One Year Later, A Glass Half Full: Energy Innovation Under the Biden Administration

The Biden administration entered office in January 2021 with soaring ambitions. To win a tough primary fight and draw a sharp contrast with former president Trump, candidate Biden promised a plan that would get the United States to net-zero greenhouse gas emissions by 2050 and reassert global leadership toward the same goal. Innovation was assigned a central role in this agenda. Generous federal funding was to push nascent climate and clean energy technologies to become cheaper and better, while tough tax, regulatory, and procurement policies would pull innovations that were nearing maturity into the market.

A year into the administration, the supply-push elements of the agenda have fared better than the demand-pull components. While a half-full glass is better than an empty one, only a full one will put the United States and the world on a path that will stop climate change.

President Biden’s biggest win in 2021 was the passage of the bipartisan infrastructure law. The law boosts federal energy research, development, and demonstration investments to historic levels, nearly doubling the previous highs. (See figure 1.) It also filled the most significant gap in the U.S. energy innovation system by funding large-scale demonstration projects for key technologies like clean hydrogen and carbon capture and establishing a new Office of Clean Energy Demonstrations to manage them.

On the other side of the ledger, the President was unable to win congressional passage in 2021 for any substantial demand-pull policies. Proposals to incentivize adoption of low-carbon electricity generation systems and accelerate electric vehicle sales, for instance, foundered on Capitol Hill. Acting within its existing authorities, the executive branch took important steps, such as revising auto emissions standards and preparing to use federal purchasing power to support cleaner production. Executive action under Biden is much broader in scope than under his predecessors, but its success will ultimately depend on congressional support, judicial acquiescence, and adroit management of the bureaucracy.

The lack of consensus at home weakens the president’s climate diplomacy. The rest of the world knows that the United States is unlikely to achieve Biden’s declared goal of a 50 percent reduction in emissions by 2030 unless Congress gets on board. Nonetheless, the administration breathed fresh life into the multilateral, supply-push Mission Innovation initiative and started up new collaborations like the First Movers Coalition to expand global demand-pull for industrial and transport decarbonization technologies.

As the anniversary of Biden’s inauguration approaches, the prospect of a more balanced and credible U.S. clean energy innovation policy seems to be receding. The main legislative vehicle for demand-pull policies, the Build Back Better reconciliation package, is stalled. A new Republican majority in Congress, which may well be elected in the fall, is no more likely to advance them than the current minority.

But, just as the past year may not have fulfilled the administration’s hopes, the new one may not fulfill its supporters’ fears, either. The climate provisions of Build Back Better may ultimately win congressional approval. The courts may yet uphold key executive actions. For the moment, the clean energy innovation policy glass remains half-full.