Transition 2021 Series: U.S. Strategy Shifts in Climate and Energy Policies

Panelists discuss the direction of U.S. climate and energy policies under the incoming Biden administration, from climate mitigation and adaptation strategies to regulating fossil fuel emissions and expanding alternate sources of energy.

The Transition 2021 series examines the major issues confronting the administration in the foreign policy arena.

JACKSON: Welcome to this edition of the Council on Foreign Relations Transition 2021 Series. Today we will be considering climate and energy. I'm Shirley Ann Jackson and I will be presiding over today's discussion. We have over five hundred members registered for this virtual meeting, and we will do our best to get to as many questions as possible during the question and answer period. First, please allow me to introduce our panelists. Ms. Alice Hill, the David M. Rubenstein senior fellow for energy and environment at the Council on Foreign Relations. She previously served as special assistant to President Barack Obama and senior director for resilience policy at the National Security Council. A lawyer by training and a board member of Munich Reinsurance America and the Environmental Defense Fund, she is interested in climate risks and paths to climate resilience. And she is the co-author of the 2019 book, Building a Resilient Tomorrow. Dr. Meghan O'Sullivan, the Jean Kirkpatrick professor of the practice of international affairs and director of the Geopolitics of Energy Project at the Harvard Kennedy School and a member of the board of directors of the Council on Foreign Relations. Earlier in her career she served as special assistant to President George W. Bush and deputy national security adviser for Iraq and Afghanistan. She is the author of the 2017 book, Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America's Power. And Ms. Michelle Patron, director of sustainability policy at Microsoft. She served as special assistant to President Barack Obama and senior director for energy and climate at the National Security Council. Earlier in her career, she served as energy attaché at the U.S. embassy in Beijing.

Today, we will discuss the geopolitics of the transition to clean energy; the risks of climate change, including the risk of triggering in an interconnected world, what I often refer to as intersecting vulnerabilities with cascading consequences; and the policies and technologies that will help the United States and the world to reach the goals of the Paris Agreement and to build climate resilience into our societies. Dr. O'Sullivan, I will begin with you. President Biden has pledged to put the "climate crisis at the center of the United States foreign policy and national security." And that's a quote. What will a climate-based foreign policy look like and what are the challenges that will be faced by former Secretary of State and Special Envoy John Kerry in forwarding that foreign policy?

O'SULLIVAN: Great and good afternoon. Thank you for that question. It's a pleasure to be with you, Shirley, and to be with my fellow panelists. Certainly during the campaign we saw how candidate Biden talked a lot about climate, but really in these last two weeks when he has been president, we have seen demonstrated actions as to why and how climate is going to be central to his both domestic and foreign policy agenda. And I'd say there's really two sides of the coin to the Biden decarbonization push. On the one hand, decarbonization is going to be an end of foreign policy, an objective of U.S. foreign policy to get other countries to move in the direction to decarbonize their economies. But it's also going to be a means of American foreign policy in the sense that, I think, it's really the climate global stage where the Biden administration hopes to first really demonstrate to the rest of the world that America is back and ready to assume a leadership role on the global stage on the issue of climate. We saw just last week President Biden announce that there would be a climate summit on Earth Day in April. And I think this is going to be the first place where America is really going to demonstrate that it has the credibility and the willpower to lead in the world.

Just briefly, what does it mean? It is not just rejoining Paris; this is something much more extensive. It's really a revamping of American foreign policy, to put the issue of climate at the center of every interaction or if not every interaction, many interactions that are had by diplomats, soldiers, aid workers, people who may not normally intersect with the climate agenda. We're used to climate being kind of a subject matter expertise and one that is discussed a lot within climate fora. But now we're going to see climate being discussed by U.S. diplomats and soldiers and aid workers and others in our bilateral discussions in international fora, in every interaction that we might have with other countries. This will require revamping our toolkit. We've already seen President Biden ask agencies to look at their mandates and look at their capabilities and assess them in the sense of how they can advance a decarbonization agenda. But this is not going to be easy, because there are many priorities that climate is going to bump up against. How is climate going to rank when we talk about more traditional foreign policy concerns like nuclear non-proliferation or human rights or conflict prevention? You know, somehow climate is going to have to be rectified with those other agendas.

And just quickly on you asked what challenges might Secretary Kerry have? And I would say, you know, first, there's probably going to be a bureaucratic challenge. We've put another, you know, mega principal into a new role in the climate space. So I imagine there'll be some tripping over of one another. But I think the real challenges are kind of twofold. The first is on the domestic front, that actually to lead internationally on climate, the United States has to demonstrate that it has credibility on making changes, pretty significant changes on its domestic agenda. So in this sense, you know, Secretary Kerry isn't going to be credible unless you can point to action at home. And then secondly, you know, we saw a little bit of this with Secretary Kerry talking about climate in China just last week. You know, people have already started to think is there some kind of bargain with China, you know, be tougher on climate and—

JACKSON: We're going to try to get to that.

O'SULLIVAN: Yes. So anyway, I think that it's going to be interesting that the U.S. might try to keep climate as a separate agenda item, but there might be other countries that want to link these things. And I think that'll be a challenge.

JACKSON: Great, thank you. Ms. Patron, you know, we're talking about what can happen inside and driven by the federal government. But a lot has occurred outside the federal government. So could you tell us about progress that has occurred outside the federal government in the nearly four years since former President Trump announced that the U.S. would no longer participate in the Paris Agreement and how that progress will allow President Biden to deploy his promised, and as you've heard, government-wide approach to climate change?

PATRON: Absolutely. And thank you very much, Shirley. It is truly an honor to be here and I just want to take a second. I know there are a lot of partners and former colleagues on this call as well and so I just want to take a second to say hello to everyone and hope all is well with your families in this uncertain times. So the federal government for the last four years has definitely been absent from climate action, but the rest of the world, and frankly, the rest of the country, has moved forward. When you look outside the country, for example, the countries around the world have negotiated the Paris rulebook. You have dozens of countries that have committed to net zero emissions targets by 2050, including the EU, UK, Japan, Korea, and even China announcing a pathway through 2060. And then you look inside the United States and twenty-five states and over five hundred cities and counties committed to staying in the Paris Agreement of the last four years. Not only did they sign a statement but they showed up at UN meetings and they did a lot of policy work. Thirteen states and over 165 cities set 100 percent zero carbon electricity targets. You have over eleven states that now have some type of carbon-pricing program. And then when you look at the private sector, that's probably where we've seen the most momentum over the last four years. A thousand companies representing over 20 percent of global market cap have committed to science-based targets. What does that mean? That's not just a climate commitment, that's a commitment to take actions that are aligned with a 1.5 degree world, and half of those, five hundred of those, have happened in the last year alone. So ambitious climate action has become mainstream, but there is this huge gap between action and ambition. And that's really the gap that the federal government needs to fill. And to the point about the policy levers and how does this play in—the world has changed. The policy playbook has changed. We're no longer talking about a single economic architecture like cap and trade or global carbon price. We're talking about a sector-by-sector approach. It's the electricity sector, the transportation sector, the industrial sector, the building sector, agency by agency. And lots of levers at the same time—R&D, infrastructure, procurement, disclosure, tax policy. So it's going to be a mosaic, if you will, of climate policy building and working with the states, local governments, and companies and external organizations. It's not just going to be a federal government single architecture.

JACKSON: Thank you very much. Ms. Hill. Soon, I'll be calling you by your first names. You have written about the national security risks associated with climate disruptions. Could you amplify it and tell us about those risks?

HILL: Sure and thank you so much. I'm really delighted to have a chance to speak with all of you and our members of CFR today. It's an honor to be on this panel to talk about just an enormous bank of knowledge that we have here. So really delighted to join. National security has been an issue that has a question mark after it for many when it comes to climate change. But we did see, this week, President Biden revive an executive order, actually an executive order my team led the development of when I was in the White House about national security and climate change. There are two aspects that are prominent when you talk about climate change in the context of security. The first is traditional security concerns around the military. Is the military able to operate as it wishes in the face of worsening conditions from climate change? And as we've seen in recent months this is a challenge for the military. In 2018 Hurricane Michael swept across Air Force Base Tyndall. It basically destroyed pretty much the entire base. The commander there said it was utter destruction. Unfortunately, we had some F-22s that could not be moved in advance of the storm and they were stored in hangars. We still don't have full accounting of how much damage was sustained by those planes. They come in with a price tag of $135 million. $3 billion at the Air Force base. If you look around the globe, Congress has already ordered the military to identify the bases that are at risk from sea-level rise and worsening conditions as a result of climate change. In 2019, they identified forty-six installations around the globe. And of course, the crown jewel of certainly naval operations, Norfolk, Virginia, is suffering from subsidence and a very high level of sea-level rise. You know, sea-level rise isn't like when you climb into a bathtub and it all rises evenly. Different places are suffering more greatly and our Eastern Seaboard is suffering more greatly. So that is an issue that will be of enormous challenge.

Then you move away from the traditional military concerns, just military readiness. And you move into the question of human security. I would say this is a tension between the traditional security view of the world and this larger aperture of human security. Some military personnel that I've spoken to about this issue have said, "You know, I understand what you're saying, but we're trained to think about what hill we should take, who we should shoot, and that's simply not a play when you're talking about the kinds of threat multiplier risks that worsening conditions bring." It threatens human security, basic food access, water security, shelter, livelihoods. And as we see these disasters—flooding a number one—sweep across the globe, it causes major disruptions for both the governments as well as the populations that suffer from these disasters. And we know in poorer countries they have fewer resources plus they have fewer flood protections than we do and other protections against these types of events. So they’re hit harder. It's no question that these events are pummeling them at a greater extent than they are in the developed world. In the future, some parts of the world will become, it's predicted, uninhabitable simply because of higher temperatures in very humid conditions causing what's called the wet-bulb temperature. That's when the human body cannot perspire enough to keep itself cool. We expect to see that occurring in the Persian Gulf, in South Asia, and even in places in the United States. So these events will cause people to be on the move and that can be highly destabilizing to both national security of these countries as well as global security.

We have a bit of this occurring at our southern border already. Since about 2011, we've seen from the Northern Triangle, huge numbers of immigrants seeking to enter the United States, one experts have termed the survival migrants. Their communities have been devastated by drought and flood, most recently in Honduras, two major hurricanes. They don't have livelihoods. They don't have a place to live. They don't have access to food. And they probably don't have access to fresh water. So if they have the means they're on the move and that will be a continued pressure on our southern border. We've seen extensive droughts in Honduras, El Salvador and Guatemala, the Northern Triangle, and we anticipate more movement from there. So the bottom line is, when we're talking about the human security aspect of this, we need to help people stay at home. Bob Gates, who has served many presidents, both Republican and Democrat, pointed this out when he argued as secretary of defense for expanding the budget of the State Department. He said this was a rather heretical move, but he recognized that that was the only way to control some of the risks that we are facing as conditions change on our planet. Jim Mattis similarly told Congress, "if you don't increase State Department's budget, I essentially, in the end, will need to buy more bullets." So we need to think about what these events mean, how they can multiply risk across the globe, understand that and then prepare for it, develop strategies and think more deeply about how we will help people stay and thrive where they currently are.

JACKSON: You know, I have two quick overlay comments. One is you talk rightfully about the military implications. And, of course, that effects our projection of power, globally, in terms of, for instance, how our naval fleet is deployed. And there are climate effects with that. And secondly, you mentioned our southern border, in particular, which suggests that we have to begin to migrate the discussion about immigration because it may not just be people fleeing gangs or homebred violence, but a more fundamental shift having to do with survivability of whole populations. So that's interesting. Dr. O'Sullivan, back to you. You and I are actually in agreement that the control of natural resources is a key determinant of geopolitical power and geopolitical alignments. So tell us how you see geopolitical power shifting during a transition to clean energy?

O'SULLIVAN: Happy to do that. I just like to add one thing to what Alice said as she laid out these threats of climate change to national security and just highlight that President Biden has asked for a national intelligence estimate of the threats that climate change poses to U.S. national security. And I think this is very significant, not only because of the prominence that this estimate will get, but because of the resources that often flow as a consequence of these NIEs or national intelligence estimates. So that's definitely something to watch. To your question about how geopolitical power is going to shift with this energy transition, I think it's a really a vital issue. The big frame for this thinking is that when the energy sources that the world uses change, or really when the energy system of the globe changes, we should expect big changes in geopolitics because of this close connection that you spoke of between energy and global power. And that has existed for quite some time. And so when we look at the energy transition, we can only assume that as the world transitions, not only to new sources of energy, but to new energy systems, that with it there's going to be a lot of geopolitical change.

And, you know, there's so much to talk about, I'll just, you know, mention four areas that are very much on my mind. First, this shift, this energy transition, will really influence the prominence of certain threats. So for instance this energy system that we're moving toward is going to be a lot more electrified. The world's economy is going to use electricity a lot more for the kinds of things that we might use other forms of energy for right now. Think about vehicles being the most obvious one. And when the world is more electrified, then the threats coming from cyber are going to be that much more intense, that much more potentially catastrophic. So we're going to have a lot more focus in that area. I also think that this energy transition could result in the disruption of some trajectories that we've almost come to take for granted, at least until COVID that is. And one of those is globalization. You know, we think that globalization has been on a steady march but an energy transition could actually strengthen some of the forces of regionalization or even deglobalization over globalization. And that is because, you know, imagine a world where countries are getting most of their energy, not from international trade and big supplies from other parts of the world, but are generating a lot of their energy sources from within their borders, or just, you know, importing electricity from across the border with their neighbor. So maybe regions are going to become more important and global trade and energy may become less important. I also think, you know, to the core of your question, this energy shift is going to affect who really wields power in the international system. Think of how oil has been so closely connected with the influence and the exercise—

JACKSON: I'm going to come to that. You cover such a wide front, I want to be sure that—

O'SULLIVAN: Well, okay, I'll just stop. The fourth thing I was going say was just simply, you know, the sources of competition, I think, are also going to be different. There's going to be less competition for access to oil and maybe more competition related to some renewable technologies and maybe we'll get to that later.

JACKSON: Yes, I am going to ask some questions about technologies. But let me ask one that could be commented on by each of you in from your own frame. And I'm going to start with you, Alice, since we lost you for a moment. So, you know, we have China, and with China we have a nation that is at once, in many ways, the world's leader in clean energy manufacturing but nonetheless is financing hundreds of coal-fired power plants in poorer nations as part of its Belt and Road Initiative. According to Yale, a Yale Environment 360 story from January of 2019, quote, "Chinese companies are involved in at least 240 coal projects in twenty-five of the Belt and Road countries, including Bangladesh, Pakistan, Serbia, Kenya, Ghana, Malawi, and Zimbabwe. But China's also financing about half of proposed new coal capacity in Egypt, Tanzania, and Zambia. And while a few of these plants will use the latest technology—in Bangladesh, for example, with a 'clean coal' plant—many are less advanced and are not being planned with the carbon capture technology that would make them less threatening to efforts to control climate change." And so how do we see China projecting its influence in the years ahead in this context, and in the process perhaps reconciling the disconnect between what it does with clean energy manufacturing in China and promulgating less clean technologies abroad? Although I note that there seem to have been a bit of a shift relative to where they may be going. And so why don't I start with you, Alice, and then go to Michelle and then to Meghan.

HILL: Thank you. I'm glad to be back, the vagaries of the internet. You put your finger on a very important issue. How will China react? It is exporting coal as part of its Belt and Road Initiative. I think there has been reporting that claims that some of the countries that are the recipients of that technology and that aid have said that's what they want. So that also identifies a growing challenge for the developed world is that many of the countries that have had the least to do with our climate problem now want to have a lifestyle similar to that we've enjoyed in the United States, which could bring a great deal of emissions and China has been building those kinds of power plants. But honestly, if we want to keep the globe safe, we have to act now. It's really hard to underestimate the urgency of this. We have to all, and this means all in, and I think much of this falls in the developed world and much of it on the United States—it's the second-largest emitter and the largest historically—to step up with financing. We haven't yet honored our pledge to the Green Climate Fund. We haven't been and that fund, the financing they've receive, much of it has been in the form of debt, not in the form of grants. The countries that were adding to the debt load, those countries already have huge losses from the pandemic. The world has changed and it's a message that probably is unwelcome as we suffer our own economic challenges here. But we are going to have to find ways to offer something different than what China is, as well as put pressure on China to stop this. We need to stop emissions from virtually all sources. We shouldn't be building new coal power plants. We don't have the kind of technology at scale yet to do the type of carbon capture storage that is imagined. We need to find clean energy from the get-go from these countries that need power now. This will test Special Envoy Kerry's diplomatic skills, the skills of the State Department, and, frankly, given that we're rejoining now, will add to our burden not only to come forward with our own nationally-determined contributions how we will cut our own emissions, but also ways to help other nations cut their emissions but also be able to achieve their development goals going forward.

JACKSON: Well, you know, it's one of you said that our ability to put what we do in the foreign policy arena links to what we do domestically. And many times when we talk about domestic policy, we have to think a bit more about what's happening in the private sector. And Michelle, I know that Microsoft has announced that it will be carbon negative by 2030. And by 2050, it intends to remove all the carbon it has admitted since it was founded in 1975. You have to tell us what that means, but as you do that tell us about emerging technologies that will allow it to reach that goal.

PATRON: So for us it really starts with carbon math, right? The science is telling us that we have to act and those who can must act faster. And that is what's behind Microsoft's carbon negative and our historic emission removal goals. So when we look at our carbon map, we need to look at not just what we're doing in our own operations, which is scope one, but also the emissions that come from our electricity, which is scope two, and what happens in our supply chain, which is scope three—everything that goes into the products that we make and the electricity that is used by our products by our consumers. So the whole, whole picture. And I say that just referencing quickly the last point, because countries are going to need to do the same thing. They're going to need to look at what they're doing inside their country domestically but also what their policies outside are doing their best [inaudible]. But for us, we looked at our supply chain and we looked at our scope one and scope two and said, "Look, we're going to need to reduce as close to zero as we can and then we're going to need to remove the rest." So we're doing significant decarbonization of our electricity, 100 percent renewable by 2025, electrifying our fleet, reducing our supply chain emission by 50 percent by 2030. We have a carbon price that helps us do that. But we also are really investing in the carbon removal side of the equation because we're going to need to move a lot just to get to our carbon negative goal in 2030 and a lot more to get to our 2050 historic emission goal.

And carbon removal is not just, it's not the point of capture piece, it is the removal from the atmosphere. Because emissions stay in the atmosphere for a very long time and every year we're putting more and more on top of it. So and there are two ways to do that. You could do that through nature-based solutions, forests and agricultural management, and you could do that through engineered solutions. There are pluses and minuses with both, right? On the nature-based side of things that are available today, they're hard to measure, hard to verify, you don't know how long they're going to last—conditions can change. So we need to have the verification technology and frankly the markets to have certifiable credits that allow companies and organizations to be able to do this and landowners and farmers around the world access to them. On the on the engineering side, we need to develop those technologies. Some of them are in the lab stage just beginning to get into deployment. Direct air capture, which can scrub air and suck carbon from the air, but it requires a lot of land, it requires a lot of energy. The costs are tremendous. Bioenergy capture, which allows you to capture carbon from bioenergy releasing and then mineralizing it like biochar—same thing. Technologies are beginning to be available, costs are high, and so we need to bring those technologies down. So we need to do R&D, we to create policies that support these markets, and we need to create standards. So it's exciting. We're beginning to see policymakers get excited and interested in this space, one of the rare signs of bipartisanship in the United States on this issue. And last year the Energy Policy Act, a really big piece of legislation that got into the omnibus, authorizes billions of dollars for research in this space. So we think that there's real potential, but we just need to prioritize it.

JACKSON: Well, I want to ask each one of you have one last question before we go to the Q&A, but I'm going to have to ask you to be really succinct so that we can leave time for the members to ask questions. So Alice, you sit on the board of Munich Reinsurance America. And one of the very first warnings in 1973, no less, that climate change was increasing the risk of natural disasters came from Munich Re. So what role will financial markets, including insures, play in getting the world towards the Paris Agreement goals? And again, I asked you to be succinct.

HILL: Well, that's an open question what role they will play? I think it was Lord Nicholas Stern who said that climate change is the biggest market failure we've had. The markets are not yet reflecting the nature of this risk. There are two primary risks that need to be better accounted for. The first is the transition risk and that is the risk that we will move to clean energy and away from fossil fuels. So what does that mean for those companies and companies that hold interest in fossil fuels? Then secondly, we have the climate impact side. And that is what does greater drought, bigger wildfires, more flooding, loss of coastal lands, erosion, salt intrusion on farmlands, all of which are occurring at ever accelerating rates, what does that mean to the bottom line for certainly publicly traded companies as well as real estate markets. We don't yet have the disclosure mechanisms either in terms of just take your home. You probably wouldn't be able to easily determine whether your whole property had previously flooded and find accurate mapping, certainly not from the federal government regarding your future risk of flood or wildfire. These are issues that mean that there's a discounting of risk that we see repeated throughout the markets.

For publicly traded companies, there have been numerous attempts by various organizations to impose some kind of accounting system so that we better reflect the material risk that is evolving with climate change. Those voluntary systems, I think it's widely recognized, haven't resulted in the kinds of disclosure we'd hoped for. Much of it is boilerplate. It's not very helpful to really understanding the risks. So you see countries moving forward with regulation. Most notably the Bank of England. Switzerland's also indicated it will move forward. France was the very first as part of the 2015 Paris Agreement requiring disclosure. And now New Zealand has just moved forward to require disclosure across the board. Once we have that, that will deepen the understanding within the company's hierarchy, as well as the market as to what the risks are. The theory, of course, there could be a sudden reversal of the markets once this risk is internalized that it's permanent. In terms of, as Michelle has said, we've already baked in heating. If we get our emissions to zero tomorrow, we will keep heating up. So just look at what happened to 2020 and it's been pretty dramatic. I didn't keep that brief. But it is an issue that we need to attend to immediately—improving disclosure risks.

JACKSON: Okay, we're going to want to move on. And so at the risk of not leaving time for the Q's and A's, Meghan, I just want to ask you about this question of carbon leakage. And if you could give me a two-minute response, you know, the question of the movement of industry to less regulated locales. The EU, as you know, is considering a carbon border adjustment mechanism. How do you think the U.S. should respond?

O'SULLIVAN: Thank you and I'll try to be very brief. It's a very important question. And let me just touch on two things. First, is this larger question just of leaks or particularly methane leaks that come from the production of oil and gas. And this is an issue that is increasingly recognized as being one of the adverse environmental consequences of oil and gas drilling. And the Obama administration put forward some regulation that really encouraged companies to address the leaks they have, to identify the leaks, and we've had a lot of advances in technologies that help identify those leaks and to take steps to rein in their methane emissions. I think this is very, very important for the industry. And interestingly, when the Trump administration reversed those regulations, there were a lot of companies that were against that reversal. They knew, you know, the direction that things are going, as Alice suggested, and they felt that, you know, that actually keeping that regulation in place, you know, kept them on the track that was consistent with investors. So I think that is one area where we're definitely going to see a return to regulation, and I personally think that's in the interest of the industry in order to maintain the social contract for production of oil and gas.

On this specific issue of carbon border adjustment mechanisms, that's, you know, another related issue, but it has more to do with basically creating something akin to a tariff that would be placed on goods that were being imported from countries that didn't have a price on carbon or anything like that in order to level the playing field so not to disadvantage European manufacturers who do have to pay a price on carbon. I think this is going to be a very strong part of Europe's, you know, progress towards meeting their climate goals. And my expectation is actually that they're going to find potentially a partner in the United States for similar kinds of measures. I think, you know, that this actually might be a point of cooperation between Europe and the U.S. as they try to figure this question out of how to level the playing field. Whereas if we were in a second Trump administration, that would obviously be a looming point of confrontation.

JACKSON: We have a question in the queue. And so let's hear that question. First question, please.

STAFF: We'll take the first question from Herman Cohen.

Q: Good afternoon. Thank you for the presentation. I do a lot of work in Africa and I wonder if you're aware of the fact that in renewable energy, solar and wind, when there's no solar at night and the wind is not blowing, you need to have a way of storing the energy, and Africa has most of the lithium that goes with that. So I'm wondering if you're aware of that and is this really a significant issue?

JACKSON: Who would like to answer that? I would say the following to the extent that there is certainly great interest in lithium-ion batteries in terms of storage mechanisms. There is this whole question about where the resources are for critical minerals and who controls those. And so you raise an interesting question about partnering with one of the more vulnerable areas of the world to help them play in the solution space and not just be an exporter of this critical material. And so I think those are the things we have to take some time to think about. Meghan, would you like to make a comment?

O'SULLIVAN: Sure, I'll just add, I think, Shirley, you're right in raising that. And we have to, to use your terminology, we have to make sure that these intersecting vulnerabilities are diffused in the sense that not only is Africa a place where there is a great deal of lithium—South America is another place—but the world's cobalt is really located in Africa, in the Congo in particular, and we've already seen quite a bit of competition among countries with China in the lead trying to ensure that they have adequate access to those resources. So I think, you know, going back to what we were talking about the geopolitics of renewable energy sources, this is an area, the kind of race for critical minerals that people are concerned about. Not only the fact that the possibility of introducing a finite input into many of these technologies, which are set to really take off could create new cartels or those types of things, but also, you know, concern about the circumstances under which a lot of these critical minerals are produced and what they mean for those countries. And whether or not this can be, you know, a platform for development rather than a platform for exploitation.

JACKSON: Thank you. Our next question, please

STAFF: We'll take the next question from John Dabbar.

Q: Hi, thank you. This is John Dabbar, ConocoPhillips. A question, and I think it's mostly for Meghan and Alice, on ESG disclosures. Where have you seen the best sources of what ESG disclosures ought to look like in order to truly address objective metrics of performance by companies?

JACKSON: Alice, do you want to start?

HILL: Well, I think that's been a challenge. The standardization of this and we have certainly had many suggestions that there's greenwashing, meaning that brown or assets that involve polluting industries are included in various, for example, green bond offerings, ESG funds. So I think there is a need for standardization. And similarly, in the disclosure of risks side, there's a need for standardization. The challenge here is if we don't get to something where we're comparing apples to apples, instead of apples to oranges, it's really meaningless both for the investor who wants to invest in ESG and for the investor who wants to understand what the kinds of risks the companies are facing. And we're just at the beginning of this, in my opinion. I don't have the best metric for you. I think whoever does develop that best metric and can promote it and sell it will have a goldmine, because similarly in the world of resilience many companies are desperate for a sound resilience metric. But I'm not familiar with what the best is.

JACKSON: Meghan?

O'SULLIVAN: Sure, I'll point out something that I know John and Alice are very familiar with, and I'd be interested in Alice's take on it, I think the Financial Stability Board, you know, they created that task force on climate-related financial disclosure. To me, that seems to be the most commonly used out there. I don't know if Alice wants to comment on metrics and whether or not she sees them as sufficient. But that's what leaps to mind in response to your question in terms of getting some, you know, moving the direction of the standardization that Alice referred to as being important.

HILL: Well, I will say the TCFD has emerged as the most prominent. But even there, they have eleven different categories that you measure against. And as of last year at least, in a survey of eleven hundred companies that were disclosing pursuant to that scheme, I think it was only about 4 percent were disclosing against at least ten of the eleven standards. So this is a work in progress. It's complex and it has not succeeded. Their publications have said in the way that they'd hoped. So it's an area ripe for further refinement in my opinion. But it's very important that we get to standardization so it's a meaningful measure for those who want to make decisions based on it.

JACKSON: So here's a question that relates to things that fall into a technological realm but have policy implications. And I'll first put the question to you, Michelle. Big data and the data science revolution are increasingly recognized as being important to addressing national and global challenges. Can you talk about the significance of data and advanced computation broadly writ in helping us to address climate change both in the technological realm and if you wish to comment in the policy realm?

PATRON: They're intertwined. I mean, data is fundamental, right? We cannot solve what we don't understand. And so we now have not only data, but we have the ability to collect massive amounts of data in real time about ERP systems and to process them so we can measure, so we can monitor, and so we can manage. It's going to be critical for climate change. It's going to be critical for stemming. The catastrophic loss of biodiversity is going to be critical for ensuring a water-secure future. Let me give you a few examples. In terms of climate mitigation, right, going back to methane leaks, right, we're able to now understand what is happening in a pipeline and where the methane is coming from and detect them and help devise solutions to be able to plug them or prevent them. On the electricity grid we just talked about storage and the need for storage to be able to balance the grid, and we now have visibility into what is happening on the grid in real time on both sides with both demand and increased supply if it's EVs and solar panels, so you can match supply to demand and you can optimize for carbon. In the resilience space, let me give you two examples. Forestry—we have a partner called SilviaTerra that has done a census of every tree in the United States and can understand the carbon sequestration potential and then can help monitor what is happening on the carbon side and underpin markets, as well as help manage wildfires to understand where do you cordon off and how do you shift the direction of where those fires are going. And then with climate equity, right, we can begin to understand which communities might be most impacted by flooding, which communities might be most impacted by urban heat centers by having urban heat maps. Water in the Central Valley—which wells are unlikely to be producing and why and when are they going to fail? And with that kind of data, then you can sit down with policymakers and communities and innovators to help really understand where is the problem and how do you solve it.

JACKSON: I think we have another question from one of our members.

STAFF: We'll take the next question from Alice Albright.

Q: Thank you What a wonderful presentation. So my name is Alice Albright. I'm the chief executive officer of the Global Partnership for Education and we are the largest partnership and fund that works with lowest income countries on education. We work with about seventy low-income countries, about two-thirds of them are in Africa. And one of the things that we work on a lot is keeping girls in school. And so a question for you all from the climate world is to what extent do you see education as a lever for reducing the overall pressure on the globe from population growth? And we often think that education is a pathway through those policy challenges. So it's really a point of information, which is you might want to reach out to the education world as a partner, but it's also a question to what extent is education on your radar screen as a policy partner? Because we think it is but don't know if the climate world thinks that it is.

JACKSON: You know, I could make a comment being an educator. But I'm going to give my brilliant panelists a chance to each make a quick comment and then maybe I'll say something but let me start with you, Meghan.

O'SULLIVAN: Sure. Thank you for raising this connection. It seems to be an obvious one in the sense that I can imagine that there could be kind of a symbiotic relationship between climate and education and really the environment more generally. And I do think that certainly increasing educational awareness about environmental harms and in efforts to address them can be helpful in addressing the problem as a whole. I haven't personally, I mean, I am an educator as well. I'm a professor at Harvard and I spend a lot of time talking to my students about climate and about energy in general. And, you know, I think there is such a huge role for education in this debate in part because of the realities like how much of this conversation needs to be based in fact and how much of this conversation has thus far not been based in fact, and that each side has, this is similar to many debates in our country, unfortunately, but each side has their own set of beliefs and information and facts. And until we can kind of bridge that divide, I think we're going to have a hard time moving it forward. So I certainly do see the relationship between education and tackling these climate, environmental, and energy challenges. And I haven't thought about it as much in the context of the developing world, but I thank you for raising that to my attention and that of others as well.

JACKSON: I'll make this quick comment as a university president and that is twofold. One, a lot of the discussion about educating girls people talk about in the context of population control essentially. And about, you know, elevating people from poverty. But I think one has to also come at it from the context that if we really are going to grapple with these challenges, it's going to take talent from all quarters. And so girls, women are a huge source of talent. And in the global context how these solutions quote-unquote are "propagated" will always occur within a cultural context as well as what's driven by geography, etcetera. And so there's a huge advantage to being able to educate a complete population and draw on the complete talent pool. I think we have a couple more questions in queue. Next one.

STAFF: We'll take the next question from Harold Schmitz.

Q: Yes, my name is Harold Schmitz, I'm with the venture capital fund called the March Fund and also University of California, Davis, and we focus in the food sector and sustainability. And so the food sector is often sort of the hidden mega sector in terms of energy consumption. But you know, there definitely are opportunities for technological innovation that can make a big contribution to this issue that we're talking about today. And by the way, great, great session. But I just was curious if any of you guys have, you know, is food as a mega sector, multi-trillion dollar sector, you know, etcetera, is it on the table in a visible way and at the policy-making level is, hey, this is a place where we can make a big difference or if it's not, how can we make sure that it is on the table for addressing climate change?

JACKSON: Michelle, and, well, Alice, I'll start with you since Michelle answered the prior question.

HILL: Ag is a huge component both of cutting emissions, but also resilience in terms of ensuring food security. I think we have about six breadbaskets in the world. If one of those fails it could cause food prices to shoot up across the globe. And as we know, that's highly destabilizing to many countries who are dependent on food imports. You have seen with Secretary Vilsack, he has indicated his commitment to making sure that ag is contributing to solving the climate problem. He has a climate advisor, Robert Bonney, who worked with him in the Obama administration, who is well versed in these issues. So I anticipate you will see far more action here domestically. But also, I think you'll see more action from USAID, from the diplomatic and development side, to find climate-smart solutions because for pastoralists, for those small farmers who are very dependent on weather for their success of their farming operations, climate change is a really huge threat. So in order to help those people thrive, we'll see greater aid to those new novel innovations, parametric insurance, other ways of helping them innovate in a manner that they feel comfortable with and can ensure that they will continue to be able to produce the necessary food.

JACKSON: Michelle?

PATRON: I just want to make a few quick points. First of all, I mean, we hear from a lot of our enterprise customers across sectors about what they're doing in this space and how they're looking to partner and I can tell you that both the food and the agricultural business are definitely well represented within that community. I think it comes down to their Ag, it comes down to their manufacturing to refrigeration to distribution. We work with a lot of other companies when it comes to policy engagement and they're quite present in those discussions. I would also point out that in addition to all of the carbon removal work and the work that Alice just talked about in the USDA, there is quite a lot of interest about on this issue in the Hill, a lot of bipartisan interest. Senator Braun from Indiana and Senator Stabenow from Michigan introduced a bill at the end of last year, the Growing Climate Solutions Act. So I think that there is a lot of discussion that is happening and I would imagine we're going to see a lot more activity in this space.

JACKSON: You raise an important point about innovation because I think there's a whole set of innovations that can occur around new types of agricultural methods and agricultural architectures as it were including vertical agriculture, but we don't have time to discuss them today. Is there another question?

STAFF: So we'll take the next question from Lindsay Iversen.

Q: Hi, I'm Lindsay Iverson from the University of Chicago. It's a pleasure to see some friends on screen today. Alice, I wanted to pick up on something that you said actually. You mentioned that one of the most important things that the United States could be doing both on sort of an immigration and diplomacy front was helping population stay at home and investing in a diplomacy that incorporated both development and climate adaptation effectively. But you also mentioned that over the course of the not too distant future, there would be places where staying at home would potentially not be an option for people, where countries would become increasingly uninhabitable or places within countries would become uninhabitable. So I wondered how you would square that circle for folks. And if there's particular places or timelines that you see as most risky on that front?

HILL: This is a major global challenge. We've seen our multilateral institutions really struggle during the pandemic. But the number of people that will be on the move as a result of climate change is simply staggering. And those people will mostly not fit our current definitions of a refugee. You hear this term climate refugee, but our refugee laws and international agreements don't consider a person who's forced to migrate because of survival needs, as I said, a survival migrant doesn't fit that definition. So they will be on the move. There won't be a legal right for them to enter other countries. So what will happen? And there have been attempts recently to come to agreement internationally, just last two years, but those negotiations haven't seen a great deal of enthusiasm across the globe. You see in Africa they have reached, among African nations, agreement for internally displaced. So most of the displacement will occur within countries. People generally don't want to cross international borders. They want to stay closer to home, but we'll see most of the displacement occur there. So African nations have come together, but there is some question about how well that's being implemented. So what we'll have are some individuals who have no state. They'll be stateless because if they're in Kiribati or some Pacific island, it will have simply disappeared into the ocean. And we'll have other places that are really uninhabitable. And so what will happen? Last time we had very large displacements like this, after World War II we instituted something called the Nansen passport, which gave the right to stateless people to move to another country, have work, live there. It wasn't that they were given citizenship, but it gave them a right to move across the globe.

JACKSON: I think we're going to have to move to close out. But I do think that here's a question that we may not be able to get to, but one of President Biden's proposed solutions for job creation is putting people to work building the infrastructure for a clean energy economy. And so an underlying question is how should the United States think about its infrastructure investments going forward, not just to reduce climate pollution but to withstand climate risks? Can any of you give a two-word answer? Yes, two words.

HILL: No building code.

JACKSON: Michelle?

HILL: Three words.

PATRON: Inclusive.

JACKSON: Meghan, two words.

O'SULLIVAN: Yes, it should be done.

JACKSON: Okay, unfortunately, we've come to the end of what I think is a fascinating discussion. And so I want to thank Alice Hill, Meghan O'Sullivan, and Michelle Patron, very distinguished folks, and all of our members here for what has been a fascinating and critical discussion. I will tell you that the audio and a transcript of today's session will be posted shortly on the Council on Foreign Relations website. I thank all of you and good afternoon.

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