This blog is the third in a series, “The ABCs of the AJP.”
An animating principle of President Biden’s American Jobs Plan (AJP) is the urgency to address climate change. But a cross-current is competition with China. This comes through not as subtext, but as the stated purpose. According to the White House, “the President’s plan will unify and mobilize the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China.”
This dual focus on mitigating climate change and out-competing China is perhaps clearest in the AJP’s proposal to “[c]reate jobs electrifying vehicles.” Noting that “U.S. market share of plug-in electric vehicles (EV) sales is only one-third the size of the Chinese EV market,” the AJP proposes “a $174 billion investment to win the EV market.” The President proposes to invest in spurring automakers’ development of U.S.-based supply chains for raw materials and parts.
Critically, the AJP proposes investments to create jobs for American workers manufacturing EV batteries here in the U.S. China currently accounts for the vast majority of the world’s lithium-ion battery cell manufacturing and raw material refining, and shipped nearly half of the lithium-ion cells and packs imported to the U.S. in the fourth quarter of 2020. While U.S.-based battery manufacturing capacity is increasing, additional support of the sort envisaged by the AJP would help boost production and accelerate reductions in domestic EV cost.
Beyond its climate-targeted investments, the AJP also calls for $180 billion in research and development (R&D) investments, noting that the U.S. is one of only a few major economies whose public R&D investments have declined as a percentage of GDP over the past quarter century and that China is aggressively investing in R&D so that it now ranks second in overall worldwide R&D expenditures. With respect to traditional infrastructure projects, the AJP notes that the U.S. lags its peers in the on-time and on-budget delivery of infrastructure and is falling behind China in overall investment.
At last week’s Leaders Summit on Climate hosted by President Biden, the U.S. unveiled its new Nationally Determined Contribution (NDC), upping the level of ambition, both at home and among other major emitters. But, despite getting top-billing, Chinese leader Xi Jingping, refrained from making any major new commitments. Instead, he restated last year’s pledge for China’s emissions to peak before 2030 and achieve carbon neutrality by 2060, adding merely that the nation would “strictly limit the increase in coal consumption,” but not begin to “phase it down” until after 2025.
In 2020, in an effort to stimulate its economy in the wake of COVID-19, China commissioned 38.4 gigawatts (GW) of new coal-fired power generation capacity, more than three times the rest of the world’s new additions combined, causing a net increase in global coal generation capacity, despite massive retirements elsewhere.
Yet in his remarks – titled “For Man and Nature: Building a Community of Life Together” – President Xi delivered a message of urgency to address climate, saying that, “the international community needs to come up with unprecedented ambition and action.” He also welcomed the U.S.’s “return to the multilateral climate governance process,” and said both nations were committed “to jointly advance global environmental governance.”
While committing to participation in COP26 later this year in Glasgow, he emphasized that multilateralism necessarily requires a renewed commitment “to the principle of common but differentiated responsibilities,” i.e., developing nations that contributed little to the accumulation of carbon dioxide in the atmosphere over first two hundred years since industrialization should bear a proportionately smaller share of the responsibility for the net societal costs to reduce emissions now.
The U.S.’s withdrawal from the Paris Agreement was predicated upon a narrative that the Paris framework’s differentiated responsibilities put the U.S. at a disadvantage and subordinated American workers to global interests. Yet there is a compelling counter-narrative that, by abdicating our leadership on the international stage, the U.S. let China eat our lunch on the development of a clean energy economy. China’s leading share of the global EV battery market may be the best illustration of this.
After describing the dismal pace of EV sales in the U.S., in comparison to China, the AJP says, quite committedly, “[t]he President believes this must change.” Only time will tell whether the AJP’s proposed investments in EV manufacturing, infrastructure and delivery to customers are sufficient to correct the imbalance.