From ‘False Solutions’ to Climate Policy Planks: How Congressional Dems Have Changed Position on Climate Solutions
By: Josh Price
August 24, 2021 — On August 22, 2019, presidential-hopeful Bernie Sanders released his $16 trillion plan to address climate change, setting a goal of a 100% renewable electric grid by 2030. Echoing a fact sheet accompanying the congressional Green New Deal resolution from 2019, Sanders’ plan stated “we will not rely on any false solutions like nuclear, geoengineering, carbon capture and sequestration, or trash incinerators.”
Fast forward two years, and Democrats in Congress—spearheaded by Senate Budget Committee Chairman Bernie Sanders—are on the cusp of providing record amounts of funding and new incentives for both nuclear and CCUS. So, what happened?
First, some background on the grievances. The pervasive antagonism of progressives toward nuclear and CCUS reflects concerns over hazardous waste, prolonging the life of fossil fuels, and more broadly, a frustration with seemingly incremental—and therefore “false”—solutions to an increasingly urgent crisis. On nuclear power in particular, the negative sentiment has historic roots in the evolution of the U.S. environmental movement, with major nonprofits including the Natural Resources Defense Council (NRDC) and Greenpeace founded in the early 1970s during the meteoric rise, and subsequent cultural distrust, of nuclear power.
Progressive opposition to CCUS has emerged more recently, primarily in response to policy and industry support for the technology over the past two decades. In 2008, as climate change was emerging as a mainstream issue in U.S. politics, Congress created the 45Q tax credit for CCUS, providing $10 and $20 per ton of CO2 used in enhanced oil recovery and stored underground, respectively. Since passage of the credit, CCUS has become a central tenant of industry-backed climate advocacy, with Congress ultimately expanding the 45Q credit in 2018. Environmental groups broadly view these efforts with intense skepticism, referring to CCUS as “bogus” and a “red-herring.”
In the White House, National Climate Advisor Gina McCarthy’s evolving position on CCUS and nuclear serves as a poignant example of the shifting sentiment in Washington. After serving as EPA Administrator under President Obama, as head of the NRDC in February 2020 McCarthy testified in Congress against additional investment in CCUS. Now in the Biden administration, she openly advocates for investment in CCUS and nuclear, calling the latter essential to meet emissions goals.
In Congress, while opposition to nuclear and CCUS technology linger within the progressive wing of the Democratic party, key party leaders are moving toward a technology-agnostic, all-of-the-above climate strategy. Senators Ron Wyden (D-OR) and Joe Manchin (D-WV), who chair the Senate Finance Committee and Energy & Natural Resources Committee, respectively, are working on legislation through budget reconciliation to create new payment programs and tax incentives for zero- and low-carbon energy resources, irrespective of resource or fuel type.
We believe the market is underappreciating this profound shift within the Democratic party, and U.S. climate policy and politics broadly, on nuclear, CCUS, and other middle-ground climate solutions like low-carbon liquid fuels and methane capture, presenting an opportunity for outsized returns. With policymakers in Washington and around the world assigning greater value to these middle-ground solutions based on their ability to mitigate GHG emissions—regardless of the age or type of technology—we expect the ESG-premium the market assigns to various securities and asset classes will follow a similar pattern.
We believe this shift from the resource-specific policies of the 2000s and 2010s, such as state-level Renewable Portfolio Standards and federal wind and solar tax credits, to a technology-neutral approach to GHG abatement will create significant upside over the next 10-15 years for the overlooked and undervalued “false solutions” of the not-so-distant past.