Transatlantic Trends: Locking in U.S.- EU Cooperation to Combat Climate Change
Recent public opinion surveys reveal positive and cautionary trends impacting transatlantic collaboration on climate change. The 2021 Transatlantic Trends survey indicates that citizens on both sides of the Atlantic view climate as the top priority for cooperation between Europe and the United States. In addition, a large majority of those surveyed (69 percent) believe more should be done to combat climate change. This positive convergence bodes well for strong cooperation across the Atlantic on this pressing issue, a partnership that is essential to driving greater global ambition to curb greenhouse-gas emissions.
However, Transatlantic Trends as well as other recent surveys expose a growing political divide in the United States on the climate issue that is worrisome for the U.S.-EU relationship, should Republicans return to power in Washington. In Transatlantic Trends and reports based on equally recent polling by the Pew Research Center and by Gallup, Democrats placed a much higher priority than Republicans on mitigating climate change. Pew found that addressing it was a top personal concern of 49 percent of Democrats but only 10 percent of Republicans, while Gallup found that 82 percent of Democrats believe the effects of global warming have begun while just 29 percent of Republicans agree. Even more striking in the Gallup survey, 88 percent of Democrats believe human activities are causing global warming while only 32 percent of Republicans share that view.
While the Biden administration is proposing aggressive steps to rapidly decarbonize the U.S. economy (a pledge to reduce emissions by 50–52 percent by 2030 and to net zero by 2050), consistent with EU goals, some key initiatives depend on legislative support that is uncertain in the closely divided Congress. Should one or both legislative chambers return to Republican control after the 2022 elections, the path to achievement of Biden’s pledge will become even narrower. And if a Republican returns to the White House following the 2024 presidential election, progress on addressing climate change in the United States, at least at the national level, could largely halt.
These political uncertainties make it paramount that Washington and Brussels collaborate not just on immediate issues related to the success of the UN climate-change conference in Glasgow in November, but to use this time to “lock in” the United States as much as possible on a path consistent with the Biden administration’s pledge and the Paris climate agreement. There are several areas that stand out for joint action to this end: emissions of methane (a much more potent greenhouse gas than carbon dioxide), a carbon border adjustment mechanism (placing a carbon price on imports). and the global trade agenda more broadly, and how financial institutions define climate risk.
The Biden administration should quickly join forces with the European Commission and the International Methane Emissions Observatory the latter has sponsored to collect data on methane that escapes along energy supply chains and use their joint market power to curb these leakages. On a carbon border adjustment mechanism, Brussels should create conditions for the United States to link up with whatever mechanism the EU establishes. This is complex as the United States does not have nationwide carbon pricing, unlike the EU’s Emissions Trading System. However, there are design options that would facilitate complimentary U.S.-EU approaches to avoid “carbon leakage,” to use both sides’ market power to promote lower carbon emissions, and to make it economically painful for the United States to withdraw from this arrangement in the future. The EU and the United States could also promote broader changes to global trade rules and governance, such as adopting a “climate waiver” at the World Trade Organization that would allow countries to favor climate-change measures and take restrictive action against those countries not taking sufficient action.
Transatlantic coordination may have the most impact, however, on setting new rules for the global financial industry on climate. Regulators on both sides are looking at how banks and other financial institutions should best assess and disclose their exposure to climate change in their investment and loan portfolios, and then how to mitigate those risks. Such rules could lead banks to direct more resources to clean energy and away from carbon-intensive activities. Movement of capital in this way could accelerate progress in decarbonizing energy production and advancing needed technologies, and a subsequent change in rules in the United States (for example, to stop disclosing climate change risk) could matter less if these institutions still need to divulge such information to operate in Europe.
Addressing climate change requires close EU-U.S. partnership. The trends are mostly positive at the moment, but they are subject to possible reversal on the U.S. side. Therefore Washington and Brussels should prioritize structuring their cooperation and agreements to constrain the ability of a future U.S. administration to withdraw from climate commitments, as the Trump administration did with the Paris climate accord.
The views expressed in GMF publications and commentary are the views of the author alone.