When it comes to climate change, President Joe Biden isn’t wasting any time. Not only is the U.S. rejoining the Paris Agreement on his first day in office, he is launching a game-changing Clean Energy Revolution. Ambitious targets go way beyond reversing Trump’s environmentally damaging decisions: they include reducing the carbon footprint of the U.S. building stock 50 percent by 2035; taking steps to ensure that the agricultural sector becomes the first in the world to achieve net zero emissions; and requiring public companies to disclose climate-related financial risks and greenhouse gas emissions in their operations and supply chains. All of which, if realised, will have a societal and environmental impact globally, and lead to us all living a Richer Life.
To coincide with the presidential inauguration, we asked five influential women working in the climate arena to share their views on the impact of the U.S. rejoining the Paris Agreement. In Europe, we spoke to the Rt Hon. Amber Rudd whose past roles include UK Secretary of State for Energy and Climate Change, where she led the UK team to completing the Paris Agreement (now an advisor on cybersecurity and energy transition in the private sector); Hannah Tucker, founder of Balance Point Ventures and Disruption Dinners, who researches how disruptive forces are reshaping the economy with a focus on food systems (she previously worked with Al Gore to communicate the case for sustainable investing while at Generation Investment Management) and Melissa Spinoso, Quintet’s sustainability strategist who, as well as developing the company’s own socially responsible practices, looks at sustainable investment strategies for clients.
On the ground in the U.S., trained economist Rachel Cleetus is the policy director for the climate and energy programme at the Union of Concerned Scientists. Her recent research has focused on coastal property at risk from sea level rise and the economy-wide pathways needed in order for the country to reach net zero carbon emissions by 2050. And finally, we asked Washington-based former judge Alice Hill, who was special assistant to President Barack Obama and senior director for resilience policy on the National Security Council staff. Hill, now senior fellow for energy and the environment at the Council on Foreign Relations, recalls: ‘When I joined Obama’s administration, I was asked to study climate change; I quickly realised that it would affect everything, and we needed to start planning.’ Now is the time, finally, for Biden’s climate plans to be put into action.
Why is it important that the U.S. rejoins the Paris Agreement and what implications do you think it will have globally?
Alice Hill: The U.S. needs to rejoin so that it can get back to the important job of cutting its own emissions. It’s also important as a signal that the U.S. intends to become a leader again on this very important issue as well as, I hope, providing aid to those countries that have had less to do with creating the problem and yet who are suffering the most.
Amber Rudd: America is one of the largest polluters so its leadership matters; its position is pivotal. The fact that when Trump withdrew from the Paris Agreement some states such as California carried on delivering climate change targets made internally is encouraging but we need certain activity at government level. Biden has said he’s going back into the Paris Agreement on day one, which is hugely significant, and he has put aside a $2 trillion package to achieve it. The impact will be in investment, leadership and moral authority.
Melissa Spinoso: First of all, it’s a matter of restoring the trust of the international community. Rejoining the Paris Agreement is a very important sign as to where the U.S. is pointing again. There are many questions around whether Biden is going to be able to implement the specifics of his plan but looking at the big picture, it’s very positive. Most importantly, climate change is a global problem and can only be addressed with global solutions and if we’re missing a part of the puzzle as important as the U.S. it becomes even more challenging than it is already.
Hannah Tucker: I see rejoining as marking an inflection point. The government is again joining forces with other global governments around a common agenda (reaching a target of net zero emissions by 2050) and, at the same time, sending a clear signal about what needs to happen economically in order to achieve this. I think when we look back on 2021 we’ll see it as a tipping point and the beginning of more co-ordinated action on both a domestic and international scale.
Rachel Cleetus: As one of the largest annual contributors to carbon emission, the U.S. has a unique responsibility to do its fair share to address climate change. The Biden administration must ensure that the U.S. takes its place at the table and make a durable commitment to deep cuts in emissions and robust climate finance for developing countries. Crucially, as the world sets a course to emerge from the current pandemic and economic crisis, policymakers in the U.S. and globally need to connect near-term imperatives to create jobs and jump start the economy with the longer-term necessity to shift to a zero-carbon economy. That means ensuring that we invest in renewable energy, and the infrastructure needed for that, as a pathway out of the current economic crisis and toward a healthier, more sustainable future.
The global community will welcome the US rejoining the fold. As a relatively rich and powerful nation, the U.S. can also help forge bilateral and multilateral agreements with other major emitters to help advance the global climate agenda. One of the most important bilateral relationships will be that with China. If the U.S. and China can agree to ambitious actions together, it would be of huge importance to the global effort in fighting climate change and could prompt more countries to follow suit.
What excites you most about this renewed commitment to climate action, particularly in relation to living a richer life in terms of impact, well-being, security, family and other key pillars?
AH: What excites me is that it signals that the political leadership does recognise that climate change is an existential threat and demonstrates that there is a commitment to addressing the challenge. Now that we have a very strong team in the White House, we’ll see greater commitment from the U.S. and greater encouragement of others to step up their ambition. One of the challenges I see is that the U.S. needs to be somewhat humble on its return. It’s like a captain leaving the team for a while saying I’m back: the other members might not be so thrilled. We need to be sensitive, demonstrating our commitment and earning back the trust of the other nations.
AR: We all need governments to address climate change. I don’t need to spell out the consequences; we can see them everywhere from higher levels of immigration to climate instability in the poorest areas. There’s a feeling that civil society more than ever expects governments to take action – Greta Thunberg has been fantastic at raising awareness – and politicians are being held to account. People want to see activity which means that governments will do so and therefore there’s a greater chance of success. The huge difference between when the Paris Agreement was put in place and now, which is good for everyone in terms of quality of life, is that clean technology has advanced so much. The cost of solar and subsidising off-shore wind has collapsed, so delivering less carbon emissions is now far more economical than anybody expected. It just shows what human ingenuity can do, how we can find the answers when under pressure.
MS: What excites me is that we can leverage this momentum in a very special moment in time when COVID-19 has made us rethink how to build more sustainable economies and habits. As investors this renewed commitment has major implications and unleashes a broader set of opportunities to support, not only a carbon neutral world, but overall advancement of the sustainability agenda. It will provide reassurance to sustainable investing solutions, increasing confidence and attracting further capital to finance a better future, making a richer life a reality.
HT: The renewed focus in the U.S. on climate action forms part of the greater transformation underway in the global economy: the rise of the modern system. For the last century the industrial economic system has propelled human progress in many areas. However, due to cumulative changes in social and environmental conditions, as well as informational and technological capabilities, it’s no longer sustainable. This shift from industrial to modern brings with it the opportunity to create a richer, more sustainable life - and it’s that potential that excites me.
RC: President Biden’s appointment of John Kerry as Special Presidential Envoy for Climate is very significant, even more so because for the first time this position will be part of the National Security Council. He has a deep understanding of the science of climate change; played a vital role in securing the Paris Agreement alongside other world leaders and is a skilled diplomat who knows how to work well with other countries in a spirit of respect, cooperation and mutual benefit.
On a related note, what opportunities do you see opening up along this path, whether for investors, business, philanthropists or organisations?
AH: There will be a lot more jobs available in clean energy. I think you’ll see an explosion in solar and wind power, as well as fields like research and development. There will also increasingly be work done to help states and cities prepare for the impact of climate change. Even Trump, earlier this month, signed the Storm Act into law, granting money for revolving loan funds that allow communities to borrow money at a low interest rate in response to environmental disasters. Businesses can assist those communities in how to adapt to climate change. I think there will be a race in terms of developing climate services, consulting and modelling in the analysis of climate risk.
AR: Fund managers and private equity companies are all beginning to require that the companies they are investing in address climate change. Also, a huge amount of money is going into the energy transition. Renewables are going to become less expensive as we try to leave as many hydrocarbons in the ground as possible and instead provide alternative, affordable electricity.
MS: Both as individuals and investors, we have to find a framework to work towards trying to achieve climate neutrality. Right now, it’s a popular ambition but it needs to materialise - that will be the key to a sustainable future.
At Quintet we have defined three pillars that apply to people, investors and corporations to achieve neutrality: reduce, transform, remove. As consumers, we can reduce in terms of producing less waste; as investors we can think about reducing carbon emissions for a portfolio through, say, low carbon equities; and as corporations we can reduce the footprint of our operations. On a personal level, transforming is about focusing on the circular economy, for example buying renewable energy or recycled products. Investors can fund projects that are transformative in terms of technologies that facilitate lower emissions, such as through green bonds, and corporations can, for instance, make use of the principles of industrial ecology. As an individual, the remove pillar is more difficult, but we can make choices such as planting a tree or carbon offsetting when we fly. Investors can finance investments – mostly in private markets – that help remove carbon from the environment, such as carbon capture and storage. And corporations can offset their footprint after they have tried to reduce and transform.
HT: Within the context of a new economic system, I see us having the opportunity to participate in many different ways of doing things that weren’t possible before: for instance, focusing on clean energy in the U.S. such as solar, wind and storage systems or unlocking new ways of producing proteins using advances in precision biology. Overall, we are harnessing advancements in informational and technological capabilities to realign the economy with today’s environmental and social reality. The development and rollout of COVID-19 vaccines is just one example of what this means in practice: in the face of a catalytic change in our conditions, we applied advances in Big Data, software analytics, genetic sequencing and engineering to develop a vaccine in a fraction of the time and cost.
Likewise, a continued stream of climate- and clean energy-related events will continue to open up opportunities. Extreme weather will no doubt be amongst the catalysts, but so will technological advancements. For example, Bloomberg New Energy Finance expects exponential declines in the cost of storage batteries to electric cars into price parity with combustion cars by 2023. U.S. government support aimed not only at getting ahead of catalysts, but responding when they do occur, creates additional incentives to take part in these efforts, just like we have experienced with the response to the pandemic. The only difference is that this time the focus is not just on healthcare or remote living, but applies across the economy in power, transport, food, health etc. Those tuned into this landscape of opportunities could get involved in impactful ways.
RC: Businesses and investors have a powerful role to play in orienting the global economy toward low carbon investments in line with the goals of the Paris Agreement, as well as preparing for climate risks. Many forward-looking companies are already doing this by making 100 percent clean energy commitments and undertaking voluntary climate risk disclosure policies. However, much more is needed: recent reports show that the costs of climate change to the global economy are mounting yet the risks are not being fully accounted for in the marketplace and there is a strong bias toward business as usual. The private sector must lend its voice to the push for ambitious climate policies, while ensuring their business models align with the goals of the Paris Agreement.
Similarly, philanthropists can invest in transformative climate solutions, providing funding for grassroots and environmental justice NGOs, not just the big mainstream environmental organisations. It means investing in economic diversification in communities that are currently dependent on fossil fuels for their livelihoods and tax base. The climate movement is the biggest, broadest and most diverse it has ever been - including young people, labour, scientists, businesses, religious leaders, public health experts and environmental groups – and now is the time to lean into the strength that this diversity and numbers brings.
What are the biggest roadblocks standing in the way of realising these positives?
AH: We are a very divided country right now so there are major political challenges in terms of working through how we will cooperate going forward. There’s a very slim margin in the Senate for Democrats and for Biden to pass legislation, so we’ll need even more bipartisan work. The polling shows that most Americans support action on climate change but those who do not are mostly Republicans. As a party, the Republicans didn’t put forward any policies other than planting trees, which I’m all in favour of, but it’s not going to solve the crisis. The Democrats have more ambitious plans, but they involve legislation.
AR: At the same time as decarbonising we have to make the right judgement in supporting poorer countries that need to industrialise in order to take themselves out of poverty. We have to find ways of allowing them to use the world’s carbon budget but also help with funds to develop technology so they can industrialise in a cleaner way than we ever did. Getting the right balance without patronising countries that need to grow is a tricky political dimension.
MS: I think it’s us; we can be the biggest roadblock. We forget or underestimate the power we have as consumers and the influence we have on our peers. The decisions we make on a micro level – such as voting for responsible politicians or not buying products from companies that aren’t socially responsible – can affect the macro landscape.
HT: The first is that the initial economic push from the Biden administration is acutely focused on the pandemic recovery. Although the Clean Energy Revolution is next in line on the economic agenda, the ability to roll it out is largely tied to the ability of the rescue plan to support the U.S. economy and those that the pandemic has most severely impacted. The good news is that adoption of clean energy and other modern ways is now increasingly competitive outright, and this may be enough to give investors, businesses and others the confidence to move forwards.
The other roadblock is that as we increasingly adopt modern ways of living, we will move away from the long-standing industrial ways we have known. This involves the loss of things that are dear to us all - whether that’s driving oil-fuelled cars or eating iconic foods from factory farms. There will be great positives, but also great resistance and volatility associated with the period of disruptive change we are living through.
RC: The biggest obstacle is the lack of political will, thus far, for transformative, bold climate action. The opposition from the fossil fuel companies and their allies is not going away any time soon. They may continue to try to slow down or stop climate action, or at best support incremental policy changes that preserve their profits - even as they claim to endorse the Paris agreement’s net zero goal.
What can each of us do to contribute to global climate commitments during this pivotal moment for international collaboration and leadership?
AH: From a U.S. perspective, climate change is still rarely discussed. It’s not a topic that people commonly address, so we need to make it part of our conversation and increase knowledge about the urgency. Then we need the commitment to make the changes that are required to save the planet. I don’t think that many businesses have incorporated climate risk in their calculations, and they continue to invest in areas that are at great risk. We all need to live more sustainably but it’s going to require government action; there are too many emissions for us each to address on our own.
AR: Have a constant awareness that this is an important issue. I don’t want to preach - my recycling isn’t always perfect - but I try to live a little bit in line with climate values. Also spend money wisely. There are apps, for instance, that will tell you whether your pension is invested in companies that address climate change.
MS: Start with the small things that we can do easily and accept that we’re not perfect. It’s like personal accounting where everything is a trade off: if I take the car, maybe I’ll have the vegetarian option for dinner instead of a steak. Keeping a track of our footprint, by using the Capture app for example, and understanding that for every action there is a consequence is huge because then we can try to minimise that with our choices.
HT: For those interested in playing a more active role on climate and the economic transformation underway, my advice would be to start by considering areas of most influence and passion. The next question is how to shape activities in those areas to align with a sustainable, modern economic system reflective of your values. My passion and area of expertise is food and I see it being transformed in both positive and negative ways, with more ultra-processed, less nutritious products in the name of climate change. I’m aiming to ring the alarm bells on that in keeping with my views on conservation and nutrition and, in a personal capacity, actively invest in the companies I see leading the way.
RC: The most important thing we can do is be informed about the latest science and put pressure on policymakers to act in line with what the data shows is necessary. Those of us who have the ability to make climate-friendly choices in our daily lives, should do so: ensuring our homes are energy efficient; walking, biking or taking mass transit as much as possible; not wasting food and shifting our diet away from meat, especially beef; making investments in companies that are helping advance climate goals; and pushing for low-carbon, climate resilient policies at the local, state and national level. We must also recognise that the climate crisis is devastatingly intersecting with, and compounding, long-standing socioeconomic inequities and racism globally. Our solutions must address the needs of those who are being disproportionately impacted, to centrally embed equity and justice.
Amber Rudd is a former UK politician and is currently an independent advisor on cybersecurity and energy transition in the private sector.
Hannah Tucker is Founder of Balance Point Ventures and Disruption Dinners.
Melissa Spinoso is Sustainability Strategist at Quintet.
Rachel Cleetus is Policy Director for the climate and energy programme at the Union of Concerned Scientists.
Alice Hill is a Senior Fellow for Energy and the Environment at the Council on Foreign Relations.