Symposium | Beyond Neoliberalism Part II

Climate: An Outline of the New Era Emerges

By Ben Beachy

Tagged Biden AdministrationClimateeconomy

After striving for months to overcome Senate obstruction, climate activists have good reason to tenaciously fight onward for Build Back Better Act (BBBA) priorities. Their eyes fixate on the prize: the largest ever U.S. investment in climate and economic justice. Despite congressional roadblocks, tireless advocacy has opened a realistic path to deliver game-changing climate and social investments in a reconfigured bill, even if it bears a new name. That includes nearly $600 billion to enable hard-hit communities to breathe cleaner air, secure family-sustaining clean-energy jobs, and hope for a livable climate.

The bill also may herald the dawn of a new era of U.S. green industrial policy. And none too soon. Another decade in the straightjacket of neoliberalism would doom our chances at achieving climate stability. Without a public hand coaxing along the clean-energy transition, the invisible hand would have delivered a business-as-usual trajectory of increasingly lethal storms, droughts, and wildfires.

The tired neoliberal critique of industrial policy is that the government should not pick winners. While broadly invalid, this argument certainly fails on climate grounds. It would seem noncontroversial to suggest that the “winners” in today’s economy should be those sectors that allow us to continue living on this planet.

But this isn’t an article critiquing neoliberalism. We have been doing that my entire life, while the climate clock has continued to tick. Instead, we’re building a decidedly post-neoliberal project: a whole-of-government industrial policy for the clean-energy transition. That means simultaneously pulling government’s many levers—investments, trade, procurement, taxation—to juice growth in clean manufacturing, electric vehicles, public transit, renewable energy, efficient buildings, and regenerative agriculture. By investing billions in those sectors, the BBBA[i] will serve as the starting gun for deeper industrial policy. But the bill only scratches the surface. In this article, I will outline a holistic green industrial policy that could serve as a next frontier for climate activists and policymakers.

Goals: One Arrow, Three Targets

What are the goals of green industrial policy? Cutting climate pollution is not the only aim. That essential target stands on equal footing with boosting economic security for working-class families and countering long-standing racial, economic, gender, and environmental injustice. The trifecta of climate, jobs, and justice holds the potential to unite unions, racial justice groups, environmental organizations, and other allies in the movement of movements we need to overcome corporate fealty to the untenable status quo.

Our beleaguered manufacturing sector offers a worthy focus for this threefold mission. A well-designed industrial policy for clean manufacturing holds the power to:

1. Decarbonize factories: Industrial pollution is now the largest source of U.S. greenhouse gas emissions. Largely overlooked by U.S. federal policy, factory emissions are the only source of climate pollution projected to steadily increase in coming decades. And domestic production is only half of the problem. To produce the goods that we import, factories abroad—many of them outsourced from the United States—now emit nearly as much climate pollution as all U.S. factories combined.

2. Support environmental justice fights: Toxic pollution from U.S. industries contributes to more than 40,000 deaths each year. More than 250,000 people live in U.S. neighborhoods with a risk of cancer from industrial air pollution that exceeds what the Environmental Protection Agency deems “acceptable.” In primarily Black neighborhoods, the cancer risk is twice as high as in majority-white areas—a legacy of decades of redlining, discriminatory zoning, and other expressions of environmental racism. Black and Latino-led environmental justice groups from Louisiana’s Cancer Alley to Houston’s Ship Channel have long pushed for policies to reduce toxic industrial emissions.

3. Boost manufacturing of clean-energy goods: The United States suffers a major shortage of manufacturing facilities to produce the electric vehicles, wind turbines, solar panels, batteries, and other clean-energy goods that we need for climate stability. Due to underinvestment and outsourcing-friendly trade deals, the United States depends heavily on imports of clean-energy goods, often from countries with lower labor standards where children mine critical minerals or coerced workers assemble solar panel components. Meanwhile, U.S. workers risk losing out on the higher-paying manufacturing jobs that the clean-energy transition offers, and clean-energy businesses risk supply chain shortages that could hamper that transition.

No single policy will spur the manufacturing renewal necessary to achieve these three goals. But by deploying an interlocking mix of investment, trade, and procurement policies, we stand a fighting chance. What follows is a bold industrial policy agenda that organizes such tools into a three-part taxonomy: 1) stimulating the supply of low-emissions and clean-energy goods, 2) spurring demand for those goods, and 3) equitably planning such interventions to achieve long-term goals.

Supply: Investing in Factories Worthy of Our Children

If passed, the BBBA will make an initial down payment on a robust supply of clean manufacturing. For example, the bill invests $4 billion for factories to install advanced technology that will cut greenhouse gases and toxic air pollution from the manufacture of steel, concrete, aluminum, and other emissions-intensive construction materials. The bill also offers companies more than $16 billion in grants, loans, and tax credits to manufacture clean-energy goods, with incentives to pay family-sustaining wages and create jobs in communities facing economic and environmental hardships. Without such investments, firms are not likely to make the switch to clean manufacturing at the speed that science and justice demand.

However, without accompanying policies, growth in domestic manufacturing of clean-energy goods would leave intact one of the biggest skeletons in the climate movement’s closet: destructive and exploitative mining practices. Many clean-energy goods rely on critical minerals that are mined abroad, often under conditions that are far from “clean.” The average electric vehicle, for example, requires 29 pounds of cobalt. Two-thirds of the world’s cobalt comes from the Democratic Republic of the Congo, where cobalt mines are notorious for employing about 40,000 children and emitting enough toxic pollution to cause birth defects. The 20 pounds of lithium in that same electric vehicle may have come from mines that are siphoning off two-thirds of the water in Chile’s arid salt flats, while the vehicle’s 88 pounds of nickel may have been extracted in Philippine mines cited for denial of workers’ benefits.

A major task of green industrial policy is to make clean energy truly “clean.” Just as the anti-sweatshop movement of the 1990s took fierce aim at the exploitation embodied in our T-shirts, the climate movement needs to confront the abuses laden in our Teslas. That means strengthening labor, environmental, and health standards for domestic mining; investing in recycling of critical minerals to feed a more sustainable supply; and funding research, development, and deployment of clean-energy technologies that reduce reliance on such minerals. Meanwhile, we should offer aid to developing countries to improve mining conditions abroad while restricting imports of products containing minerals mined under abusive practices.

Demand: Consuming as if the Future Exists

Offering factories grants to churn out sustainably produced electric vehicle batteries and low-emissions steel will only go so far if there are no throngs of ready buyers for these goods. To help stimulate demand, the federal government can first turn to its own purchases, which surpass $665 billion per year. The BBBA, for example, primes the pump for the budding electric vehicle market by channeling funding to electrify 70 percent of the U.S. Postal Service trucks that deliver your mail. The Biden Administration rightly plans to go further. An executive order in December commits the federal government to purchase 100 percent zero-emission vehicles by 2035 and to electrify federal buildings to spur demand for clean-energy goods.

This same tool—government procurement—also could help to drive demand for low-emissions versions of steel, concrete, and other energy-intensive construction materials. Government purchases of those materials will soar after November’s enactment of the Infrastructure Investment and Jobs Act—a $550 billion wave of new spending to build roads, bridges, rail lines, and other projects. Will those purchases fuel the upward march of industrial climate pollution by rewarding high-emissions concrete and steel plants, or will the government “Buy Clean” by purchasing from the world’s cleanest factories, many of which are in the United States?

The Biden Administration suggested an answer in its recent executive order, which announced the nation’s first federal Buy Clean policy. With further development, this policy could eventually require companies to report and reduce their emissions if they want the U.S. government—the largest purchaser on Earth—to buy their construction materials for infrastructure projects. By using Buy Clean to literally “Build Back Better,” the government can create a much-needed market for low-emissions materials that support not only new bridges, but also a livable climate.

While public demand for climate-compatible goods can serve as the tip of the market-making spear, a holistic industrial policy also must stoke private demand to secure the clean-energy transition. The BBBA, for example, will incite more people to buy domestically manufactured clean-energy goods by making it $7,000 cheaper on average to install rooftop solar, $12,500 cheaper to buy a union-made electric vehicle, and $10,000 cheaper to convert a home to electricity-based heating.

How could the government similarly boost consumer demand for low-emissions concrete or steel instead of the high-pollution varieties? Part of the answer lies in trade policy. Nearly three decades of neoliberal trade deals have made it cheaper for firms to move U.S. steel, aluminum, and concrete factories to countries with lower wages and weaker environmental and labor standards. While deep U.S. job losses from this outsourcing legacy are well-reported, analysts have largely overlooked the emissions impacts. For example, manufacturing an average ton of steel in China causes more than twice as much climate pollution as in the United States. Our imports of such high-emissions materials, many of which used to be made at home with less pollution, have skyrocketed since the 1990s.

How should we transform trade policy to reverse this legacy of pollution outsourcing and refocus consumer demand on clean materials? One tool is a carbon dumping fee: a fee on imported goods made with a high degree of climate pollution. This policy could help slow the global race to the bottom that neoliberalism spawned. Corporations may think twice about outsourcing a factory to a country with weak standards if they know they will have to pay a carbon dumping fee to sell the products back in the United States. Meanwhile, U.S. construction companies would quickly find it cheaper to buy steel and concrete from the world’s cleanest factories, boosting demand for low-emissions materials.

Planning: We Won’t Arrive at Justice by Accident

If trade, procurement, investment, and tax policies serve as pieces of the green industrial policy puzzle, who is putting the puzzle together? Who is synchronistically pulling policy levers and opening financial spigots to achieve clean air, good manufacturing jobs, and a livable climate? Other countries have answers to that question: Germany has the Reconstruction Credit Institute (KfW), and Costa Rica has the Banco Popular, for example. The United States has no such coordinating and financing entity because our industrial policy has, until now, been fractured and hidden—something that siloed agencies carry out in the shadows, for fear of being accused of neoliberal heresy.

The climate crisis demands that we come out of the shadows. Without a more explicit and collaborative industrial policy, we are left with unclear goals, incoherent policies, and inaccessible decision-making for the clean-energy transition.

A more accountable industrial policy requires a new, bottom-up model of governance—one led not by Washington insiders, but communities that have borne the brunt of the unjust status quo. Workers in Appalachia’s coalfields are best qualified to name which clean-energy investments would realistically create family-sustaining jobs in their communities, and which ideas amount to greenwashing. Communities who live near proposed lithium mining projects from Nevada’s controversial Thacker Pass mine to California’s promising Salton Sea project are best equipped to determine which mining approaches to pursue, and which to scrap, as we satiate our growing appetite for battery minerals. The communities with the most at stake in the clean-energy transition should be the ones to drive that transition.

How can we operationalize this basic democratic precept? By creating a new national institution—governed by the leaders of union locals, environmental and racial justice groups, and other impacted community representatives—to craft a whole-of-government strategy for the clean-energy transition. We have no shortage of frameworks to draw from in building such an institution, from the New Deal’s Reconstruction Finance Corporation to Saule Omarova’s recent proposal for a National Investment Authority.

The first task for this new institution would be to consult with impacted communities, technical experts, and government agencies to name specific, long-term goals for our industrial policies. This inclusive process could beget a goal, for example, to reduce air and climate pollution from steel manufacturing by a certain percentage by 2030, or to deploy the nation’s first cobalt-free electric vehicle battery by 2025.

The institution’s second role would be to serve as a laboratory for impacted communities to directly shape new policy ideas to achieve those goals—without the interference of corporate lobbyists or local elites. To cut pollution from steel manufacturing, for example, the institution could host workshops in steel towns like Gary, Indiana for steel mill workers and community members outside the factories’ fencelines to discuss investments that could boost both the workers’ paychecks and the communities’ air quality. To implement the winning policy ideas, the institution could give binding instructions to executive agencies, offer legislative guidance to the many members of Congress who seek community-led proposals, or directly issue grants and loans to fill investment gaps that communities identify.

As its third objective, the institution also should provide oversight to ensure that the federal government’s smorgasbord of policies coherently align to deliver on the community-defined goals. For example, the institution may suggest that the departments of Energy, Health and Human Services, and Housing and Urban Development—which run three different programs to help low-income residents achieve energy-efficient homes—work together on new procurement rules to collectively catalyze demand for domestically manufactured electric heat pumps. By looking across agencies, the institution could help ensure that all policy oars row toward the same benchmarks for economic transformation.

What Now?

The road ahead looks daunting. The laws of physics leave us little time to turn the corner on the climate crisis, while the mandates of justice demand swift action to support clean air and dignified jobs. The time horizon for deploying an industrial policy for the clean-energy transition—bolder investments, smarter procurement, transformed trade, and more equitable governance—is years, not decades.

The good news is that the neoliberal groupthink that made industrial policy a dirty word for a half century is crumbling. With everyone from Republican leaders like Senator Marco Rubio to progressive champions like Senator Elizabeth Warren to the Biden Administration vocally embracing industrial policy, we have the greatest opening in two generations to finally use the economic tools the climate crisis requires. The only question is whether we can amass the political strength, sharpen the policy ideas, and build the institutions in time to fend off the worst of the crisis. That question is ours to answer.


[i] While the final bill will likely have a different name, this article uses “BBBA” for ease of reference. All descriptions of the bill refer to components of the House-passed BBBA that are likely to be included in a reconfigured bill.

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Ben Beachy is the Director of the Sierra Club’s Living Economy Program.

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