Climate Change: The Shared Existential Challenge

The earth is warming at an unprecedented rate. Polar ice is melting, and sea levels are rising. Instances of extreme weather are becoming increasingly frequent and more severe. Droughts have multiplied, curtailing harvests. Heat waves have contributed to higher summer death tolls. And the frequency, intensity, and amount of heavy precipitation has increased, resulting in damaging storms and flooding.

Accelerating warming threatens the economy and human lives. Annual economic growth rates around the world could be two percentage points lower by 2060 thanks to rising sea levels, declining crop yields, and impaired labor productivity.¹⁸ Between 2030 and 2050, climate change is expected to cause approximately 250,000 additional deaths worldwide per year, from malnutrition, malaria, diarrhea, and heat stress.¹⁹ And by 2050 there could be tens of millions of climate refugees, within and between countries.²⁰

These developments are due to the steady rise of global greenhouse-gas emissions. The United States and the European Union account for more than a third of annual global CO² emissions, the most common greenhouse gas. And the portion of such emissions attributable to the transatlantic economy are even higher when measured by consumption rather than by production, as much carbon-emitting production of many of the items Americans and Europeans consume has now been offshored to China and elsewhere.

"The global community has no hope of stopping climate change without Europe and the United States, in conjunction with China, India, and other major emitters, drastically curtailing and eventually halting greenhouse-gas emissions."

The global community has no hope of stopping climate change without Europe and the United States, in conjunction with China, India, and other major emitters, drastically curtailing and eventually halting greenhouse-gas emissions.

To begin to address this challenge, in 2015, 195 nations, including the United States and members of the European Union, signed the Paris Agreement, pledging through non-binding “best efforts” to keep the global temperature rise this century to below 2° centigrade compared with pre-industrial levels, hopefully no more than 1.5°. Nevertheless, greenhouse-gas emissions hit an all-time record in 2019.²¹

In the Paris Agreement the United States pledged to cut its greenhouse-gas emissions by 26-28 percent by 2025 compared with levels in 2005. By 2019 it had reduced such emissions by about 12 percent. Meeting its Paris commitments would require roughly a 3 percent annual reduction in U.S. emissions over the next six years.²² This is significantly faster than the 0.9 percent average annual reduction achieved since 2005.

Instead, Washington has gone backward. The U.S. government announced plans to withdraw from the Paris Agreement on November 4, 2020. Washington has repealed energy-efficiency requirements for lightbulbs, has weakened methane-emissions standards for oil and gas facilities, and has proposed curtailing standards for new coal-fired power plants. It has downgraded vehicle-emissions requirements from a planned 5 percent reduction per year to just 1.5 percent per year. And it has adopted a rule that would revoke the authority of California and 13 other states to set their own emissions standards for cars and trucks.

At the same time, at the subnational level, two-dozen U.S. states and hundreds of cities and companies with operations in the United States have made climate commitments, and all 50 states have some type of policy that could bring about emissions reduction. If these sub-federal commitments are fully implemented, such measures could enable the United States to come within striking distance of its Paris Agreement commitment, but the federal government will still need to come up with a comprehensive climate policy to help states achieve the necessary reductions in greenhouse gases. 

"As governments on both sides of the Atlantic move too slowly or even reverse course in combatting climate change, their publics are clearly concerned."

In the Paris Agreement the European Union agreed to cut its emissions 40 percent²³ below 1990 levels by 2030,  and it has subsequently upped its commitment to 55 percent.²⁴ But, as of 2019, policies in place put the EU on a path to curtail emissions by only 33 percent. While the EU’s progress, and its ambitions in the European Commission’s proposed Green Deal, exceed that in the United States, it is still not sufficient to hold global warming to below 2° centigrade.

As governments on both sides of the Atlantic move too slowly or even reverse course in combatting climate change, their publics are clearly concerned. A majority of Americans²⁵ believe climate change poses a direct threat to the United States and two-thirds²⁶ say the government is doing too little to reduce the effects of global warming. Nine-in-ten Europeans think climate change is a serious problem.²⁷ Since 2018, young people, whose future is most at risk, have demanded more urgent action from political leaders around the world. Moreover, pluralities of the French and Germans say global warming is the most important issue for the European Union to cooperate on with the United States. ²⁸

Such concern demonstrates public support in Europe and the United States for more concerted joint action on climate change. But experience since 2015 suggests that, while the Paris Agreement was necessary, it was not sufficient to adequately slow global warming. Commitments to further cut carbon emissions are needed in the next few years if the world is to have any chance of holding the temperature rise to even 2° centigrade, let alone 1.5°. As two of the three largest emitters of greenhouse gases, if Europe and the United States do not lead the way on curbing carbon emissions, other major emitters, such as China and India, are unlikely to follow. The transatlantic community has a limited time to act before catastrophic climate change is unavoidable. 

Faced with this urgency, the Task Force recommends:

• Strengthen Paris Agreement Climate Commitments: The United States should not leave and, if it does leave, it should rejoin the Paris Climate Agreement. Washington and its transatlantic partners should work out a joint approach to improving commitments under the Paris Agreement, with new international obligations in 2025 consistent with a goal of net-zero greenhouse-gas emissions by 2050 and a timetable to achieve that ambition. 

• Build Climate Resilience into Economic Recovery: The United States and Europe should take the lead in a three-pronged effort to slow climate change. They should do so by (1) committing a significant portion of coronavirus-related economic recovery funding to investment in climate-change mitigation and adaptation, including more funding for research and development of carbon-emission-reducing technologies, (2) cutting and eventually eliminating subsidies for fossil fuels and (3) developing a common approach to the standard setting and taxation of carbon emissions, gradually increasing the effective domestic price of carbon over time, and agreeing to carbon border-price adjustments to accommodate such standards and taxes to avoid future transatlantic trade frictions, while forcing climate action in other countries.

• Boost Subnational Climate Cooperation: U.S. and European cities and other subnational entities should boost their local-level cooperation with non-state actors and the private sector, sharing experience and goals in decarbonizing their electrical grids through large-scale renewable power generation, energy storage, systems to manage distributed energy resources, improving energy efficiency in buildings, and maximizing public transportation and walkable and cycle-friendly living patterns.

• Support Renewable Energy and Climate-Sensitive Agricultural R&D for Developing Nations: The United States and Europe should lead a coalition of international financial institutions to encourage new lending practices and to increase foreign assistance to help developing nations achieve the Paris Agreement’s goals. Washington and Brussels should offer emerging market economies more low-cost financing, through existing export financing facilities, in support of renewable energy generation projects as an alternative to new coal-based generation projects. They should press the major coal-financing countries— China, Japan, and South Korea—to halt coal investments around the world. And, as they did to develop miracle rice in the 1960s, they should finance research, development, and deployment of drought-resistant crops, water-conserving irrigation infrastructure, and regional water-conservation projects to help climate-threatened nations adapt to warming temperatures.

• Encourage Climate Stress-testing of the Financial Sector: Europe and the United States, through their central banks and financial regulatory agencies, working with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures, should ensure that banks, investment houses, and insurance companies calculate and disclose their climate-related risks and include climate-repricing scenarios in the stress tests they are now required to conduct, in order to make sure financial institutions are prepared for climate-change related losses.

• Develop Interoperable Green Technological Standards: The United States and Europe should work together to develop interoperable industry standards for green technologies, including batteries, solar panels, and windmills, to grow the market for these climate-friendly products. 

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_{Photo Credit: Lumppini / Shutterstock}

 

_{18 “The Economic Consequences of Climate Change,” OECD, 2015.}

_{19 “Climate Change and Health,” World Health Organization, February 1, 2018.}

_{20 “Migration, Environment, and Climate Change Division,” International Organization for Migration, undated.}

_{21 Chelsea Harvey and Nathanial Gronewold, “Greenhouse Gas Emissions to Set New Record this Year, but Rate of Growth Shrinks,” Science, December 4, 2019.}

_{22 Trevor Houser and Hannah Pitt, “Preliminary U.S. Emissions Estimates for 2019,” Rhodium Group, January 7, 2020.}

_{23 “Country Summary,” Climate Action Tracker, September 22, 2020.}

_{24 Alasdair Sandford and Danielle Olavario, “State of the Union: What are the Key Takeaways from Ursula von der Leyen’s Speech,” Euronews, September 17, 2020.}

_{25 Ben Fox and Emily Swanson, “Poll: Many in U.S. Support Trump Decision to Kill Iran General,” Associated Press, January 24, 2020.}

_{26 Alec Tyson and Brian Kennedy, “Two-Thirds of Americans Think Government Should Do More on Climate,” Pew Research Center, June 23, 2020.}

_{27 “Special Eurobarometer 490 Special Report on Climate Change,” European Commission, April 2019.}

_{28 “Transatlantic Trends 2020–Transatlantic Opinion on Global Challenges before and after COVID–19,” GMF.}