National

In a recent speech, French President Emmanuel Macron raised a proposal for an EU–wide carbon “tariff” on goods coming into the bloc from countries without a price on carbon — a way to lead by example on climate while still leading through advantage for industry.

Why it matters: The plan could prompt other countries to adopt carbon pricing in part to avoid disadvantaging their goods and services. In the best case, it could lead to a rapid increase in the amount of global emissions exposed to a carbon price, without creating excessively harmful economic distortions.

The catch: Border adjustments are delicate mechanisms and will have to be designed with the game theory of other countries' likely responses in mind. In the worst case, such a charge might be contested before the World Trade Organization.

Even if the WTO validated the policy, a supportive ruling disregarded by key economies such as the U.S. would damage the organization's credibility in exchange for no meaningful climate action.

Where it stands: The system Macron discussed would be incredibly complex and could take years to develop. But one thing is sure: Efforts by various countries to advance a "green" industrial policy, in all its forms, are only set to expand.

France's idea has been unsuccessfully floated before, but it's noteworthy that Europe’s largest business lobby recently dropped its opposition.

ArcelorMittal, the steel and mining company, is also calling for a "green border adjustment" that would protect it from imports of steel not currently subject to EU carbon fees.

The U.S. could expose itself to trade sanctions for its failure to ratify the Kigali Amendment to the Montreal Protocol, an environmental agreement supported by American industry and many Republicans.

What to watch: Although climate change is polling as an increasingly important issue for both Democratic and Republican voters ahead of next year's U.S. presidential elections, candidates have said relatively little about the intersections of climate and trade policy.

A recent proposal by John Hickenlooper to integrate climate goals into U.S. trade agreements may yet mark the beginning of a shift for the 2020 race.

David Livingston is deputy director for climate and advanced energy at the Atlantic Council Global Energy Center.

Carbon "tariffs" could trigger a collision of climate and trade policy

Design would be critical, as border adjustments are delicate mechanisms.

Animated GIF of the Euro symbol and "O2" coming together to form the carbon dioxide symbol

Energy

Climate change policy

Expert Voices

Climate change

In a recent speech, French President Emmanuel Macron <a class="gtmContentClick" data-vars-link-text="raised a proposal" data-vars-click-url="http://time.com/5582034/carbon-tariff-tax-fee-europe-macron/" data-vars-content-id="25763b8f-fbd0-4666-9989-d5f1e5b026cc" data-vars-headline="Carbon &quot;tariffs&quot; could trigger a collision of climate and trade policy" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="http://time.com/5582034/carbon-tariff-tax-fee-europe-macron/" target="_blank">raised a proposal</a> for an EU–wide carbon “tariff” on goods coming into the bloc from countries without a price on carbon — a way to lead by example on climate while still leading through advantage for industry.Why it matters: The plan could prompt other countries to adopt carbon pricing in part to avoid disadvantaging their goods and services. In the best case, it could lead to a rapid increase in the amount of global emissions exposed to a carbon price, without creating excessively harmful economic distortions.

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

The Commerce Department released on Tuesday an interagency report that identifies a list of minerals deemed critical to U.S. strategic interests and outlines an action plan to ensure their supply.

Why it matters: Securing these minerals and their supply chains is essential to leading the way on technologies that will enable the global energy transition, including cobalt and lithium for batteries, graphite and scandium for fuel cells, and indium and tellurium for solar panels.

Background: The U.S. relies 100% on imports for 14 critical minerals and over 50% for 15 others and has few commercial processing facilities. Amid American neglect, China has carved out a dominant position in critical minerals.

It is the leading producer of 19 minerals deemed critical by the Trump administration and produces 71% of all "rare earth" elements.

Chinese entities also hold significant investments in mining and processing projects around the world.

The administration's decision to exclude critical minerals from its most recent round of tariffs against China reflects its favored position in this market, which Beijing has recently sought to advertise.

Between the lines: Critical minerals present different security challenges from crude oil and are central to a successful and sustainable energy transition.

Although both resources are often concentrated in regions of high political risk, critical minerals feature less market governance, less liquidity and an opaque supply chain. For example, there is no "OPEC" for minerals, and the quality of data on supply and demand varies drastically. Some mineral markets are so small that a single actor can easily swing prices.

The extraction of critical minerals raises environmental and social concerns, exacerbated by artisanal mines with spotty labor standards that often come online as prices spike and shut down suddenly when they dip.

What we're watching: There are valuable ways the U.S. government could build on its new strategy:

Coordinating with Congress, which has introduced a bipartisan American Mineral Security Act that shares many of the administration's goals.

Reinvesting in atrophied economic geology programs at American universities. This is particularly important for workforce development, since the U.S. Geological Survey and other key entities can hire only American citizens to work on these issues.

Investing further in processing facilities and innovation, especially to reduce dependence on minerals that create strategic vulnerabilities.

David Livingston is deputy director for climate and advanced energy at the Atlantic Council Global Energy Center. Reed Blakemore is an associate director at the Global Energy Center.

U.S. minerals strategy aims to safeguard vital technologies

The U.S. has come to rely heavily on mineral imports, most from China.

lab scientist coating a glass slide with indium

A glass slide being coated with indium tin oxide for use in a nanoparticle solar cell. Photo: Chris So/Toronto Star via Getty Images

Minerals

The Commerce Department released on Tuesday an interagency <a class="gtmContentClick" data-vars-link-text="report" data-vars-click-url="https://www.commerce.gov/news/press-releases/2019/06/department-commerce-releases-report-critical-minerals" data-vars-content-id="6edf707f-61d7-40d2-a5cc-65455148d130" data-vars-headline="U.S. minerals strategy aims to safeguard vital technologies" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.commerce.gov/news/press-releases/2019/06/department-commerce-releases-report-critical-minerals" target="_blank">report</a> that identifies a list of minerals deemed critical to U.S. strategic interests and outlines an action plan to ensure their supply.Why it matters: Securing these minerals and their supply chains is essential to leading the way on technologies that will enable the global energy transition, including cobalt and lithium for batteries, graphite and scandium for fuel cells, and indium and tellurium for solar panels.

Representative Bill Pascrell, a Democratic member of the House Ways & Means Committee that oversees U.S. trade policy, is expected to send a letter this week to Commerce Secretary Wilbur Ross asking his department to investigate whether “imports of carbon emissions” pose a national security threat.

The big picture: The largely symbolic maneuver highlights a new tactic among climate hawks: treating President Trump's aggressive use of executive powers as a template for action.

Details: Pascrell's request cites the authority granted under Section 232 of the 1962 Trade Expansion Act, which Trump availed himself of to justify the imposition of tariffs on steel and aluminum imports from a variety of countries, including key U.S. allies.

Although the Trump administration is unlikely to respond enthusiastically, the Commerce Secretary is statutorily required to "immediately initiate an appropriate investigation" on the national security effects of the imports in question.

Other global attempts to tie climate to trade policy, such as the EU's resolution to “make ratification and implementation of the Paris Agreement a condition for future trade agreements,” have been abandoned amid the exigencies of negotiating an agreement with the U.S. that would avoid damaging tariffs on European automobiles.

Why it matters: This isn't the first, nor will it be the last, such maneuver. Trump's declaration of a "national emergency" to fund a wall along the Southern border could set a precedent for a similar declaration around climate change.

A president acting on those grounds could fall back on nearly 150 special powers, including the suspension of some domestic oil drilling and the imposition of sanctions on fossil fuel–producing countries, regardless of whether such drastic actions are advisable.

David Livingston is the lead for climate and advanced energy and deputy director of the Atlantic Council’s Global Energy Center.

Turning Trump's trade weapons into climate tools

Trump's invocations of emergencies and security threats set expansive precedents.

Reprsentative Bill Pascrel speaking at a lectern

Representative Bill Pascrell. Photo: Michael Lofenfeld/Getty Images

Politics

Representative Bill Pascrell, a Democratic member of the House Ways &amp; Means Committee that oversees U.S. trade policy, is <a class="gtmContentClick" data-vars-link-text="expected to send a letter" data-vars-click-url="https://www.politico.com/story/2019/03/08/bill-pascrell-investigation-carbon-emissions-1252621" data-vars-content-id="76c1d6fc-b155-4244-88c8-744e6ec62246" data-vars-headline="Turning Trump&#x27;s trade weapons into climate tools" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.politico.com/story/2019/03/08/bill-pascrell-investigation-carbon-emissions-1252621" target="_blank">expected to send a letter</a> this week to Commerce Secretary Wilbur Ross asking his department to investigate whether “imports of carbon emissions” pose a national security threat.The big picture: The largely symbolic maneuver highlights a new tactic among climate hawks: treating President Trump&#x27;s aggressive use of executive powers as a template for action.

New Mexico Governor Michelle Grisham signed into law on Friday the sweeping “Energy Transition Act” (ETA), which commits the state to 100% carbon-free electricity by 2045, along with interim renewable energy targets.

Why it matters: Despite the fanfare and handwringing in Washington over the Green New Deal, carbon taxes and related measures with little near-term political tractability, improvements in state-level clean energy standards have garnered bipartisan support and made meaningful market impacts.

Details: The clean energy standard established by the ETA grew out of renewable portfolio standards (RPS), which 38 states and the District of Columbia use to mandate a given share of electricity production from renewables by a target date.

More than 60% of U.S. renewables growth from 2000 to 2015 was driven by state-level RPS compliance. These state-level standards send the private sector a durable, long-term signal that clean energy is a stable investment, even if changes in Congress or the White House create policy whiplash at the federal level.

Clean energy standards do not preclude the exclusive use of renewables to meet their targets, but are more technology-neutral and can thus accommodate nuclear power, carbon capture and storage (CCS), or any other technology that can compete on cost and zero-emissions credentials.

What's next: California set the tone in late 2018 with a bill that commits the state to 100% carbon-free electricity generation by 2045, choosing this option over an alternative proposal for 100% renewables. A number of states across the U.S. heartland may now follow suit.

New Mexico is among them and, unlike California, a major fossil fuel state (its energy mix is 50% coal and 20% natural gas). Although New Mexico’s plan calls for 80% of its electricity mix to be renewables by 2040, at least some of state’s fossil fuel fleet could theoretically continue operate through 2045, provided that CCS technology proves cost effective in coming years.

The ETA will also allow New Mexico’s utilities to continue importing emissions-free nuclear energy from the Palo Verde plant in neighboring Arizona, which may prove more cost-effective.

David Livingston is the lead for climate and advanced energy and deputy director in the Atlantic Council’s Global Energy Center.

New Mexico is the latest state to approve clean energy standards

New Mexico Governor Michelle Lujan Grisham. Photo: Bill Clark/CQ Roll Call

low-carbon energy

Alternative energy

New Mexico Governor Michelle Grisham <a class="gtmContentClick" data-vars-link-text="signed into law" data-vars-click-url="https://www.abqjournal.com/1295064/nm-commits-to-clean-energy-future.html" data-vars-content-id="845e2748-90f4-4f13-97a2-96e5c9bb9293" data-vars-headline="New Mexico is the latest state to approve clean energy standards" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.abqjournal.com/1295064/nm-commits-to-clean-energy-future.html" target="_blank">signed into law</a> on Friday the sweeping “Energy Transition Act” (ETA), which commits the state to 100% carbon-free electricity by 2045, along with interim renewable energy targets.Why it matters: Despite the fanfare and handwringing in Washington over the Green New Deal, carbon taxes and related measures with little near-term political tractability, improvements in state-level clean energy standards have garnered bipartisan support and made meaningful market impacts.

More sophisticated energy systems will be needed for the diversified, intelligent electric grids of the future, but blockchain technology — one widely promoted solution — may require a long list of difficult tradeoffs.

Why it matters: The power sector is becoming more distributed and decarbonized, with increasing amounts of intermittent renewables, energy storage and other smart technologies deployed across the grid. If new energy markets can't make a symphony of these varied assets, the result could be a dysfunctional cacophony.

Where it stands: Blockchain — the distributed ledger technology best known as the backbone of cryptocurrencies like Bitcoin — has been proposed as a promising platform for these energy markets.

It solves a challenging problem: enabling mistrusting parties to transact with one another securely without trusting — or paying — a central authority.

Yes, but: Blockchain relies on massive duplication of data storage and processing (owing to its consensus process), which could prove prohibitive given the volume of data and computation required for energy market processes and transactions. All that duplication slows down the network and makes inefficient use of its resources.

Between the lines: Beyond the technical challenges, blockchain poses practical and legal risks.

The ledger's immutability leaves it vulnerable to faulty and malicious transactions as well as defective smart contracts — problems that, even if infrequent, could have dire effects in the critical power sector.

Blockchain’s reliance on economic incentives for ledger validators leaves the power system exposed to malicious actors whose goal is disruption, not economic gain.

At a more basic level, blockchain's decentralization is misaligned with the statutory authority of state regulators and the utilities they franchise. And its inherent transparency is at odds with the confidentiality and sensitivity of financial and power system data — particularly dangerous in an era of international cyberattacks.

The other side: Selective use of blockchain could mitigate some concerns, such as quickly and efficiently processing certain transactions "off-chain" and recording only the most important data on blockchains.

Blockchain's signature strength — disintermediation of a central authority — could also be valuable in applications like asset registration, payment systems and managing carbon and clean energy credits.

The bottom line: Many of these most serious tradeoffs are structural and intrinsic to blockchains. Power market regulators will place higher premiums on platforms that are cost-effective, high-performing and private than on those that disintermediate providers — making current blockchain technology an unlikely choice.

David Livingston is deputy director for climate and advanced energy at the Atlantic Council Global Energy Center. Ben Hertz-Shargel is vice president of advanced grid services and analytics at EnergyHub.

Go deeper: Read the Atlantic Council report on blockchain and the power grid.

How blockchain falls short for energy transactions

Beyond the massive data-processing demands, it also presents practical and legal risks.

wind turbines in a field with red dollar signs on the ground

Blockchain

Technology

More sophisticated energy systems will be needed for the diversified, intelligent electric grids of the future, but blockchain technology — one widely promoted solution — may require a long list of difficult tradeoffs.Why it matters: The power sector is becoming more distributed and decarbonized, with increasing amounts of intermittent renewables, energy storage and other smart technologies deployed across the grid. If new energy markets can&#x27;t make a symphony of these varied assets, the result could be a dysfunctional cacophony.

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David Livingston

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How blockchain falls short for energy transactions

U.S. minerals strategy aims to safeguard vital technologies

Carbon "tariffs" could trigger a collision of climate and trade policy

New Mexico is the latest state to approve clean energy standards

Turning Trump's trade weapons into climate tools