Climate Change Beats China on Katherine Tai’s To-Do List

New USTR Katherine Tai sent a letter to staffers on Friday outlining her priorities. And while we don’t believe that she was putting them in any particular order, we couldn’t help but notice this: climate change beat out China.

“As I stated in my confirmation hearing, from implementing and enforcing USMCA, to rebuilding our alliances, tackling climate change, ending the COVID-19 pandemic, advancing racial and gender equity, addressing the challenges posed by China – and more – we will have to walk, chew gum and play chess at the same time,” she wrote.

For sure, the entirety of the new Biden staffers has been all about climate change and economic inclusiveness. China has been the single most important country discussed at every confirmation hearing, including Tai’s, who was sworn in last week (SWORN IN? Is this the right language?), while “working with allies” gets equal billing, sometimes top billing.

But on the complex mathematical challenge of dealing with climate change, China must be part of the equation. For years, the US has offshored its industries to China, worsening pollution. And while China claims to be getting tougher on its environmental regulations, making it harder for companies, say, to dump chemicals down a river, they are still churning out new coal-fired power plants to keep their factories humming. Outsourcing to China is bad for the environment.

China’s CO2 Emissions Rising

China pumped 4 percent more carbon into the air in the second half of 2020 than it did in 2019, pre-pandemic, as the world shut down and everyone turned to China to make everything for them, a new analysis by Carbon Brief showed.

Emissions fell approximately 3 percent in the first half of the year due to lockdowns in Hubei province, but rebounded and then some. Last year, China’s CO2 emissions increased by 1.5 percent compared to 2019.

Carbon Brief data, using official Chinese government figures, shows the extent of C02 emissions in the world’s No. 2 economy.

China’s energy use and emissions output reflect the pattern of what Carbon Brief called a “dirty recovery” and one that has been emerging since mid-2020.

Beijing doubled down on stimulating heavy industry, where the jobs are, to keep people employed even if demand had fallen off a cliff.

For example, crude steel output grew 7 percent in 2020 and steel products by 10 percent, roughly four times as fast as GDP. Steel production is the largest emitting sector for CO2 in China, along with other pollutants.

China’s policy response towards post-pandemic recovery has been to boost China’s export manufacturing industry. In other words, so long as China is the go-to global exporter, climate change remedies in the US and elsewhere won’t have much impact overall as companies are simply outsourcing their pollution elsewhere.

We don’t know if Biden and his Canadian counterpart, Justin Trudeau, will make good on their threat to impose a carbon tax on countries deemed to be pumping out too much CO2 for their liking. Trudeau is imposing a carbon tax on local Canadian industries instead.

The best way to combat climate change and rebuild our industries is to apply a carbon tax on all goods and services from high emission countries to eliminate the low-cost advantage they have. The amount should be set high enough to make companies move away from China and other polluting companies, rather than to merely offset of their “pollution advantage”.

Another way would be for the US government to prevent government purchases, tax credits or other industry incentives from being taken advantage of by companies that make products made in whole or in part from polluting country goods.

If Tai, and the Biden administration want to battle climate change, making it easy for American companies to shift production to countries that do not share their sense of urgency would be a massive headwind for their climate agenda. It would be an even bigger one for American manufacturing and its labor force.