Navigate to Subject Areas
- Federal Organization and Climate-Specific Roles
- Social Cost of Carbon and Permitting Impacts
- Energy Policy and Renewable Energy
- Forests, Agriculture, and Federal Lands
- Oceans & Fisheries
- Environmental Justice
- Concluding Thoughts: What's Next?
It’s no secret that President Biden plans to prioritize action on climate change. During his presidential campaign, Biden identified climate change as one of his top four priorities, and announced he would seek to put the U.S. on a path towards “net-zero” greenhouse gas emissions by 2050. In the few weeks since his inauguration, President Biden has taken a suite of actions aimed at making good on that promise. In this special edition of B&D’s Carbon Markets Roundup, we break down what steps the Biden Administration has taken or announced in its early days, and forecast what’s next to come. Key coverage includes:
- Recent executive orders on climate change that address:
- Administration appointments and organizational changes
- Social Cost of Carbon and what it could mean for regulations
- Energy policy
- GHG reductions on forests, agriculture, and lands
- Oceans and fisheries
- Environmental justice
- The Paris Agreement and foreign policy
- Potential GHG enforcement initiatives
Within hours of his inauguration, President Biden had acted to bring the U.S. back into the Paris Agreement and signed Executive Order 13990, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” Among other things, that order revoked a key permit issued for the Keystone XL oil pipeline and ordered a review of actions taken under the Trump administration. One week later, the Biden Administration hosted “climate day” at the White House, where he described a “government-wide” approach and focus on climate change issues and signed Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad.” President Biden has taken other actions on climate change as well and is assembling a team at the White House and at the U.S. Environmental Protection Agency with deep experience on climate change and greenhouse gas (GHG) regulatory policy.
The Biden Administration is not operating in a vacuum. As we previously reported, the omnibus spending bill passed in late December, 2020 included numerous provisions aimed at climate change and renewable energy. Meanwhile, the D.C. Circuit issued an opinion vacating the Trump-Era Affordable Clean Energy rule, which clears the way for further action on GHGs within the power sector. Regulators are active as well, with the Treasury recently finalizing rules on the 45Q tax credit for carbon sequestration and EPA acting on GHG emissions from aircraft. As a backdrop to all of this, some business groups are becoming more vocal in their support carbon pricing or GHG regulations, while others are wary of actions that will disrupt their business and industry sectors. And in a time when we are seeing increased and renewed focus on social and racial justice in America, momentum is building for increased action on environmental justice and equity issues, many of which are linked to climate change. These and other actions are beginning to shape the Bide Administration’s climate change policy in various concrete ways.
EO 14008 lays out a “government-wide” approach to climate issues. The Order creates a variety of new structures at the White House and elsewhere in the Executive Branch, and also sets forth several specific mandates and goals that were promised in the climate action plan Biden laid out as a candidate. This Executive Order serves as a companion to EO 13990, which directed agencies to review specific climate-related rules and targeted them for action.
The “whole government” approach to climate policy will have broad implications. In addition to action by the environmental and energy agencies, President Biden has set the expectation that all agencies will contribute toward the Administration’s climate goals. Notably, John Kerry will have a seat on the National Security Council, which will elevate climate issues further and incorporate them into national security decision making.
Agency rulemaking will also be impacted by these Orders. EO 13990 directs agencies to look back to January 20, 2017, the beginning of President Trump’s Administration, and evaluate all regulations, orders, and guidance documents issued during the past four years to determine whether those actions should be suspended, revised, or rescinded. Specific rules affecting greenhouse gases are targeted for immediate review with deadlines between March and September 2021. These include rules for methane emissions in the oil and gas sector, fuel efficiency standards, appliance and building efficiency standards, and certain requirements relating to the mercury and air toxics standards for power plants. While all the rules can be subject to immediate review, any withdrawal or revisions must be made consistent with the Administrative Procedure Act and may require notice and comment. Final rules can also be subject to legal challenge.
EO 14008 creates several organizational structures and positions that will be dedicated to carrying out the Administration’s aggressive climate goals and related goals in environmental policy. In particular, the Biden Administration has created two unique positions to directly address climate change: Special Presidential Envoy for Climate and the National Climate Advisor. EO 14008 also creates a National Climate Task Force, which include every cabinet agency and a number of additional non-cabinet agencies with authority over environmental or scientific matters, to be headed by the National Climate Advisor.
John Kerry serves as Special Presidential Envoy for Climate. In this role, Kerry will focus on international policy and encourage innovative approaches to address a multitude of issues ranging from clean energy to sustainable development.
Gina McCarthy, a former EPA Administrator, will serve as the National Climate Advisor as part of the National Climate Task Force and the White House Office of Domestic Climate Policy. McCarthy will advise the President on domestic climate policy and ensuring policies meet the President’s stated climate goals.
EO 14008 also outlines the important roles the different heads of agencies will play in the administration’s efforts to address climate change and reinforces the “whole government” approach. For example,
The Secretary of the Interior is tasked with reviewing siting and permitting processes on public lands and in offshore waters to inform the National Climate Task Force on steps that can be taken to increase renewable energy production.
The Secretary of the Treasury and the Secretary of State are tasked with coordinating with the Special Presidential Envoy for Climate to develop a climate finance plan.
The chair of the Council on Environmental Quality and the Director of OMB must ensure that federal infrastructure investment reduces climate pollution, and that federal permitting decisions consider the effects of GHG emissions and climate change.
All heads of agencies are tasked with other objectives such as identifying and eliminating any fossil fuel subsidies provided by their agencies; and identifying areas of opportunity for federal funding to incentivize innovation, commercialization, and deployment of clean energy technologies and commercialization.
Under President Biden, federal agencies will more widely consider GHG impacts when undertaking rulemaking actions, perhaps most notably through the development of an updated value to measure the social cost of greenhouse gases. Under Executive Order 12866 (signed by former President Bill Clinton on September 30, 1993), agencies must “assess both the
costs and the benefits” of new regulations and adopt only those regulations that where the “benefits of the intended regulation justify its costs.” Since then, federal agencies have endeavored to put a value on the economic impacts of GHG emissions. Efforts began in the George W. Bush Administration, which formed an Interagency Working Group on Social Cost of Greenhouse Gases, and an initial “social cost of carbon” (SCC) metric was developed and published by the Obama administration and subsequently employed in federal rulemaking. President Trump subsequently disbanded the SCC Working Group in 2017 and sought to discontinue use of the SCC metric. Since then, EPA has relied on an interim measure to evaluate the costs and benefits of GHG emissions
EO 13990 reinstates the SCC Working Group and directs it to develop measures to assess the social cost of carbon, nitrous oxide, and methane, with a goal to capture the full costs of GHG emissions as accurately as possible. Such measures then can be incorporated into an agency’s evaluation of the costs and benefits of a particular action to support more stringent standards that reduce greenhouse gases along with the primary benefits, such as toxic air emissions. Reinstatement of the working group highlights the priority that the Biden Administration places on the measure and indicates a reconsideration of the measure with potentially a significant increase in the social costs attributed to greenhouse gases.
These actions and any new SCC metrics could have important ramifications for federal rulemaking, including how GHG impacts are evaluated when issuing federal permits under the National Environmental Policy Act (NEPA) and other permitting programs. For example, it is possible that a revitalized SCC metric will show higher costs associated with certain energy-sector permitting actions (such as oil and gas pipelines), while showing higher benefits for other actions (such as some Clean Air Act rules). As a result, EPA and other agencies may find it easier to approve—or disapprove—certain federal permits, while justifying more stringent regulations based on related GHG benefits. All of this will help tip the scales towards actions the Biden Administration deems “climate friendly” and away from those it does not.
EO 14008 sets forth several substantive energy goals, including achieving net GHG neutrality for the electricity sector by 2035; replacing federal, state, local, and tribal vehicle fleets with non-emitting vehicles, doubling offshore wind production by 2035, and “conserving” at least 30% of the nation’s lands and waters by 2030. The Executive Order also sets forth a number of mechanisms for achieving these goals. It instructs relevant agencies to identify changes in siting and permitting processes that will facilitate production of renewable energy on public lands and waters. This goal dovetails with the recently enacted Energy Policy Act of 2020, which sets a goal of permitting 25 gigawatts of renewable energy capacity on public lands by 2025, which would roughly triple the amount of renewable energy projects that have been permitted on federal lands since 1978, and creates new mechanisms to streamline permitting and review royalty rates to achieve that goal.
In addition to the direction to acquire non-emitting vehicles, EO 14008 requires each agency to identify opportunities within existing authority and take advantage of those opportunities to use federal purchasing power to spur innovation and adoption of clean energy technologies. Within 120 days, each agency is required to submit a Climate Action Plan, which lays out the agency’s plans for reducing GHG emissions and improving the climate resiliency of the federal facilities under that agency’s control. These Climate Action Plans are to be reviewed by the federal government’s Chief Sustainability Office and regular progress reports are required. To improve these Climate Action Plans, as well as to assist state, local and tribal governments in resiliency planning, NOAA is directed to prepare a report on methods for improving climate forecasting capability and public access to this information, and the Department of Interior and OMB are directed to prepare a report for the Climate Task Force proposing methods to improve state, local, and Tribal access to climate information for purposes of resiliency planning.
EO 14008 also requires the Office of Management and Budget and Council on Environmental Quality to ensure that federal infrastructure investments reduce climate pollution and directs those agencies to review permitting processes to improve the deployment of clean energy and transmission infrastructure. The USDA is directed to undertake a stakeholder process to identify methods to encourage voluntary adoption of climate-friendly agricultural and forestry practices and, within 90 days, submit a report to the Climate Task Force setting forth an agriculture and forestry climate strategy. Similarly, NOAA is directed to undertake a stakeholder process to identify methods for improving the climate resiliency of the nation’s fisheries, which may include changes to fisheries management and conservation practices.
Finally, consistent with the Executive Order’s heavy emphasis on creating well-paying and union jobs as part of the nation’s response to climate change, the Executive Order requires the Departments of Interior and Agriculture to submit a report within 90 days setting forth a plan to create a Civilian Climate Corps to carry out conservation and resiliency projects consistent with the nation’s climate strategy.
EO 14008, Section 208, directs the Secretary of the Interior to indefinitely “pause” new federal leasing for oil and gas onshore and offshore “pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices.” It does not apply to new oil and gas leasing on Indian, State, or private lands. It also does not encompass permitting on existing federal oil and gas leases, which may be the subject of future government actions. The review must consider potential federal royalty adjustments based on “corresponding climate costs,” a legally dubious proposition. There is not yet a Secretarial Order implementing Section 208, though previously scheduled lease sales have already been cancelled in response. This federal leasing “pause” follows a prior Secretarial Order restricting federal leasing or permitting approvals to higher levels within the Department of the Interior. Separately, Section 209 seeks to remove “fossil fuel subsidies” from future federal appropriations requests.
EO 14008 focuses on land-based climate solutions in two ways. First, it sets the new goals of conserving 30 percent of the United States’ lands and waters by 2030, and to come up with a strategy to establish a Civilian Climate Corps to further those efforts. Second, it requires the Department of Agriculture (USDA) to identify and encourage sustainable, less carbon-intensive agricultural practices. It also asks USDA to identify potential programs, funding and financing capacities, and other authorities, and how to encourage the voluntary adoption of climate-smart agricultural and forestry practices.
Furthering these efforts, Robert Bonnie joined USDA as its deputy chief of staff for policy and senior advisor on climate. Mr. Bonnie has extensive experience with nature-based climate mitigation policies and formerly served as the USDA Undersecretary for Natural Resources and Environment from 2013-2017. The USDA is likely to build on its current programs in this area, while parallel legislative efforts—such as the Growing Climate Solutions Act—may find bi-partisan support and an eventual path towards becoming law. These actions will likely converge towards a new set of incentive programs aimed at fostering GHG reduction and sequestration practices in the forestry and agriculture sectors, along with a broader federal focus on federal lands as components of achieving any federal GHG reduction goal.
Oceans & Fisheries
EO 14008 directly addresses fisheries in two important respect. First, Section 216(c) directs the National Oceanic and Atmospheric Administration (NOAA) to, over the course of the next two months, begin efforts to obtain input from the following diverse perspectives “on how to make fisheries and protected resources more resilient to climate change, including changes in management and conservation measures, and improvements in science, monitoring, and cooperative research”:
- Regional ocean councils
- Fishery management councils
- Other stakeholders
This federal directive is landmark in that it embodies the recognition that equitable and effective fisheries climate adaptation responses require input from multiple perspectives. For example, while President Barack Obama’s 2013 Executive Order 13653 Preparing the United States for the Impacts of Climate Change directed NOAA to identify specific actions to increase fisheries’ climate resiliency, it notably lacked a call for the breadth of stakeholder coordination envisioned by this directive.
Second, Section 216(a) directs the Secretary of the Interior, in consultation with the heads of all “relevant agencies,” to submit a report to the National Climate Task Force by April 27, 2021 setting forth recommended:
- Steps for meeting “the goal of conserving at least 30 percent of our land and waters by 2030” (commonly referred to as “30 by 30”);
- Guidelines regarding what qualifies as “conservation” for purposes of the 30 by 30 goal; and
- “Mechanisms to measure progress toward the 30 [by 30] goal.”
Section 216(a) also directs the Secretary of Interior to submit annual progress reports to the Task Force in subsequent years. Notably, this 30 by 30 conservation goal concept recently took center stage with the Ocean-Based Climate Solutions Act of 2020 introduced in the house and subsequently stalled in committee. Marine conservation areas have the potential to mitigate climate change as well as promote adaptation to climate change. They can also be of significant concern to fishing interests as demonstrated by the opposition of more than 800 seafood industry stakeholders to the 30 by 30 goal set forth in the Ocean Based Climate Solutions Act. The Executive Order appears to acknowledge these concerns, calling on the agency heads to “solicit input from State, local, tribal, and territorial officials, agricultural and forest landowners, fishermen, and other key stakeholders in identifying strategies that will encourage broad participation in the goal of conserving 30 percent of our lands and waters by 2030.”
EO 14008 demonstrates the Biden Administration’s “whole-of-government” approach to Environmental Justice (EJ). EJ priorities play a central role throughout the document, prescribing initiatives that broadly advance EJ principles. For instance, Section 217 explains that “[i]t is the policy of [the Biden] Administration to improve air and water quality and to create well-paying union jobs and more opportunities for women and people of color in hard-hit communities.” This section highlights specific initiatives to address historical environmental damage in “hard-hit” communities to not only remedy, but revitalize. Section 211(d) directs the Secretary of Interior and the Office of Management and Budget to assess the potential development of a federal mapping service to facilitate public access to climate-related information that will assist federal, state, local, and tribal governments in climate adaption and resiliency planning. Additionally, the EO directs the Secretary of Health and Human Services to establish an Office of Climate Change and Health Equity and establish an interagency working group focused on decreasing climate risks to vulnerable populations.
The EJ-specific sections of EO 14008 (§§ 219 to 223), entitled Securing Environmental Justice and Spurring Economic Opportunity, establish the administration’s priority of “ensur[ing] that environmental and economic justice are key considerations in how we govern.” Per the EO, the administration intends to achieve these objectives by introducing initiatives to (1) increase government accountability; (2) increase enforcement in disadvantaged communities; (3) empower disadvantaged communities; and (4) provide economic opportunities to members of disadvantaged communities:
- Government Accountability:
- The EO revises President Bill Clinton’s Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations) to create the White House Environmental Justice Interagency Council, which, among other tasks, will develop a strategy to address EJ, develop performance metrics, and publish an annual scorecard to measure progress on EJ implementation.
- The EO also creates the White House Environmental Justice Advisory Council to advise the Interagency Council on ways the federal government can increase efforts to address environmental justice.
- EJ Enforcement:
- Under the EO, the EPA Administrator is directed to strengthen environmental enforcement for violations with disproportionate impacts on disadvantaged communities.
- The EO directs the Attorney General to consider renaming “Environment and Natural Resources Division” of the US Department of Justice (DOJ) to the “Environmental Justice and Natural Resources Division,” develop a comprehensive EJ enforcement strategy in coordination with EPA, and consider creating a new Office of Environmental Justice within DOJ to coordinate EJ activities with other DOJ components and United States Attorneys’ Offices nationwide.
- Community Empowerment:
- Under the EO, the Chair of Council on Environmental Quality must create a geospatial Climate and Economic Justice Screening Tool and annually publish interactive maps highlighting disadvantaged communities.
- EPA must create an environmental pollution notification program for frontline and fenceline communities under the EO.
- The EO directs the Office of Science and Technology Policy to publish a report identifying the climate strategies and technologies that will result in the most air and water quality improvements.
- Economic Opportunity:
- The EO highlights the Justice40 initiative, which sets the goal of ensuring 40% of certain federal investments flow to disadvantaged communities.
- The EO recommends that investments focus on the following areas: clean energy and energy efficiency; clean transit; affordable and sustainable housing; training and workforce development; remediation and reduction of legacy pollution; and development of critical clean water infrastructure.
Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad,” (EO 14008) begins by stating that “Domestic action must go hand in hand with United States international leadership, aimed at significantly enhancing global action” on climate change. The Order places climate change at the center of his Administration’s foreign policy, specifically stating that it is “the policy of my Administration that climate considerations shall be an essential element of United States foreign policy and national security.” In other words, addressing climate change in the international arena is an essential element of the Biden Administration’s foreign policy, with the foremost vehicle being his decision to rejoin the Paris Agreement. As the Order notes, on January 20, 2021, Biden signed a separate “instrument of acceptance” to rejoin the Paris Agreement.
On December 12, 2015, 196 nations, including the United States, adopted the Paris Agreement under the United Nations Framework Convention on Climate Change. At present, 190 nations (out of the 197 that have joined the Convention) are Parties to the Paris Agreement. The U.S. officially joined the Paris Agreement on August 29, 2016 when former President Obama signed an acceptance on behalf of the U.S. The Paris Agreement formally entered into force on November 4, 2016. Subsequently. President Trump announced that the U.S. would withdraw from the Agreement, and that official withdrawal occurred November 2020.
The Agreement sets a goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels. To achieve the GHG reductions needed to meet that goal, the Paris Agreement requires nations to develop and submit every five years their nationally determined contributions (NDCs), which are plans that set forth the nation’s GHG reduction goals. The US submitted its initial NDC in 2015, setting an emissions reduction target of 26-28% below 2005 levels by 2025. EO 14008 indicates that the Biden Administration will immediately turn to developing a new NDC for the United States, which many expect will be significantly lower than the initial U.S. NDC. President Biden aims to submit that NDC in advance of the Leaders’ Climate Summit, an event announced EO 14008 and which is intended to raise climate ambition at the next United Nations Climate Change Conference of the Parties in November 2021. Once a new NDC is developed and submitted, it will likely form the basis for a suite of additional executive and regulatory actions to reduce domestic GHG emissions and foster low-GHG technology and carbon sequestration. While many of these actions will flow from the White House, President Biden also may use the Paris Agreement to push Congress to act on a broader climate-focused legislative package aimed at helping the U.S. achieve its Paris Agreement GHG emissions reduction targets.
In addition to developing NDCs under the Paris Agreement, EO 14008 also sets forth the Administration’s intention to develop a climate finance plan that assists developing countries in achieving ambitious emission reductions, fostering resiliency against climate change impacts, and promoting climate-aligned investments. President Biden has tasked the Secretary of State and the Secretary of the Treasury, in coordination with other various agencies, to submit a plan within 90 days of the Executive Order.
Beyond the Paris Agreement itself, the Executive Order prescribes tasks directed at various cabinet members, including the Secretaries of State, the Treasury, Energy, Defense, and Homeland Security, to address a multitude of international climate change issues. Such issues include evaluating national security and economic risks posed by climate change, developing plans to integrate climate change considerations into the agencies’ international work, identifying steps to promote ending international financing of carbon-intensive fossil-fuel-based energy, and preparing a package to seek ratification of the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer, which requires further reductions in emissions of hydrofluorocarbons (HFCs). Indeed, Biden is pressing the Senate to ratify the Kigali Amendment. It is likely that the Biden Administration will build on this directive over time and incorporate climate change and global GHG reductions into additional foreign policy measures.
To achieve near-term climate gains, Biden may also look to achieve GHG reductions through the enforcement of existing laws and regulations. Unlike policies, enforcement offers tangible, measurable reductions in pollutants that Biden may seek to demonstrate progress as his policies mature. For example, the preambular provisions of judicial Consent Decrees issued under the Clean Air Act already estimate achieved reduction of GHGs, in addition to criteria pollutants and hazardous air pollutants.
How enforcement will unfold is yet unclear and there are relatively few direct federal regulations targeting GHG emissions or climate change. Still, the Biden Administration has a number of tools under existing environmental statutes. Industry should be prepared for enforcement initiatives that focus on chemicals with high CO2e measurements, such as HFCs and methane, along with parallel regulatory efforts to tighten those rules. EPA could also expand its aggressive utilization of statutory and regulatory levers such as the General Duty Clause under Section 112 of the Clean Air Act and the enforcement of risk management programs. This could include an increased focus on extreme weather events and climate change preparedness under existing programs, such as Clean Air Act Risk Management Plans, contingency planning requirements under the Resource Conservation and Recovery Act, and Spill Prevention, Control, and Countermeasure (SPCC) plans under the Clean Water Act. Increased scrutiny on climate change under these laws could result in enforcement actions where federal agencies perceive a gap between current planning and risk-mitigation efforts and an increased risk of adverse advents driven by climate change.
The Administration also may develop climate-focused “rulemaking by enforcement” initiatives, an informal mechanism through which the Agency targets an industry sector to achieve substantial, extra-regulatory requirements through injunctive relief, well beyond the penalties themselves. Notable examples include the Refinery Initiative and its tandem Flaring Initiative, the latter of which set precedent for broad interpretation of “good air pollution control practices,” that industry has yet to challenge and could lay the framework for further GHG controls.
The DOJ’s recent reinstitution of Supplemental Environmental Projects as a settlement mechanism in enforcement further opens an avenue for demanding GHG reduction or climate change mitigation projects, well beyond existing regulatory requirements. Enforcement cases have the added benefit of semi-permanence—once referred to the DOJ, they are usually untouched by subsequent administrations. Further, negotiated CD compliance requirements must often be included in permits in perpetuity, ensuring against backsliding once the CD has terminated.
Based on his campaign platform, after nominations have been secured and his leadership team is in place, President Biden can be expected to move quickly to bolster the ranks and initiatives of EPA’s enforcement branch and the Department of Justice. Climate change and environmental justice will no doubt take center stage.
Concluding Thoughts: What’s Next?
In contrast with the speedy issuance and boldness of these newly announced policies, Biden’s initiatives will take time to implement, and resulting GHG reductions will take years to accrue. Absent a national federal climate change law to solidify these policies—unlikely in the near term—Biden’s efforts to institute long-range climate change regulatory change will face a number of hurdles, including identifying funding and fighting back inevitable litigation. And as the Biden administration has itself demonstrated, actions taken only by Executive Order can easily be undone by future Executive Orders.
On the other hand, many players in the business community (particularly those operating in markets that currently impose more stringent climate regulations) have already incorporated climate change planning into their long-term strategies, and some may be more willing than in the past to accept climate-related regulation as inevitable to some degree. In combination with market drivers, these factors may help Biden’s initiatives benefit from greater independent momentum than previous administrations’ clean energy and climate efforts.
Over the coming months, we expect the Administration to focus on developing key GHG regulations, such as those focused on the energy industry and power plants, while building SCC metrics into agency decision-making. We also expect the Administration to develop policies to streamline permitting for certain renewable energy projects, such as offshore wind while evaluating rules that could help support a broader roll-out of renewables. Beyond energy, near-term priorities are likely to focus on areas where there is at least limited bi-partisan support, such as infrastructure spending and GHG incentives, HFC regulation, and supports for agriculture and forestry. The Biden administration also is likely to turn its eye towards transportation as a key sector for GHG emissions reductions.
As President Biden works to build momentum on the Administration’s climate change regulatory and legislative agenda, we can also be sure that he will engage more broadly on climate issues, particularly with key trading partners, while shifting enforcement initiatives and federal procurement to focus more heavily on climate change. And if the past few weeks have been indicative, there’s plenty more to come.