Why the CEPP is More Cap and Trade than Green New Deal

Supporters point out that the CEPP is a vast improvement over the industry-supported “cap-and-trade” plan of the Obama years. And they’re right that the CEPP is more ambitious in lowering projected emissions (as it should be given the grimmer science) and more aggressive in forcing, or at least heavily penalizing, utilities to decarbonize. It targets what many agree is the “linchpin” of any decarbonization pathway — the electric power sector — and bills itself as the opening salvo in a wide-ranging project to “electrify everything.”

It is also not a stand-alone piece of legislation like Waxman-Markey but is instead bundled with a budget reconciliation bill (BBB) meant to expand the welfare state in a manner similar to what Green New Dealers advocate. Although the scale and scope of the legislation has been considerably shaved down — and Joe Manchin still might not support it — there was good reason for the early excitement.

Yet despite these improvements, it is also true that many climate advocates have again put their hopes in a measure fairly described as a technocratic policy fix. Like cap and trade, the CEPP harnesses market incentives to nudge the private sector in the desired direction. There is nothing that ordinary workers would recognize as direct, visible benefits. Quite the contrary: This type of policy has been rolled out in states across the country, and advocates in Washington State conceded their clean electricity standard would raise electricity rates. (The organization pledges that “those costs are distributed in a way that [doesn’t] overly burden those who already struggle.”)

While many supporters promise the CEPP would not hike electricity rates, the lack of obvious material benefits could easily allow opponents to claim the policy is geared toward increasing energy costs for workers. In fact, this is exactly what happened with cap and trade. The David and Charles Koch–funded Americans for Prosperity organized mass rallies and dubbed cap and trade “cap and tax,” arguing that Obama’s liberal clean energy agenda was an affront to the freedom and budgets of everyday workers.

As scholar Theda Skocpol has painstakingly shown, Waxman-Markey focused on assembling an elite coalition of green groups and corporate polluters to grease the wheels for closed-door bargaining. Generating a mass popular base for the legislation was never contemplated. Skocpol pilloried the campaign for failing to “spell out concrete benefits that the new legislation could bring ordinary families.” Today, the Right doesn’t even have to mobilize popular opposition, thanks to Joe Manchin.

Some might argue that because the CEPP is bundled with a broad set of social welfare provisions like the child tax credit and a possible expansion of Medicare, it is akin to a GND-style program that couples decarbonization with social welfare. But when the signature climate policy (CEPP) lacks any clear welfare provisions, it’s not clear how ordinary people would link climate action to improvements in their lives. No one will assume the child tax credit is part of a Green New Deal.

So, could things have been any different? Is this just a story of our broken democracy and the disproportionate power of one corrupt coal senator?

A Green New Deal on Day One

When Joe Biden assumed the presidency in January, there was a remarkable consensus among liberal pundits and policymakers that to avoid Trumpism 2.0, Biden had to, as Ezra Klein argued at the time, “just help people . . . fast and visibly.” He did so to some extent with the American Rescue Plan, which featured stimulus checks and the child tax credit (though he could have done much more, including canceling student debt).

But even at the peak of his spending appetite, Biden explicitly said the relief act was not related to climate action — losing an obvious opportunity to tie climate policy to material betterment from the very beginning. He followed that up with an “American Jobs Plan” on infrastructure and climate that fell woefully short of tackling what Biden himself claims is “the existential threat of our time.”

In the months since, the announced level of investment has only been further whittled down. Meanwhile, the climate wonks put all their energy behind the CEPP. So, here we are now, amid another disappointing round of COP26 negotiations, and the interminable inside-the-Beltway bargaining process has delivered predictable results: a smaller climate change plan and little public mobilization.

What could Biden have done instead? He could have pushed to include a public works jobs-climate package in the original “American Rescue Plan” when he had all the political capital in the world. While the official unemployment rate was declining, millions had dropped out of the workforce and might have been enticed by a good public sector union job. As Green New Deal advocates always point out, there is no shortage of work that needs to be done to shift the energy system off fossil fuels: building transmission lines, insulating buildings, installing heat pumps, building out charging infrastructure. The Biden agenda should have included all of this from day one.

If the president was savvy, he could have even directed a disproportionate amount of public works projects to two states: Joe Manchin’s West Virginia and Kyrsten Sinema’s Arizona. Following the Bernie Sanders playbook, he could have then organized mass rallies around “jobs for all.” Thus far, Biden hasn’t held a single rally in West Virginia. Had Biden spent the last nine months building popular energy around a public sector climate jobs agenda, he surely would have had more political momentum to pass a more ambitious infrastructure package. And Manchin might actually feel threatened in voting against it.

Is it wise to hitch the entire decarbonization agenda to a wonky regulatory standard meant to push private capital to do the right thing? There was an alternative option too. Rather than hoping the private sector would deliver green investments – as both John Kerry and Janet Yellen insisted they must earlier this year — a GND approach would achieve decarbonization directly through the public sector.

This was the centerpiece of Bernie Sanders’s climate plan — a vast expansion of federal-scale public power in the form of the Tennessee Valley Authority (TVA) and the federal Power Marketing Administrations (a plan that the Sanders campaign claimed could be passed via budget reconciliation). The essence of such a plan — inspired by the People’s Policy Project proposal for a Green TVA — was to have the federal government empower existing publicly owned power generation to build out clean energy all over the country.

Centrists criticized the Sanders plan because it might “make it very hard for the existing generators to compete.” But isn’t that the point? To render fossil fuel–powered electricity uncompetitive?

Federal public power could have been folded into the public jobs agenda mentioned above to build out the new clean energy generation. It could also learn something from the original New Deal. The Tennessee Valley Authority was not just about delivering electricity to poor rural areas that the private utilities found unprofitable — it was about delivering cheaper rates to everyone in the region. The TVA’s slogan, “electricity for all,” echoes present-day socialist demands for “electricity as a human right.”

While CEPP advocates might have elegant models showing cheaper electric rates in the future, their plan leaves pricing power largely in the hands of the reviled private utilities. A public power agenda could channel that popular anger at utilities, in the name of cheaper power for all. Nearly one-third of Americans currently struggle to pay their utility bills; people literally die when investor-owned utilities cut off power due to lack of payment. As the late labor leader Tony Mazzocchi observed, “The most radical piece of literature in America reaches the home of every American each month. . . . It’s called the utility bill. It is escalating the indignation of the American people.”

It was no problem for Joe Manchin to block a complicated regulatory standard that inspired few, but would he have so easily scrapped a plan that trumpeted cheaper electricity for his impoverished constituents? Maybe. Unfortunately, we will never know.

Wielding Executive Power in a Planetary Emergency

Thus far, I’ve only laid out what Biden could have done differently legislatively. But there was no shortage of ideas about how Biden could wield his executive power to pass a working-class climate agenda.

The left-liberal American Prospect, for instance, released a “Day One Agenda” detailing what Biden could achieve without Congress. It identified fifty-four specific actions Biden could take on climate. While many were not the direct, visible material gains a GND strategy advocates, the list did include pro-worker “wage standards” and “green construction projects with project labor agreements” (which would benefit unions).

Another plan from a left-leaning think tank, New Consensus, proposed a more ambitious public investment program. They circulated a memo of what Biden could achieve without Senate approval, including proposals such as a National Development Council and Bank that would direct a nationwide public investment program in conjunction with the Department of Treasury. Echoing novelist Kim Stanley Robinson’s fictional plan (and Adam Tooze’s real-life one), the think tank also proposed a “Spread the Fed” program that would restore “the Federal Reserve System’s original purpose [as a] network of regional development-finance assistance institutions.”

This new regional vision of the Federal Reserve could have blanketed neighborhoods with public investment, “fast and visibly,” in the spring and summer. But Biden ignored such advice. He decided instead, like Obama, to trust the process of insider negotiation on a core piece of climate legislation.

Which brings us to this week’s underwhelming round of COP negotiations. Joe Biden’s speech featured lofty rhetoric asserting that this is the “decisive decade” for climate action. Yet he’s also come to the meetings without any credible plan to rapidly decarbonize the world’s leading historic emitter.

It’s very easy to blame the downfall of Biden’s climate agenda on Joe Manchin. But while GND advocates spent much of 2018–20 demanding a transformative approach to climate policy, 2021 has been more of the same. When it comes to climate politics, Biden and elite Democrats seem to be saying, “We’ve tried nothing, and we’re all out of ideas.”