CSIS: Future of U.S. Climate and Energy Leadership

The Center for Strategic and International Studies hosted a panel on March 20, 2023, to discuss the future of the US energy economy and the government’s efforts to reduce global emissions. While the Biden administration’s Inflation Reduction Act (IRA) has already been reshaping the US energy economy, the US still remains one of the world’s largest producers and exporters of oil and natural gas. With this in mind, a panel of industry professionals and researchers discussed the future geopolitical and economic impacts of the policy. The talk was moderated by the Director of the Energy Security and Climate Change Program at CSIS, Joseph Majkut.

First, the Vice President of Clean Energy at Edison Electric Institute, Emily Sanford Fischer, discussed the clean energy transition process for the next few years as well as potential setbacks. She noted that the clean energy transition is a formidable challenge, as there is a massive amount of existing energy infrastructure that people rely on. Moreover, there must be affordable, clean energy available for a transition to be possible. She emphasized that the IRA and the Infrastructure Investment and Jobs Act (IIJA)—specifically the tax incentives they provide—would be critical in moving the energy system in place. In terms of setbacks, Fischer listed supply chain issues, trade complications, access to solar panels, and supply of electrolyzers as the main possible obstacles for the transition.

Next, Scott Moskowitz from Qcells spoke about the legislation from an industry perspective. He described the backdrop in which the IRA was signed into law. Moskowitz said that COVID-19, general supply chain issues, and trade disputes have disrupted the trajectory of the energy industry for the past three years, and thus the IRA came at the perfect time. “Frankly, without it having passed, it’s really hard to see how any of these problems would have been solved in the long term,” Moskowitz stated. He emphasized that the bill’s production-based manufacturing credits and adders that extended existing investment tax credits for ten years created a strong environment to invest in the sector. “You’ve seen more investments in the last six months than you have in the last twenty years,” he continued. 

The final speaker, David Waskow from the World Resources Institute discussed the new legislation and the US decarbonization initiatives within the international context. From an innovation standpoint, the IRA has introduced incentives for advanced manufacturing in heavy industry—which will not only push innovation forward but also provide innovative approaches to the rest of the world. Waskow also noted that the IRA has also diversified supply chains, which should not only be seen as advantageous from the anti-China standpoint but also considering that long-term demand will rise for critical minerals, batteries, and solar panels, to keep temperature change to 1.5ºC per year according to the Paris Agreement.

He also commended the Biden administration’s efforts to incorporate environmental justice initiatives in their policy. One such example is a screening tool that locates disadvantaged communities and where investments on clean energy need to be directed. Waskow argued that this is a new approach to climate policy that other countries can look to, which no other nation has attempted thus far including those in the EU. However, he also critiqued the US government for not applying their concern for disadvantaged communities beyond its borders. Waskow suggested that in order to obtain further international credibility on this issue, we must supply more finances needed by developing countries to reduce emissions and build resilience to climate impacts.