WORKWEEK

Last week was a wild one for climate legislation. The Biden admin has been busy trying to secure W’s in hopes of securing votes for the coming midterms in November (and, you know, to help slow global warming, too). But it’s not all coming from Washington, D.C., either. California continues to push the pace, cementing itself as a bellwether state for climate action. Here’s the rundown:

• The U.S. Senate ratifies the Kigali Amendment to phase out HFCs
• The text of the permitting reform legislation in the U.S. is out
• California moves to ban new gas appliances by 2030

Phasing out HFCs 

In a big, somewhat ceremonial step, the U.S. Senate ratified a global treaty aimed at phasing out hydrofluorocarbons (‘HFCs’) last week. Common in refrigerants and coolants, HFCs have been around for a long time and are significant air pollutants that carry super-high global warming potential; while their lifespans in the atmosphere can be relatively short, their global warming potential over that timespan can be anywhere from 100-1,000x that of CO2.

Modeling suggests that versus the current state of affairs, phasing out HFCs in favor of more innocuous chemicals could help prevent up to 0.5 °C of global warming over coming decades. That’s a big win. I noted that the amendment is a touch ceremonial because while necessary, the U.S. and the EPA have already been moving in that direction in recent years. 

Still, this is an example of powerful climate policy that’s both necessary and not particularly controversial – the Senate passed the amendment in bipartisan fashion, which is pretty rare in the U.S. these days. And the U.S.’s commitment here is necessary to advance international progress; the chemicals are a global challenge, and the more countries onboard, the better. Ideally, HFCs go the way of the chlorofluorocarbons they replaced, which were responsible for the ozone layer depletion that’s been reversed to some extent.

This U.S. move also comes at a perfect timing for some positive international climate policy and action. World Bank events last week were mired in climate controversy and put on full display just how it is to marshal international attention, let alone action on climate. With the 27th UN Climate Conference in Egypt coming up in November and not much movement on last year’s COP26 resolutions, it’s high time to build momentum and cooperative spirit.

Finally, it’s also worth noting that this legislation embodies that ‘decarbonization’ isn’t the end all be all of climate action. CO2 drives the bulk of global warming (methane’s share is large, too). But other air pollutants are still a scourge for the planet and human health and drive global warming. 

Permitting brouhaha

While committing to phase out HFCs was low-hanging fruit, permitting reform in the U.S. is proving much harder for Congress. In fact, so far, Congress is aligned in opposition to the newly proposed legislation. 

While critically important to help accelerate energy infrastructure development, when the text of the new draft permitting legislation officially came out last week, it immediately sowed division and discord. Pragmatists across the board were ready to throw their weight behind the bill, which would accelerate critical infrastructure, like transmission lines, which are essential to realize the full value of renewable energy development in general.

Many other folks were concerned that the bill made too many concessions, such as clearing the way for the Mountain Valley Pipeline despite significant community concerns about the project. And several Democratic Senators came forward early, noting they’d oppose the legislation, potentially complicating its passage, while Republicans are opposed to some of the reforms proposed concerning transmission planning that would benefit renewables.

Even if the good outweighed the bad in the bill, many argued that projects like the Mountain Valley Pipeline would have uniquely harmed some communities. Globally, climate change already threatens developing countries and vulnerable populations most. Now that dynamic threatens to play out domestically, too. 

It looks like all this discord may prove too much for the bill’s passage, at least in its current form. On Tuesday, a bipartisan coalition shot down Manchin and Schumer’s bill. It would have needed 60 votes to advance as part of a stopgap government funding bill it was packaged with; when those votes didn’t materialize, Manchin pulled the bill to allow the separate government funding measures to proceed. 

Where does that leave us? Clearly, the way this process played out was unpalatable to many constituents and congresspeople. There’s little reason something as vital as permitting reform should be packaged alongside concessions favorable to one Senator and his business interests (groups that would benefit have lobbied Schumer tremendously, too). 

Still, the U.S. desperately needs permitting reform. The fact that Manchin was more or less promised reform with concessions for his vote on the Inflation Reduction Action also complicates matters. The Biden admin wants to keep the peace and appears ‘committed’ to passing the permitting legislation. If this doesn’t work out in Manchin’s favor and Democrats don’t pick up seats in November, the current legislative momentum for climate in the U.S. might be gone. And absent permitting reform, the infrastructure for which the IRA freed up dollars will be much harder to build. 

Passing the IRA itself was already a bit of a hail-mary miracle; it’s hard to see how lightning could strike twice to pass permitting reform in a way that doesn’t ruffle a lot of feathers. I’ll suspend my disbelief and cross my fingers. 

California paces the country

Back to better climate news. After setting a 2035 target to ban the sale of new gas-powered cars recently, California is setting its sights even more aggressively on a lower carbon future, this time by targeting a ban on new gas-fired furnaces and water heaters in the state by 2030. 

The big question is whether the grid can handle an army of new electric appliances and cars all charging or humming in the evenings in the hot California summer. The grid was already stretched to its limit in the state this summer, narrowly avoiding blackouts a few times, thanks to demand-response measures and an increasingly powerful amount of battery storage.

Scaling up the grid to accommodate a lot more demand looms as a significant challenge to make California’s ambitious targets work, in addition to deploying all those new electric furnaces and charging infrastructure for millions of electric vehicles. A 2019 BCG study estimated that utilities nationally would need to invest an additional $1,700 to $5,800 per EV in infrastructure upgrades. I wonder how much higher that number is if you were to apply similar methods to study California and the litany of targets its legislature set in recent months. 

California’s grid mix also still includes about 40% of electricity from natural gas. Even as it builds more renewables and battery storage, it’ll still be a while before the new electric appliances and EVs are powered with carbon-free electricity. That doesn’t invalidate the impact of banning new gas appliance sales, however; electric appliances are often so much more efficient than gas ones that you could power them purely with fossil fuels and still reduce emissions. 

Needless to say, if the legislation stays on target, it’ll be a big boon for companies creating all-electric solutions to heating and cooling. It’s already been a big year for the heat pump category. Now, California looks like it won’t just be a hotspot for EVs.

The net-net

As I write this, I don’t think I’ve taken a step back to fully appreciate just how much is happening in climate policy and has happened this year. The IRA alone could have been Biden’s signature legislative achievement. Instead, policy is forging ahead, with the U.S. going from laggard to leader.

Internationally, concrete action is still hard to come by. At the minimum, given this year’s global events, folks at least recognize the importance and interconnectedness of energy, supply chains, resilience and sustainability. I’m not massively optimistic for upcoming events like COP27. But if there’s anything that could still get global policy makers rears in gear, the specter of Russian aggression in Ukraine (and in Europe?) could tip the scales.