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Highlights

Kerry says 55% of global GDP making key commitments

Sees future reversal checked by market transition

The US committed April 22 to reducing economywide greenhouse gas emissions by 50%-52% from 2005 levels by 2030, as some of the world's top emitters also reaffirmed or raised their ambitions to cut emissions at the start of a two-day climate summit hosted by US President Joe Biden.

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"We now have about 55% of the global GDP committed to levels of reduction that keep faith with holding the Earth's temperature at 1.5 degrees," said John Kerry, the US special presidential envoy for climate.

"I'm pleased with where we are, but not sanguine. The next six months will be absolutely critical to the capacity to make Glasgow what it needs to be," he said. Parties to the Paris Agreement are scheduled to convene in Glasgow, Scotland, in November to submit enhanced commitments, or nationally determined contributions, for 2030.

Biden and other US officials repeated goals from the administration's recently introduced $2 trillion infrastructure plan to invest in existing and future clean energy technologies, clean up abandoned mines and oil and gas wells, and build next-generation electric vehicles and EV charging infrastructure.

Investments in technologies such as hydrogen use to forge cleaner steel and cement, as well as carbon capture investments, were highlighted in the US NDC and administration officials remarks, but the new NDC did not include sector-by-sector emission reduction targets, such as a new goal for methane emissions reduction sought by environmental groups.

Policy follow-up

S&P Global Platts Analytics suggested that additional policies would be necessary for the US to meet its NDC. In absolute terms, Platts Analytics' forecast of US 2030 combustion CO2 emissions is roughly 1,300 million mt above a 50% reduction target, equivalent to 8.5 million b/d-9.5 million b/d of oil demand. Alternatively, its expected power sector coal emissions in 2030 are around 340 million mt. Therefore, Platts Analytics suggested a full phase-out of coal in the power sector would meet just 25% of the additional emissions cuts required under a 50% target.

With the US representing less than 15% of global greenhouse gas emissions, Biden said at the summit that no nation can solve this crisis on our own. "All of us, particularly those of us who represent the world's largest economies, we have to step up," he said.

As the top global GHG emitter, China has committed to peaking its CO2 before 2030 and achieving carbon neutrality by 2060. During a virtual address at the White House summit, China's President Xi Jinping reaffirmed those targets and pledged to "strictly control coal-fired power generation projects." Xi said China will "strictly limit the increase in coal consumption" over the country's 14th five-year planning period running from 2021-2025 and "phase it down" during the country's 15th five-year period.

As the third biggest emitter behind China and the US, the European Union is also ramping up efforts to curb emissions. On April 21, the European Parliament and the EU's 27 member governments agreed to the bloc's first-ever climate law.

With the policy in place, "we write into stone the goal set out by the European Green Deal to make Europe climate-neutral by 2050," European Commission President Ursula von der Leyen said during the White House summit. The EU has also agreed to reduce GHG emissions by at least 55% by 2030 from a 1990 baseline, with the European Commission tabling proposals in July on how to accomplish the goal.

"Carbon must have its price because nature cannot pay the price any longer," von der Leyen said.

Closer to home, Canadian Prime Minister Justin Trudeau said Canada has a new target is to reduce emissions by 40% to 45% below 2005 levels by 2030 and will "continually strengthen our plan and take even more actions" to get to net zero by 2050.

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GOP pushback

On the domestic front, harsh critiques from some GOP lawmakers underscored challenges ahead for legislation to advance toward the targets.

Senator Energy and Natural Resources Ranking Member John Barrasso, Republican-Wyoming, called the president's pledge "drastic and damaging."

"The last thing the economy needs is higher energy prices and fewer jobs, but that's exactly what we're going to get," he said.

Pressed by reporters about challenges getting Republicans in Congress on board and the potential for reversal by a future administration, Kerry countered that much of the plan is executable by executive order and emphasized private sector momentum.

"That is the real reason why I'm saying to you that no politician in the world is going to undo this, because all over the world, trillions of dollars, trillions of yen, trillions of euros are going to be heading into this new marketplace," Kerry said.

Companies have made the long-term strategic judgment, and no politician, "no matter how demagogic or how capable" will be able to change what the market is doing, in his view.

"It will have moved and we'll have four years of entrenchment," he said.

International finance plan

Alongside the announcement of the sharpened climate targets, the White House also released an international climate finance plan that aims to double by 2024 the US annual public climate finance to developing countries. Under the plan the Treasury Department, working with other countries and agencies, also would work to reorient export credit agencies' financing support away from carbon intensive activities.

The US International Development Finance Corporation would increase its climate-related investments to at least one-third of its new investment, and the Export-Import Bank would look for ways to boost support of exports for renewable energy, energy efficiency and energy storage. The DFC separately pledged to reach net-zero emissions through its portfolio by 2040.

The White House plan said US government agencies would "seek to end international investments in and support for carbon-intensive fossil fuel-based energy projects," stopping short of the hopes of gas-industry opponents that the White House would rule out backing overseas gas projects.

The language was similar to the wording of a January executive order and did not specify the resources to be targeted. The latest announcement included an additional qualifier, which said that "in limited circumstances, there may be a compelling development or national security reason for US support for a project to continue."