With the next United Nations climate change conference underway in Sharm el-Sheikh, Egypt, the United States can participate with renewed credibility. In August, US President Joe Biden signed into law the largest investment in the United States to address the climate crisis. The Inflation Reduction Act mobilizes $374 billion to accelerate the deployment and reduce the cost of clean energy technologies needed to replace fossil fuels.
However, US domestic action alone will not prevent the worst effects of climate change, which include rising sea levels, heat waves, wildfires and droughts. Developed countries are responsible for most of the historical emissions of greenhouse gases. But today, developing countries account for more than half of annual emissions and most of the growth in emissions. Even if the United States and other developed countries were to implement the pledges they committed to at the previous UN climate conference, COP26 in Glasgow, the world would fall behind on global climate goals, in part because developing countries cannot affordably access many of the technologies needed to rapidly decarbonize. The Inflation Reduction Act will make most of these technologies, such as fusion-resistant nuclear reactors and clean hydrogen, cheaper domestically. To bend the curve on global emissions, the United States must commit to exporting these innovations to lower the cost of developing countries to make the clean energy transition.
IN THE MARKET
The Biden administration has campaigned hard for climate action. As the inaugural special presidential climate envoy, former Secretary of State John Kerry has traveled between capitals to build momentum to reduce carbon emissions. In his first week in office, Biden issued the Executive Order to Address the Climate Crisis at Home and Abroad, which directs all US government departments and agencies working internationally to integrate climate considerations into their political initiatives.
But this new foreign policy direction has played out unevenly in practice and remains disconnected from the domestic climate agenda. That’s partly because the US government has historically been bad at helping to create domestic markets for the technological innovations it helps finance.. Since the United States passed the American Recovery and Reinvestment Act of 2009, the government has increased incentives for the development of clean energy industries, such as wind and solar. But it was only with the passage of the Inflation Reduction Act that the government really invested in expanding the nation’s clean energy manufacturing capacity. This was long overdue. As journalist Robinson Meyer has pointed out, many clean energy technologies that the United States helped create, such as solar panels, were eventually commercialized by foreign companies. The Chinese government, in particular, used forced technology transfers, intellectual property theft, and legitimate joint ventures to capitalize on US-funded research and development. It then offered state support for the manufacture of these products. As a result, China exported back to the United States the very technologies that American know-how had created.
The The Inflation Reduction Act, as well as the Jobs and Infrastructure Investment Act and the CHIPS and Science Act, help address this problem by providing funding for domestic manufacturing and increasing tax credits for projects that contain enough content domestic, for example, steel and steel made in the United States. iron or critical minerals mined at home. When the United States strengthens international climate action, it grows the global market for climate solutions like clean hydrogen and electric vehicles, in which the United States already has some competitive advantages. The export boost presents an unprecedented opportunity for the United States to become the world’s preferred manufacturing hub for clean technologies.
But just because conditions are ripe for exports doesn’t mean they will take off. Whether American companies are able to export innovative new technologies depends on the support of the American government, especially given the competition from other countries that recognize the same opportunity. And for While these policies will last beyond Biden’s term in office, clean energy jobs will likely need to proliferate and pay well. In essence, in order to seize this opportunity to generate economic growth by becoming a leader in clean energy manufacturing, the United States should overhaul its trade diplomacy.
NEW SOME DE LIT CLIMA
This will require leadership from the Commerce Department, specifically the International Trade Administration, which has its own foreign service. More than 200 officers, sent to the United States and abroad, are charged with promoting American exports. The Biden administration should expand its ranks and train its employees to prioritize the export of new green technologies, including long-lasting batteries and carbon removal that can permanently sequester emissions from the atmosphere The Biden administration can use this workforce to market resources to nascent cleantech companies and help them tap into one of the fastest-growing segments of the global economy. Persuading these companies to quickly enter foreign markets will ensure that American companies benefit from being the first movers. Otherwise, these advantages will be ceded to companies in countries that promote their domestic industries more aggressively.
TThe Commerce Department can help the US clean energy sector by showcasing domestic companies and trade associations at international meetings on clean energy and climate, including subsequent UN conferences. There, US government officials should announce export deals to signal to developing countries that US companies can provide the technologies they need to achieve their clean energy plans. The Commerce Department should also encourage its trade specialists to join climate task forces and create interagency cleantech teams to capture opportunities opening up overseas as more countries step up to achieve their climate goals.
US government policy on climate action and export promotion has backfired.
The Commerce Department cannot execute this strategy alone. It must work in conjunction with other departments, particularly those that lead the Biden administration’s international climate work, but are less engaged in trade diplomacy. To that end, the White House should develop a clean trade strategy, similar to the National Security Strategy, that charts the course for the entire federal government. There is also a need for inter-institutional cooperation. The State Department, for example, may do so regularly send your embassies market analyzes conducted by the Department of Commerce, including information on updated priority sectors and supply chain segments. For example, US diplomats should be aware that Eastern European countries, wary of relying on Russia for energy, appear to be hungry for US nuclear reactor designs. Similar opportunities will abound—American companies could reap the rewards of the Inflation Reduction Act by exporting green steel to Canada or developing geothermal projects in the Middle East and South Africa. The State Department may also deputize a senior official to champion cleantech diplomacy and convene a one-stop shop for U.S. companies seeking access to government resources. Relevant departments and agencies could create similar coordinator positions.
Similarly, the Biden administration should direct its export and development finance agencies to prioritize the same technologies as the Inflation Reduction Act and other new legislation. These agencies, which include the US International Development Finance Corporation, the Export-Import Bank and the US Trade and Development Agency, should embrace flexibility where they can. They should finance projects beyond those that strictly meet high domestic content requirements, because most emerging technologies will not clear conventional thresholds when it comes to export support. The domestic content requirements of the Inflation Reduction Act are helpful in stimulating domestic manufacturing, but conditioning trade and financial support on similar standards would limit US competitiveness abroad. Along the same lines, these agencies should support domestic manufacturing that facilitates clean energy exports that assume higher levels of technological risk. A greater focus on facilitating exports of innovative technologies will dovetail better with recent domestic investments in the next generation of climate solutions.
SALE OF THE PLAN
The Biden administration should not expect Congress to give it more resources to fight climate change, especially since Republicans are expected to take control of the House of Representatives in the midterm elections. Selling clean-tech exports as a way to compete economically with China, however, is a message that could garner broad support.
US government policy on climate action and export promotion has historically operated in silos. Bringing them together could create a virtuous circle in which reducing emissions abroad and creating domestic employment go hand in hand. This effort could be politically durable given the bipartisan consensus around economic competitiveness and domestic manufacturing. The world will benefit greatly from the Biden administration’s down payment on climate change. The United States should extend its hard-won climate progress to the world. Without it, the United States may come very far in meeting its national emissions reduction goals, but other countries may fall short of theirs.