White House National Climate Advisor Gina McCarthy brushed off concerns about a global energy crunch slowing climate action ahead of the 2021 United Nations Climate Change Conference (COP26), saying that clean energy is "the first defense against spiked energy prices."
Speaking at Yahoo Finance's All Markets Summit, McCarthy said soaring commodity prices stemming from a surge in energy demand and limited supply, should accelerate the move to renewables around the world.
“The question will become whether or not we can convince countries that the path to a secure and stable future and the path to lower energy costs is actually clean energy,” McCarthy said. “While you will have these times of opportunities for some to say that we need more coal or other fossil fuels as our first line of defense, I think our argument would be that we're moving to a clean energy future in the United States and that's our first defense against spiked energy prices.”
World leaders will gather in Glasgow next week for COP26, calling for commitments that limit global warming to 1.5 degrees Celsius, a number that climate scientists say is critical to staving off the worst impacts from climate change.
But fears of tightening energy resources, and ensuing price hikes have led to calls to slow the transition to green energy, and reinvest in fossil fuels, the biggest source of global greenhouse gas emissions. Natural gas prices in Europe have climbed more than 250% this year, while a shortage of coal has shuttered some factories in China. The U.S. Energy Information Administration (EIA) forecasts a 30% hike in utility bills for American households that rely on natural gas this winter.
That threatens to complicate negotiations at COP26, where the White House is looking to press other nations, particularly developing countries, to commit to aggressive climate action that sets them on a path to reach net-zero emissions by 2050.
In the U.S., McCarthy said administration officials are working closely with state officials in California and the New England region that are expected to see the biggest price hikes this winter, to find additional avenues to reduce demand and costs. She did not specify what options the White House and local leaders were considering.
Government data already points to an increased use in coal-fired power generation, as a result of sky high natural gas prices. According to the EIA, usage is expected to jump more than 20% this year compared to 2020, marking the first increase in the fuel since 2014.
Globally, major fossil fuel producing countries are now expected to produce more oil, gas, and coal until at least 2040, according to a new United Nations study. Countries surveyed planned to produce more than double the fossil fuels needed to keep temperature rise limited within 1.5 degrees Celsius.
But, McCarthy said long-term tax credits for clean energy and investments in energy efficiency, contained in the bipartisan infrastructure bill and the President Biden’s Build Back Better Agenda will make a lower-carbon grid an affordable reality.
Citing a recent Rhodium Group study that assessed the U.S. target to slash 2005 level greenhouse gas emissions in half by 2030, McCarthy said the White House plan will save households roughly $500 a year on energy costs.
“It is our opportunity to underpin a stable economy,” McCarthy said. “If we can all get behind that, we can recognize that there's always going to be challenges confronting us, but if we keep heading in that path forward, we have an opportunity to deliver a good future for our kids and a healthy and sustainable economy for ourselves now.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita