Let’s lower the temperature
How a Biden-Harris administration could act on climate change
Hello! Welcome back to Interior Analytics, a newsletter about the business of American nature. Today, I write about the Biden-Harris transition and what it means for climate change. We dive into some of the strategies that an incoming administration might quickly implement and some that they should look into. If you like what you see, please give it a like, share or reach out on twitter @sambarkley_
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Let’s get to it.
#ClimateTwitter has been a blaze since the election and the Biden-Harris transition team’s signal to bring science and climate change back to decision making at the White House
It’s safe to say It has been a good week for climate action and science.
Since winning the election, Joe Biden and Kamala Harris have been rolling out their transition plan. Expeditiously naming advisors, laying out strategy and putting forth the key priorities of the Biden-Harris administration. These focus areas are a welcome sight to anyone having doubts about the incoming party’s appetite to fight a contentious debate on solving climate change.
Naming advisors and making broad statements on the issue is one thing, but taking action in specific areas is another. Everyone expects a new administration to rejoin the Paris agreement and appoint scientists to key decision making posts, but will they address underlying structural issues at the heart of real outcomes?
Let’s take a look at the transition, what could happen right away, and a few suggestions for what should happen, like:
Restructuring the incentives of science and invest in R&D
Trade as a solution to climate change
Reducing friction for outcomes-based funding and blended financial instruments
Establishing a commission on data standards, land connectivity and conservation tax policy
The transition
The president-elect transition team was quick to mobilize and send out their priorities for a Biden-Harris agenda on day one. Many were relieved to see climate change make the cut. It was no shock that a Biden administration would tackle this challenge, but to elevate it to such a high profile from the beginning sent a clear signal to expect aggressive action shortly after inauguration. Let’s not forget, of the two debates held prior to the election, only one even had climate change as an official “topic”.
Since we learned the results of the election, the President-elect has incorporated climate change into a large percentage of his public talking points, reinforcing that a Biden-Harris administration will be laser-focused on building their brand around this important issue.
Tactically, this makes sense as it lingers in the minds of voters who did not support him in the primaries but eventually propelled him over the top in critical swing districts. Over the last several days since the election was called by most of the media, Biden not only referenced climate change in his acceptance speech, but it was brought up in almost every call with world leaders as they offered their congratulations on the victory. Even the Pope weighed in:
Of course, another concern for a Biden-Harris climate strategy will hinge on the political balance of the Senate where any impactful legislation will have to run its gauntlet. The GOP has had some success with branding the “Green New Deal” as impractical, while young people and minorities overwhelmingly support it. Will Biden’s moderate strategy advance meaningful solutions or will compromises erode any broad support there may be on this critical issue?
Working swiftly, the Biden-Harris transition team released its list of volunteers who will be advising them on the transition of each of the agencies of government as they prepare staff, consider cabinet positions, and set these priorities in motion. One thing became clear: science and climate change will have a seat at the table across the entire spectrum of a Biden-Harris administration.
What could happen right away
It is anyone’s guess what a Biden-Harris administration will actually do first. They have made public statements on potential executive orders on the very first day; from nationwide COVID measures to addressing climate change. The most obvious action that most think will happen immediately, is the formal rejoining of the United States to the Paris Climate Agreement also known as COP21. This mostly symbolic move will assert the administration’s commitment to the cause as well as bring back a level of American leadership to the effort.
Many analysts also believe Biden will take swift action with executive orders to roll back the loosening or elimination of emissions and environmental regulation which became a focus of the Trump administration.
Another strategy they may implement soon after inauguration that is gaining momentum in bi-partisan circles is the 30x30 plan being pushed by leading secretary of the interior candidate and Senator of New Mexico, Tom Udall. The premise: to conserve 30% of land in America by the year 2030. This comes largely from on-going work being done and based on recommendations from the science community as a key tenet of the United Nations’ sustainable development goals for the planet. Not only does this plan square with research supporting this initiative from a warming perspective, but it also turns out to be a relatively reasonable investment in return for ecological outcomes.
As a recent Mckinsey & Co. study called “Valuing Nature Conservation” points out, doubling our current investments in land conservation could reduce atmospheric CO2 by 2.6 gigatons and create or safeguard 27 million to 33 million jobs and $290 billion to $470 billion in GDP (globally).
This is by far the biggest bang for the buck out there on the conservation market.
This potential legislation could gain political momentum in the wake of the wildly popular and bi-partisan Great American Outdoors Act, which could be used in part to fund this initiative.
In short, the money is there and so may be the political headwinds.
What should be happening
The conservation and climate community has been hard at work over the last four years and while some of their proposals have been tabled, there have been unique developments that are worth considering. One such innovation has been installing standards for data and measurement as central to any solution. This has provided scientific entrepreneurs the opportunity to innovate on projects that produce market-rate returns, drawing a parallel interest from the finance community whose clients are demanding a more climate friendly investment portfolio.
And while rejoining the Paris Accord and re-instituting time tested regulations on clean air, water and emissions (which I wrote about here) are deservedly up first, here are a few other strategies that could bolster the future success in this area for any future administration.
Restructure the incentives of science, invest in R&D
Who is working on solving the biggest problems we face in the fight against global warming? We know that 98% of scientists agree that we must act in order to have a fighting chance but if governments can’t solve this huge problem that threatens so many of our systems and the world’s GDP, can we lean on the free market to do any better?
One solution that a Biden-Harris administration can institute quickly is a commission on the incentives of science followed by a five-fold investment in federal research and development funds. Obama wanted to double it in 2016, so I propose we make up lost ground.
This isn’t enough:
Our brightest minds are working diligently at colleges and universities across the world on solutions to climate change. Unfortunately their incentive structure, in large part, fails to encourage market based innovations. Granted, some would argue that this is not the reason for academic research and of course there are exceptions to this rule, but by and large, the model is to research, to publish and then to repeat that process over and over. Those that do push the envelope, keep their breakthroughs a secret thus shielding the collective brainpower of our higher education system from ever collaborating and building on those advancements.
As economist Steven Levitt said in a recent podcast [speaking anecdotally on scientists and solutions to climate change]:
I would argue one of the reasons we're making such little progress is that the market is just not well suited to solving this problem because individual entrepreneurial scientists go off on their own and start their own companies, guard their intellectual property because they're trying to make a profit.
He added in a following podcast:
But In an existential crisis like climate change, it seems like a terrible model for science, it seems like something much more like the Manhattan Project, where we gather the top three hundred scientists in the world together and encourage them, incentivize them to work collectively would be a better model.
Trade as a solution to climate change
Rejoining the Paris Accord will be the easy part. As the second largest emitter in the world and possessing the largest capacity to lead in funding and science, there is no question that the landmark agreement that is unifying the world to fight global warming must include the United States. What will follow is something we have to watch carefully as the Biden-Harris administration looks to rebuild alliances and weigh important trade deals that have been updated over the last four years. Without significant revisions to major pacts like NAFTA, Trans-Pac, NATO and WTO specifically with regards to climate change, there may be stiff headwinds on achieving targets set in Paris.
For instance, the United States Department of Defense is increasingly worried that climate change itself is a major threat to the Nation’s long-term security while at the same time its own military emits more greenhouse gases than some entire countries alone.
Reduce friction for innovative financial instruments
In 2012, the Obama administration proposed an injection of funds upwards of $500M to the Department of Treasury to be used for an innovative and under utilized financial instrument. This mechanism aimed to fund social and environmental outcomes called Pay-for-success (PFS) or as some have called it, social impact bonds (SIBs). Although his budget was not fully approved by Congress, some of these funds were allocated and several of these projects got off the ground like the innovative DC Water environmental impact bond and the very first publicly offered impact bond offered in Atlanta. Since then, there has been a rise in structuring projects like this to some success and it continues to grow. Although they have a longer investment time horizon the concept is simple, Investors get paid based on outcomes achieved. A true win-win. As described by Quantified Ventures, a capital firm specializing in these deals; they work like this:
This innovative approach to solving societal challenges, like green infrastructure or debt restructuring for conservation outcomes, could play a key role in matching projects to funders looking for market rate returns and positive environmental outcomes. As one of the largest conservation NGOs in the world, the Nature Conservancy has been actively building a pipeline of projects through their NatureVest division and has experience in larger scale deal flow as evidenced by their successful “debt-for-nature swap” in the Seychelles. Another vehicle that is gaining global attention.
But these projects take time, a blend of funds from diverse stakeholders and philanthropic and private investors that are seeking deal sizes large enough to provide worthwhile returns for everyone. An infusion of government funding, along with standards and policies on evaluation (and technology), could bring this concept out from the periphery and into the mainstream financial system.
Establish commission on data standards, connectivity and conservation tax policy
Conserving land will be at the forefront of actions being taken immediately to achieve the 30x30 goal, as recommended by scientists, to be the most cost-effective way to mitigate climate change globally. In America, our effort will depend in large part on private landowners participating in this push and the expansion of Federal lands. We need data to help establish a baseline and discover where each opportunity exists to conserve these parcels at the clip necessary to do this by 2030.
Luckily, some of the work on this has already started through a partnership with Montana-based mapping technology company OnX Maps and public land NGO, Theodore Roosevelt Conservation Partnership (TRCP).
The Biden-Harris team can expand on this work by gathering a working group of technology partners, scientists, and local governments to establish these crucial data sets. This will make them easily interpreted by the public providing an open source opportunity for agencies, land trusts, private individuals and NGOs to work on acquisitions, easements and real estate investments with market-rate returns.
The incoming administration can also bring more transparency to the mysterious role that current tax code plays in conservation and land easements. This process has historically been shrouded in secrecy and only best understood by the specialty appraisers and legal teams that work on these transactions. Let’s put together some oversight, clarity and simplification to this process so that we can fill the pipeline with more deals resulting in more land set aside forever.
Let’s set expectations and lower the temperature
Any hope for quick solutions to climate change should be measured as we observe the Biden-Harris transition. Clearly, the country and the world is facing a pandemic that must be addressed first for the economy and the environment to thrive. But if there are any silver linings to the COVID crisis, it is that the structural problems facing society have been illuminated more than ever. The disproportional impact the disease is having on certain cultures mimics similar effects that climate change is and will have on these same communities. The incoming administration is in a unique position to slow down the virus and simultaneously push legislation and infuse resources that reduce our negative influences on a warming planet. As President-elect Biden said during his acceptance speech, “Let’s lower the temperature”.
Special thanks to Team Quebec at @beondeck: Stacy Ndlovu, Derek Browers, Tom White, Matt McPheely, Jake Singer and Mikko Järvenpää
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