What Biden and his Senate majority mean for climate policy and philanthropy

While overshadowed by a violent insurrection, Biden’s Inauguration, as well as the Democrat wins in Georgia which provide a unified Democratic government for the first time since 2010, mark a turning point in US climate policy.

In this article, we will examine what this means for US climate policy but also, specifically, for impact-focused climate philanthropy – giving to organizations poised to make an impact on climate change by improving US climate policy. We will first talk about what happened politically before examining the philanthropic implications.

Policy

For the first time since 2010, the Democrats are in control of both chambers of Congress and the Presidency (although their Senate majority is weaker than the filibuster-proof one they held in 2009). Given the Democrats’ strong focus on climate policy in the 2020 election, how does this change what is possible now?

What is possible now?

In December 2020, we held an event on the implications of the 2020 election for climate policy and philanthropy. During the event, Lindsey Baxter Griffith, Federal Policy Director of the Clean Air Task Force, spoke about how a Democrat Senate majority might impact climate policy in the US. You can listen to Lindsey talk in the video below, and find a summary of her points beneath the video.

• Agenda setting: The process of moving things to passage should be easier due to agreement between the Senate, the House and the President. The Democratic majority in the Senate means that they will be able to decide what is being voted on.
• Passage through reconciliation: While the Democrat majority is not filibuster-proof, reconciliation offers a perspective for bills affecting the budget. Only 51 votes are required to pass budget reconciliation, to which important policy changes such as a Clean Energy Standard can be attached.
• Senate Democrats: The Democratic Party in the Senate covers a wide political spectrum - it is not simply filled with supporters of the Green New Deal - very conservative Democrats will need to be cooperative for 51 votes to be achieved. Yet, there does seem to be agreement within the Democratic Party when it comes to clean energy spending, so we can probably expect to see a rise in climate-focused spending with a 51 majority.

Veteran climate journalist David Roberts puts this as follows (emphasis ours):

“So what kind of clean energy policy can fit through this reconciliation process? The most obvious place to look is at measures that directly affect the budget: a refunded carbon fee, clean-energy tax credits and RD&D investments, infrastructure investments, and the like. Anything that spends money or charges fees.”

While these are not mandatory economy-wide emissions targets as we know them from other advanced economies – such would require a filibuster-proof Senate majority or executive orders resilient to court challenges – in terms of enabling global decarbonization, the ultimate goal of climate policy, these are very potent policies.

Indeed, a large part of what gives us optimism on climate – the cost reductions in solar, wind, and electric cars enabling entirely different conversations about emissions targets – has been the result of relatively narrow technology-specific innovation policies similar to those that might be possible now. As such, the Democratic control of the Senate in a time of economic stimulus warrants optimism for effective climate policy through smart clean energy spending. The likelihood of such policy ultimately depends on the interests and behaviors of pivots; given the laser-thin Democrat majority in the Senate, a lot will depend on those legislators closest to the “middle.”

The changing pivots

With such a laser-thin Democratic majority in the Senate, a lot of attention is now focused on the most conservative Democrat, Joe Manchin of West Virginia, whose vote may often be the deciding one in the reconciliation process, giving him an outsized amount of power as a pivot.

If not voting strictly along party lines, Republican supporters of clean energy bills might include Senators such as Alaska’s Lisa Murkoswski, the Republican sponsor of the most recent energy innovation package, and the second most liberal Republican in the chamber according to Voteview’s analysis of past voting records, or Susan Collins (R-ME), the most liberal Republican Senator.

https://voteview.com/congress/senate

As this analysis shows, across all votes and differentiating into two dimensions (“economic / redistributive” and “other”), Democrats and Republicans remain strongly polarized even in the Senate, historically the more bipartisan chamber of Congress.

However, there is also a great deal of ideological division within the two parties - the most conservative Democrat (Joe Manchin) is much more similar to the most liberal Republican than he is to the most liberal members of his own party.

While the results shown in the chart above focus on general ideology (as estimated by voting patterns), other factors, such as a state’s electricity mix, dependence on fossil fuels jobs, and special interests, will also drive climate-relevant votes in the Senate; with the Democratic coalition including progressives advocating for ideas like the Green New Deal and 100% renewable energies to moderate Democrats in states heavily reliant on fossil fuels.

As such, while a more Democrat Senate would be more desirable when it comes to ambition level, in terms of the solutions pursued, the political need to integrate conservative coal-state Democrats and moderate Republicans could be beneficial because it forces Democrats to design climate policy that can bring those interests on board – and those interests and existing infrastructures are quite typical of many areas in the world. Bluntly put, with its dependence on coal for energy production and jobs, West Virginia is more representative of many parts of the world that need to be brought along for global climate progress than many coastal states where support for climate policy is largest.

Consider, again, the case of Joe Manchin, a conservative Democrat from West Virginia, who is a big champion of carbon capture and storage. Roberts notes that: “Manchin will be the gatekeeper. That will mean, among other things, that carbon capture, utilization, and storage (CCUS) gets lots of money, along with a bunch of other stuff greens don’t like.”

This is actually good news because a lot of the technologies that “greens don’t like” are, for that reason and others, relatively neglected in the overall climate conversation, making additional funding particularly valuable. CCUS is a good example of this, recently identified as one of the top three areas where innovation spending should increase most and also, generally, considered an essential technology for global decarbonization.

So, while the clean energy legislation that comes out of this Senate might look less focused on renewables than some advocates would like, it might, in fact, be more useful in enabling global decarbonization by focusing on those technologies that are critical to this process and that are in need of the same kind of innovation support that has made renewables succeed.

Changing paths and changing risks

With the Democrat Senate Majority, the relative emphasis of the Biden climate agenda is likely to move somewhat into the legislative arena – passing a stimulus, annual budget bills, and others that can be passed through reconciliation – rather than primarily relying on executive orders and the direct power of the executive. This, of course, bears the risk of relying on legislation to get at least minimal bipartisan support (or the entirety of Democrats supporting) at the cost of pursuing executive orders less aggressively (to ensure support from the most conservative Democrats, most liberal Republicans), with support from these pivots not guaranteed.

However, as Perry Bacon Jr notes in his discussion of these risks, it appears that, while Biden is talking about unity and bipartisanship, he is equally prepared to use executive action and more partisan approaches should his pivot to bipartisanship fail. With the large possible gains related to passing clean energy legislation at a time when stimulus needs make large government spending more palatable, this risk appears worth taking – in particular, as executive orders would always be liable to court challenges and scrapping by a future president.

A similar risk exists not only in the failure of support from the middle (from conservative Democrats or liberal Republicans), but in a lack of support from the left as Senate proposals will seem insufficiently ambitious to many progressive Democrats. This could lead to situations where well-intentioned pressure on Democrats by progressive climate activists leads to more partisan approaches that either fail or are pursued by executive order and risk court challenges and removal by future presidents.

So, clean energy and climate policy under the Biden administration will be a delicate dance of finding majorities in a time of intense inter- and intra-party polarization.

Philanthropy

Does the unexpected result in Georgia change how we think about high-impact climate philanthropy? To answer this question, we should review our starting position.

In October 2020, we launched the Founders Pledge Climate Change Fund. The Fund allows members to pool their donations with that of other members to make larger grants and respond to time-sensitive funding opportunities. Our Fund Managers continuously research and review climate-focused charities to ensure that grants from the Fund maximize the impact of every dollar donated.

As part of this research, we published a report on the implications of Biden’s victory for climate philanthropy. Based on the data available at the time and to be conservative, we assumed only a 15% probability of a Democratic win of both Georgia races in our main model of the expected goodness of climate philanthropy over time (purple line below).

Despite this conservative assumption for the Senate results, our model predicted that the first year of the Biden administration was a special moment to donate to improve US climate policy. Our model also predicted that impact will decline after 2021 due to the declining influence of the Presidency over time, a more Republican-leaning environment going forward, and the declining usefulness of US climate policy (and philanthropy improving such policy) over time given carbon lock-in (for more see our report). Based on this finding, we granted $850,000 to Clean Air Task Force and $400,000 to Carbon180 for their federal policy work, enabling them to pursue their important policy work well-resourced.

As Conrad Schneider, CATF’s advocacy director, put it: “The support we have received from Founders Pledge and its contributors has allowed us to immediately seize the opportunity for climate regulations under a Biden Administration and continues to bolster our work preparing for additional, fast-moving opportunities in 2021 as a new Congress prepares to reboot the American economy with climate and clean energy investment post-COVID.” Giana Amador, co-founder and managing director of Carbon180, strikes a similar chord, stating that “[t]he Climate Fund has been integral to achieving our goals around federal policy by giving us both the runway and platform needed to execute on our policy development, advocacy, and coalition-building work.”

After the Georgia election, we updated our model to incorporate (1) Democrat wins in Georgia and (2) a Republican Party that seems significantly weaker than the November election results alone reflected (increasing the probability that Democrats will be able to hold on to a trifecta in 2022 to 25%). As you can see below, the Democrat win in Georgia makes this dynamic – a sharp increase in opportunities for impact, followed by a steady decline – much more pronounced.

We expect the next two years to be the best time for progress on climate change in the US, with the situation likely becoming less favorable following the 2022 midterm elections as the Democrats are unlikely to hold onto their trifecta. (The last time a president’s first midterm election result was robust enough to maintain/win a trifecta given current margins in the House and Senate was JFK in 1962.) In light of this analysis, we recommend that climate-focused philanthropists interested in capturing this unique moment donate to the Founders Pledge Climate Change Fund.

Why use the Fund instead of directly donating to policy advocacy organizations?

While the Senate results suggest that climate-focused philanthropists should give a lot more now, we also need to consider funding margins of organizations. Taking funding margins into account, there isn’t a lack of obvious funding gaps to fill related to influencing US federal policy right now, as we have already deployed $1.25 million to the highest-impact organizations we have identified in this space.

However, our Fund Managers continuously monitor the projects and corresponding funding needs of our top recommended charities, and are poised to act when a specific, timely opportunity arises. We also regularly evaluate new funding opportunities, identified through our original research and our broader climate philanthropy and advocacy network. Therefore, for most donors, the Founders Pledge Climate Change Fund is the best way to guarantee your donation truly takes advantage of this unique opportunity for impact. Learn more about joining the Climate Change Fund community and making a donation.

Appendix

Here we outline how we updated our model in light of the Georgia results.

In late November, when we published our report, the polls and strategic asymmetry – Republicans only needed to win one seat – suggested Republicans were favored to win the Senate. Therefore, we assumed a 15% probability that the Democrats would gain a Senate majority. (At the time, prediction markets were a bit more confident in the Democrats than us (about 20-30%, ~50%-100% more optimistic, around November 20.)

Our estimate was based on the assumption that the Republicans would act more wisely and exploit the opportunity in Georgia by utilizing their strategic advantage of only needing to win one race to gain a majority, and more effectively involving Trump in their campaigns.

However, the Republicans acted in the worst ways possible:

Trump (a) did not concede, undermining the strongest argument that the Georgia Republicans could use, i.e. “protection against the Democratic trifecta”, (b) questioned the integrity of the elections, thereby suppressing Republican voter turnout, (c) made only a half-hearted endorsement of the Georgia candidates.

The Republicans at large (a) were divided over stimulus checks, not passing $2,000 stimulus checks despite the Democrats and Trump supporting the initiative and it being popular, (b) were focused on defeating the stronger Democratic candidate (Warnock).

Due to revelations of the weakness of the Republican Party, we also updated the win probability for Democrats in the 2022 midterms – the probability that the Democrats will be able to hold the trifecta – from 12.5% to 25%.