Carrots and Sticks

There has been some discussion of carrots and sticks in our nation’s climate policy.  Why?  What’s at stake here and why does it matter??

The metaphor apparently goes back more than a century to a cartoon that portrayed a race between two donkey riders– one encouraging his burro forward by dangling a carrot in front of it, while the other whipped his animal on the flank with a stick. It general it refers to motivating human behavior by providing incentives and rewards (carrots), or by threats, punishment, or other negative consequences (sticks). A “carrot and stick” approach generally refers to applying both at the same time.

What does this have to do with climate policy? It’s relevant, for instance, if a state wants to get its electric utility companies to provide more electricity from clean, renewable sources and less generated by burning fossil fuels. The state might provide tax rebates, subsidies, or other financial incentives (carrots) for providing more clean energy, or it might impose a tax on fossil fuel use or pass laws requiring utilities to provide an increasing percentage of green electricity each year (sticks).

Build Back Better had both
This is a key issue in how the federal government in the U.S. is trying to deal with the climate crisis. The original Build Back Better climate bill that the Biden Administration proposed in 2021 had a healthy mix of carrots and sticks. It provided major incentives, rebates, and credits for green energy infrastructure and equipment and imposed new regulations and controls on the fossil fuel industry. That bill was never approved because the Democrats had a very slim margin in the U.S. Senate and two of their senators opposed it. Senator Manchin wasn’t willing to give up his West Virginia fossil fuel pipeline and Senator Sinema wasn’t willing to increase taxes on the rich.

Inflation Reduction Act
It seemed the bill was dead and no significant climate legislation was possible. However, the Democrats kept negotiating behind the scenes and eventually got both Senators to support the Inflation Reduction Act (IRA). This bill was the largest climate bill in history and along with the CHIPS Act and the so-called Bipartisan Infrastructure Act, is resulting in a major successful expansion of clean energy manufacturing and electrification of transportation, heating and cooling in homes, schools, and businesses, and more.

However, in order to get that bill passed, they had to take all of the sticks out of it. (Many other excellent social safety net features were lost as well.) The regulations, taxes, and ending of subsidies designed to limit the fossil fuel industry and hasten the nation’s transition off fossil fuels, were all removed. So IRA is all carrots and no sticks.

The carrots are working, but ….
The carrots are working and resulting in rapid growth in the production and use of renewable energy. But despite the rapid growth of renewables, the fossil fuel industry is also continuing to expand–increasing production and exports and increasingly damaging the climate in ways that are causing disaster in every part of the world.

Although the U.S. signed the agreement at COP 28 in 2023 committing to “transitioning away from fossil fuels” with “accelerating action” in this decade, we are largely failing to do so. We will not succeed without regulations, taxes, and legislated controls on the fossil fuel industry. We must put some sticks in place. This will continue to be challenging, of course, unless we can elect a pro-climate President and Congress in the coming election.

Recent important good steps
I’m writing about this now to celebrate some recent steps the Administration has taken to impose some limits where it can.  In January, Biden put a hold on all new permitting of LNG (methane gas) export terminals.  In March the Administration announced what the New York Times called “one of the most significant climate regulations in the nation’s history.” It will increasingly limit tailpipe emissions so that by 2032 the majority of new passenger cars and light trucks sold in the U.S. will be all-electric or hybrids. This will avoid 7 billion tons of CO2 emissions over the next 30 years–equivalent to a year’s worth of greenhouse gases emissions by the U.S.

Last month Biden protected 13 million acres in Alaska from drilling and mining. Also in April the EPA issued a regulation requiring all coal plants and all new gas plants in the U.S. to eliminate 90% of their greenhouse gas emissions by 2032. All of these actions have been strongly objected to by the affected industries, while being criticized by climate advocates for not going far enough. They will face various court challenges. Nonetheless, they represent an application of “sticks” that, if maintained, will result in decisive, huge decreases in climate-destroying emissions by the United States.

We will continue to need to  use both carrots and sticks to reduce our emissions, improve public health, slow the climate crisis, and be a responsible member of the global community of nations.

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The photo above is one I took last summer at Lake Sebago in New York State.

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