Biden’s Climate Balancing Act Really Worked

Biden’s Climate Balancing Act Really Worked

There should have been a climate backlash. This is what I find most remarkable about the midterm elections. During previous administrations, voters penalized congressional Democrats for even trying to pass a climate bill. That’s what happened in 1993 and 2009. The Democrats did this with the Inflation Reduction Act. It was the party’s best performance in midterms in decades.

As I wrote last week, that Democrats stopped a red wave is excellent news for climate policy itself. The Senate will now be controlled by President Joe Biden, who can appoint nominees to the Senate and confirm them. This will allow him to carry out the IRA’s implementation as intended. Biden will have more influence in budget negotiations. Yet, I am still unsure why there was no backlash.

Let’s set aside what might be the most likely explanation–that voters were focused on other issues this year, or that Republicans nominated such extreme candidates for the Senate that voters overlooked the IRA and voted for Democrats anyway. The GOP barely made an issue of the IRA, almost never mentioning it in attack ads, preferring instead to focus on inflation and crime. Despite this, it suggests that something did work regarding the IRA and not about previous climate proposals. What was it? I’ve come to think that three aspects of the law–and the campaign to pass it–helped differentiate it.

First, Democrats should thank Joe Manchin. For most of Biden’s presidency, Manchin was the arch-villain of the climate process: He killed the Build Back Better Act, which fused the president’s original climate goals to a messy set of new domestic programs, not once, but twice. In July, I wrote that Manchin’s fickleness at the negotiating table was setting America up for catastrophe. Yet when he finally settled on a deal, he defended it, and his long opposition to climate policy bestowed an aura of moderation on the IRA. Because it was Manchin’s bill, the public didn’t think that the IRA was revolutionary.

But second, Manchin should thank Democrats, too. If Manchin provided political cover for the party, then the party returned the favor and gave policy cover for Manchin. Politically, the idea behind the IRA –that climate policy should lower the cost for clean energy and build new pro-decarbonization alliances in the United States — proved to be far more harmful than the old idea that it should make fossil fuels less expensive.

The third and perhaps most important reason the IRA did not face a backlash is that the other half of Biden’s energy policy has given the law cover. Biden has made enterprising use of the Strategic Petroleum Reserve, or SPR, the U.S. government’s strategic stockpile of oil that it can distribute in an emergency or if supplies are interrupted. Starting in April, after gas prices surged during the Ukraine war, the government released an average of about 1 million barrels a day from the reserve, the largest and fastest sale of supplies from the stockpile ever.

In June, gas prices hit an all-time high, and then they steadily declined throughout the summer. Although these releases are not solely responsible for the decline, they have helped accelerate the downward slide. Last month, the White House announced the second and more important aspect of this policy, which is that the government will refill the reserve at a price guaranteed to generate a small profit for U.S. oil companies. This will ensure that the SPR is available until the government runs out. It will also help to maintain a level of oil prices worldwide, giving the drillers confidence in expanding production.

Although Republicans have tried to attack Biden over these releases, they haven’t hit the mark. That’s in part because … what would they criticize? If Americans are upset about gas prices being so high, shouldn’t Biden go out of his way to bring them down? Some moderate Republicans even called for Biden to adopt a similar strategy in March.

In its simplest form, Biden’s SPR usage allowed moderate Democrats to state that they supported expanding oil and gas drilling. Using the SPR as an insurance policy is one of the policies that Representative Jared Golden of Maine, for instance, called for after Russia invaded Ukraine. Golden later voted for the IRA, but framed it as one more policy among many to lower energy costs–all kinds of energy costs. He was just reelected in a district that leans 10 points toward Republicans.

It turned out that addressing energy costs now allowed Democrats to take the most ambitious steps ever proposed to cut long-term fossil-fuel demand. This is a remarkable act of resistance to Biden’s policy on energy. The fact that the president would even consider trying to manage gas prices is a sign of a departure from traditional political wisdom. In 2012, the University of Chicago Booth School of Business surveyed 41 economists about whether federal policy affected gasoline prices more than market forces did. (This was seen as a proxy for: Can the president do anything about gas prices? ) Not one said yes.

But here’s Biden doing it and maybe it saved him. What’s more, voters vindicated those efforts at the polls. To the degree that politics is what you can get away with, Biden has managed to successfully nudge down gas prices while preserving power to pass more aggressive climate policy.

This is perhaps the most reassuring lesson of the midterms. Managing the energy transition is going to be really hard. Here’s one example: Global oil demand is set to plateau in the 2030s, according to the International Energy Agency. During that time, the world’s transportation sector will still depend on oil, but for the first time in the roughly 160-year-old history of the oil industry, nobody will want to risk producing too much of it. Oil companies have no experience running a business when global liquid-fuel demand is plateauing, much less falling–but they will have to learn.

And that’s just one problem. There will be new factories opening; the demand for minerals will soar. These are going to be unprecedented changes, and they will likely cause some volatility and backlash, both in politics and the economy. What Biden’s energy balancing act suggests is that these bumps in the road can be managed as long as politicians understand what the economy needs–to fight climate change in the long term and to manage costs in the near term–and deliver.

The country isn’t doomed to endless thermostatic backlashes: When policy is designed cannily and attentively, it can avoid political blowback. This is perhaps the best and most optimistic of all.

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