CEPP is dead. But it was never the most important climate policy.

By Michael Thomas

CEPP is dead. But it was never the most important climate policy.

Last week I shared the bad news about the Clean Electricity Payment Program (CEPP). After months of debate, Sen. Manchin finally announced he wouldn’t vote for it.

Immediately the climate community — myself included — went into a collective state of mourning. The NY Times, and just about every other media outlet, announced that we had lost our best chance at climate action in a decade and would have to wait another 10 years for our next one.

Then, almost miraculously, everything seemed to change as news broke on Thursday that the latest bill’s text — supported by Sen. Manchin and Sen. Sinema — contained roughly $500 billion of climate spending.

In many ways the bill is like a climate activist’s Christmas wishlist: 10 years worth of renewable tax credits, up to $12,500 of electric vehicle rebates, and lots and lots of electrification rebates.

If passed in its current form, it would be the biggest piece of climate legislation in US history. It would be 10 times larger than the climate investments in Obama’s recovery package. To quote our President, it would be a BFD.

So how did we go from nothing to a historic bill? Well, the truth is that we didn’t.

How important was CEPP?

Nearly every story about Build Back Better has claimed that CEPP was the most important piece of climate legislation. For example, the Times article that broke the bad news about Sen. Manchin’s opposition led with this sentence: “The most powerful part of President Biden’s climate agenda will likely be dropped from the massive budget bill.” (emphasis mine)

But was CEPP ever the most important part of the bill?

According to an analysis by Resources for the Future it wasn’t. Contrary to the popular narrative, the tax credits (CEAA) do most of the work to clean up the power sector.

Without either piece, RFF estimates 46% of electricity would be clean by 2030. (This is the baseline scenario without any federal policy change). With the tax credits (CEAA) alone, it’d jump to 69%. And with both policies it’d reach 78%.

That means the tax credits (CEAA) would increase the share of clean electricity by 23 percentage points and CEPP would add an additional 9 percentage points. Between 2022 and 2040, the tax credits (CEAA) alone would cut 9.42 billion tons of carbon emissions, while the CEAA and CEPP would cut 11.71 billion tons.

In other words, while CEPP was always an important part of the bill, it was never “the most powerful part,” as became the narrative.

It was, however, always the most important piece of legislation on the margins. According to a senior Senate staffer I spoke to this week there was never any doubt the tax credits would make it into the bill. Those were a given. But the fate of CEPP was unclear up until a few weeks ago when Sen. Manchin killed it. And whether it’s a piece of legislation like this or a swing district in Pennsylvania, the incentives of politics lure our attention towards these marginal votes and policies.

The job of any interest group — in this case the environmental community — is to constantly focus the media and the public’s attention on these margins.

Of course, none of this is meant as a criticism of the environmental community or the work anyone did to advocate for CEPP. The severity and impacts of climate change will be decided by marginal gains and losses. The difference between two billion tons or two-tenths of a degree in a computer model don’t look like much. But they will manifest as an unfathomable amount of suffering.

Ultimately that’s why everyone from Sierra Club to CEPP’s sponsor Sen. Tina Smith framed the bill as “the most important climate policy.” Communicating nuance at scale is a fool’s errand; it’s also the surest way to kill the energy and momentum of a movement. Far better to paint in broad strokes and avoid the color grey.

After all, how else are you going to get anyone to fight for a policy as esoteric and boring as CEPP?

The silver lining

The good news in all of this is that America can still reduce carbon emissions by 45% by 2030 (the 1.5 degree trajectory). The bad news is that losing CEPP makes it a lot harder.

An analysis by Energy Innovation suggests that CEPP would have been responsible for a third of Build Back Better’s carbon reductions. The authors of that analysis argue, “Without it, emissions are likely to be 250 to 700 MMT higher per year in 2030.” To put that in perspective, consider the entire country of Germany emitted 700 million metric tons (MMT) of carbon in 2019.

In other words, Sen. Manchin killed a policy worth as much as the 6th largest economy in the world’s annual emissions.

But remember all is not lost.

According to a report by Rhodium Group, America can still reduce emissions by 45% by 2030. Here’s what needs to happen:

  1. Congress passes Build Back Better in more or less its current form.
  2. The White House passes a bunch of executive orders.
  3. “Leadership states” (blue states with Democratic trifectas) pass a bunch of really ambitious policies (like 100% electric vehicle targets by 2035).

That last bullet is worth emphasizing because I think it’s the one that’s easiest to overlook. While most media, tweets, and protests will focus on Biden and Congress, states will play an instrumental role in climate action over the next decade.

This differential between the large potential impact and the lack of current attention creates plenty of opportunity for any individual who wants to maximize their impact.

With that in mind, here’s my suggested climate action of the week:

  1. Go to this site and find your two state legislators’ email.
  2. Write them a nice personalized email telling them you are a constituent and would like to meet with them to understand what bills they plan to introduce to address climate change next legislative session.
  3. Meet with them and share personal stories about why you care about this issue and why it’s important your representatives prioritize it.

If I can help in any way, whether it’s editing your email or coming up with a plan once you’ve got the meeting, let me know.

Alright, that’s all for this week, folks.

I’m currently in the process of working on a few different guides that you can expect to see soon:

  • A guide to climate banking — Traditional banks like Chase and Wells Fargo use your money to fund fossil fuel projects. So I tested and reviewed 5 banks that use your deposits to fund clean energy and electrification.
  • A guide to climate investing — It turns out you can get 5-8% annual returns funding clean energy, climate justice, and all kinds of cool impact projects and companies. I looked at over 20 different options and plan to share my favorites.
  • A review of the best air quality monitors — I’m planning to go full nerd and test a few air quality monitors to see how bad our natural gas stove is for our health.

As always, I’d love to hear from you. What do you think about the communications around CEPP and the Build Back Better climate legislation? What questions do you want answered in upcoming guides?

And of course, Happy Halloween! 🎃

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