated at the state of climate policy discussion on the presidential campaign trail. During the presidential debate, Vice President Kamala Harris presented herself as a continuity candidate that will maintain the Biden climate agenda rather than embracing a vision for bold new climate policies. Meanwhile, former President Donald Trump sidestepped the issue entirely.

None of it seems to match the urgency of the crisis we’re facing as the world faces an increasing crush of climate-related disasters and remains on the precipice of hitting temperature rise metrics set in the Paris Agreement. And, indeed, some climate advocates have said that the U.S. needs something akin to an IRA 2.0, proposing a redux of the Inflation Reduction Act, President Joe Biden’s landmark climate law.

But there’s a case to be made that simply staying the course in Washington will pay big climate dividends. Over the last three years, the Biden Administration has sowed the seed of decarbonization in a number of key industries—but policy continuity is required for the plant to bloom. And, when it does, investments in clean technologies may accelerate much faster, spurring even faster decarbonization.

“The trajectory of decarbonization at the sub-sector level is nonlinear,” Ali Zaidi, national climate advisor at the White House, told me earlier this year. “Each sector has a different stepwise trajectory, so if you hit a tipping point, then you take a big leap forward.” 

Nowhere is that continuity more important than with the IRA. The law has advanced clean technology manufacturing and deployment across the country with $247 billion invested last year, according to data from the Rhodium Group. That’s a 75% increase from 2021, the year before the law was enacted. 

In some ways, though, the IRA hasn’t been as effective as hoped—at least not yet. A range of factors from supply chain issues to interest rates have posed challenges. Some companies have homed in on technical issues with the fine print of the law’s implementation. Continuity provides an opportunity to address those challenges, and ensure the law meets its potential. Zaidi said that a lot of work remains at a project level—even though the administration has issued a wide array of rules and regulations to implement the IRA. “There's just a lot of blocking and tackling," he said.

And, with continuity, there are other factors that could break in the favor of climate action, too. With the continued nudge of the IRA, investment in electric vehicle manufacturing will keep flowing, further driving down the price of electric vehicles. Sooner or later, EVs will reach price parity with cars powered by the internal combustion engine. That could rapidly accelerate consumer adoption. With continuity, fledgling sectors and technologies—from sustainable aviation fuel to energy storage—would also experience renewed investor confidence that tax incentives will last another four years.

Continuity would also give the IRA and other Biden climate measures a chance to blossom under market conditions more favorable than in the period of inflation and high interest rates of the last few years. High interest rates have dragged down renewable energy investment for the simple reason that clean energy requires more upfront capital compared to the equivalent fossil fuel generating power plant. Interest rates are coming down regardless of who wins the election, but if you combine lower rates with continued IRA incentives, renewable energy is bound to benefit.

It’s not just Democrats who are making the case for continuity. In August, 18 Republican members of the House of Representatives signed onto a letter warning that targeting clean energy tax incentives in the IRA could be detrimental to “business and market certainty.” And earlier this year ExxonMobil CEO Darren Woods derided the “flip-flopping” that might occur if a future administration tries to undo existing climate rules. “We need consistency in this space,” he said at the CERAWeek conference in March.

To be clear, the case for consistency isn’t that the existing climate rules will be enough to meet U.S. obligations to cut emissions. Analysis after analysis shows that new measures are needed.  

But consistency has the potential to rapidly accelerate decarbonization in a range of sectors.  And for those eager to see the U.S. take action on climate, continuity is far from the worst-case scenario.