It’s the cars, stupid. But it’s also the car jobs, stupid.
If President-elect Joe Biden wants to make progress on his decarbonization agenda, then the U.S. vehicle fleet is ground zero. Cheap shale-gas, ever-cheaper renewable energy and flat electricity demand have already forced the closure of many coal-fired power plants. Transportation overtook the electricity sector as the largest source of greenhouse gas emissions in 2017.
Hence, Biden’s appointment of Jennifer Granholm to be the next Secretary of Energy ticks a number of boxes. She is a former governor of Michigan, both a crucial swing state for Biden and, of course, home to Detroit. She sits on the board of Proterra Inc., a cutting-edge electric-bus manufacturer based in California, and has long advocated for green-hued industrial policy. It helps that she will be only the second woman ever to head the Department of Energy, and is an immigrant to boot.
Most important, Granholm is fully aligned with Biden’s “Build Back Better” policy platform. One way to think about this most alliterative of slogans is as a way for Biden to navigate between the Scylla and Charybdis of his own party’s Green New Dealers and a Republican-controlled Senate led by a figure who only got around to publicly recognizing Biden’s election victory after the Kremlin did. While there is a slim chance of Democrats gaining effective control of the Senate via Georgia’s run-off elections, Biden certainly can’t bank on that. And in any case, a more decisive majority would be required for sweeping climate legislation to pass.
Fostering innovation and creating jobs — especially in the wake of COVID-19 — are two of the few things where some sort of bipartisan support can probably still be found. These are Biden’s strongest suits in pushing green objectives, and Granholm is an advocate on both fronts, as exemplified in a postelection Op-Ed she wrote for The Detroit News:
“Investing in a low-carbon economy will ensure that Michigan remains a leader in the auto industry. The report* finds that by 2025, a low-carbon recovery plan could create 1.7 million new jobs in the U.S. State automakers like Ford and General Motors are producing a greater number of EVs, but policy incentives are needed to ensure that the cost-saving and environmental benefits are available to everyone.”
The Energy Secretary’s powers are actually pretty limited, especially in the context of divided government. However, as Sarah Ladislaw of the Center for Strategic and International Studies, puts it, Biden needs a “green industrial policy person” focused on science, technology and, crucially, deployment. “DoE doesn’t have all the tools necessary to put that theory in practice. But that doesn’t mean it can’t make down-payments on it.” In the absence of more transformational measures, such as a carbon fee, fostering innovation with a mix of federal dollars, regulatory tweaks and local support offers another way of encouraging American development of clean tech.
Kevin Book of ClearView Energy Partners, a Washington, D.C.-based analysis firm, highlights the DoE’s Advanced Technology Vehicles Manufacturing Loan program as one important example. This was established by the Energy Independence and Security Act of 2007 and, having lent $8 billion already to the likes of Tesla Inc. and Ford Motor Co., still has about $10 billion of authorized funds waiting to be deployed.
Granholm’s appointment should also be viewed in the context of how Biden’s approach to climate policy is shaping up. Absent decisive Democratic Senate control, the locus of activity will be centered in the executive and agencies. That essentially boils down to obstructing and, where possible, rolling back some of outgoing President Donald Trump’s deregulatory and pro-fossil fuel agenda, such as on oil drilling in the Arctic National Wildlife Refuge.
It also means using administrative levers for pushing green industrial policy as judiciously as possible, a complex process of coordinating between different departments and actors at the state and federal level. Granholm can play a central role here, even if her own department isn’t ultimately the prime mover.
She can also try to evangelize the agenda to important constituencies such as auto unions, swing-state voters and progressives within the Democratic Party. Biden’s other picks offer support on this front, with a number of labor economists — including Janet Yellen at the Treasury Department — backing up his heavy emphasis on job creation to win back blue-collar voters that went for Trump.
Meanwhile, Biden’s reported appointment of Gina McCarthy as climate czar and tapping of Susan Rice to run his domestic policy council signal to progressives that, for all his messaging of old-fashioned compromise, he’s gearing up for a fight with Republicans, perhaps with an eye on Senate elections in 2022.
Absent a Blue Wave, Biden’s green agenda must begin with ripples — and rely on jobs coming through to build that into a rising tide of support.
* Granholm was referring to “Assessment of Green Recovery Plans After COVID-19,” published in October 2020 by Cambridge Econometrics and the We Mean Business Coalition.