Following the Paris Agreement, global climate protection must focus on translating commitments into concrete action. The US and Germany, as climate leaders, must be at the forefront of these efforts. As both countries, and indeed all countries, undertake energy transition, climate policy requires cooperative leadership and is an opportunity to broaden the relationship between federal, state, local, and private-sector stakeholders in the US and Germany.
However, the Trump Administration’s climate skepticism, expressed preference for fossil fuels, and Cabinet appointments raise questions about the future of climate cooperation. The Energiewende also has its shortcomings, including a noticeable gap in addressing transportation. Acknowledging these challenges, German policymakers and business leaders should reach out US stakeholders at the state and local level, and engage with the private sector, research community, and NGOS. California, with its commitment to climate mitigation and carbon scheme, and Texas, with its success in renewable integration and grid modernization, could be complementary partners for cooperation.
1. Push the private sector to adopt a carbon pricing scheme.
The EU’s carbon Emissions Trading Scheme (ETS) is the world’s largest emission trading system, while the US (a top global emitter), has yet to adopt a federal carbon pricing mechanism. California is the only US state that has adopted a carbon pricing scheme. While federal action in the US is unlikely at this juncture, exchange between California regulators and German policymakers involved in ETS reform would help the US learn from the EU experience, including its shortcomings. Additionally, US private sector actors could learn from the experiences of German businesses operating under a carbon trading scheme and adjust their business models accordingly.
Private sector actors can take action and serve as impetus for policy change, and progressive businesses are already turning to “shadow carbon pricing” or carbon proxy pricing to prepare the shift to a low-carbon future. Given the need for investment certainty on both sides of the Atlantic, businesses are in a prime position to drive the carbon pricing dialogue. Greater corporate pressure and awareness can be leveraged in support of state-level carbon pricing schemes and the eventual creation of a national market. Partnerships between the private sector and subnational or national policymakers can create the necessary coalition to advance federal climate efforts over the long term. Cities and coalitions of cities like C40 and the Coalition of Mayors could be further consulted on how to implement policies and achieve results in the absence of comprehensive federal policies.
2. Fostering an Inclusive Energy Transition
A persuasive climate policy must acknowledge the social, economic, and political dimensions of the energy transition, and strive to make the benefits inclusive and ameliorate negative side effects. As populist political movements in the US and Germany express working class grievances (including the fate of coal communities), understanding and managing these concerns and side effects is crucial. Policymakers on both sides should share strategies to mitigate the downside of transition and disperse positive side effects, including employment opportunities in clean energy. To support communities in transition, policymakers should consider incentives and tax breaks to encourage investment in former fossil fuel communities. Policies could also incentivize clean technology companies to hire former fossil fuel employees or locate in towns or states with a history of coal production. Policymakers should also work with the private sector to design job (re-) training programs for workers seeking to transition from the fossil to the renewables sector.
3. Sharing Transition and Green Technology Expertise at Home and Abroad
While falling renewable energy costs have made the energy transition viable, challenges in grid integration and management and sector coupling remain. Modernizing electric grids and integrating intermittent renewables is a particular challenge, one several US states, including Texas and California, have deep expertise in. Cooperation with state partners could facilitate the exchange of best practices, critical for Germany as it struggles with grid expansion and its negative effects, like loop flows. Both countries are similarly struggling to address the transportation sector, including the integration of e-mobility architecture. Stakeholder engagement between Germany, with its globally recognized automotive sector, and US states with various e-mobility strategies could provide an opportunity to discuss what has and has not worked and foster cooperation between industry and policymakers.
Countries outside of the US and Germany are struggling to provide reliable and affordable energy while meeting sustainability goals and Intended Nationally Determined Contributions (INDCs) commitments. Many emerging economies are interested in creating a more sustainable energy system, but lack expertise or capacity in designing policies and regulations, technology development and deployment, and managing transition. Germany and the U.S. should leverage their shared expertise and leadership by providing technical and financial support and sharing best practices. This could include peer-to-peer exchange, expert visits, and creation of public and private sector networks between the US, Germany, and interested emerging economies. Such initiatives could be developed at relatively little cost, and potentially be funded by businesses or climate NGOs. Universities could serve as a key link in this exchange, bringing climate scientists and energy sector researchers from emerging economies to the US or Germany to research technological and policy solutions.
Andrea Becerra is an International Relations graduate student at the Fletcher School focusing on Environmental Resource Policy and Development Economics.
Michael David Harris is a Civil Affairs Specialist for the US Army Reserve and instructs high school students on debating foreign policy in Chicago, IL.
Jonathan Old is pursuing his bachelors degree in International Relations at Technische Universität, Dresden, and has worked on development projects with NGOs in Germany and India.
Juan Jose Pedroza is an attorney with interests in energy and environmental policy and former fellow with the German Bundestag.
Ellen Scholl works on the intersection of energy and foreign policy at the German Institute for International and Security Affairs (SWP), and is a former Robert Bosch Fellow.
Jiayi Zhou is a Researcher at the Stockholm International Peace Research Institute (SIPRI).