EPA’s McCarthy: A US Climate Action Agenda Before 'The Wave Election'

Gina McCarthy: Let me begin by putting the challenges of air quality and climate change into perspective.

The South Coast Air Quality Management District has a very special place in the history of American progress, as does Los Angeles. In the ’60s, a headline stated “Smog Surrounding Los Angeles: A Dirty, Grey Blanket Flung Across the City.” It was so bad at times that schools were cancelled for smog days. There is a reason why everyone knows about smog in Los Angeles, and that is because it remains an incredible comeback story.

It also remains an incredible opportunity for further progress. I know Los Angeles is still not pollution free. The challenge is real. But look how far you have come! You have been able to consistently make progress. Your comeback can be boiled down to this: If you do smart policy, you can drive markets and spur innovation. It takes really hard work, which brings life to all of these clean-technology businesses you are working to generate and get out into the market.

For government, it starts with smart policy. It starts with recognizing you have a problem and figuring out how to engage the private sector in bringing solutions to the table. For years, California has been pretty comfortable being ahead of the curve on cars and clean energy. The fact that I’m here at LA Cleantech Incubator, a hub for innovation and investment, is proof that this progress is remarkable and should be recognized. Being from Massachusetts, we are always competing to say who’s more progressive about the environment. I’m sick and tired of trying to catch up to California. Continue to do that—it makes everybody else run.

EPA is running as fast as we can. We may not have caught up with you on everything, but we are giving it our best shot. Recognizing that Los Angeles, this district, and the State of California has stepped up, now it’s time for every state and every community to step up. It’s time for EPA to start harnessing the power of smart policy available to us to signal that our markets are available. That can spur innovation.

The most pressing environmental, public health, and economic challenge that we face is climate change. It’s directly related to air quality. Today, with climate unfolding all around us, the pollution and the problems may be different but the principle remains the same. Smart policy drives innovation: create smart private sector investment, and the rest will follow.

At the UN Climate Summit I attended a few weeks ago, President Obama said, “We cannot condemn our children to a future that is beyond their capacity to repair. Not when we have the means to repair it now.” That’s why the president put together a Climate Action Plan to lower carbon pollution in the US and to trigger international efforts that are productive, affordable, and aggressive. If he were here, he would be pointing to you as the reason why he can feel confident that solutions are on the table and more are going to come. He trusts innovation in the United States. He gets it. We need to make sure that everybody gets it.

The big challenge EPA has is to consistently remind people that good environmental policy, great public health, and environmental protection do not go against really great, really sound, really sustainable economic policy. Those goals are not separate—they are intertwined. A world-leading economy like the US depends on a healthy environment as well as a stable climate. We don’t act despite the economy—we are acting on climate because of the economy.

That’s why, under President Obama’s direction this summer, EPA imposed a Clean Power Plan to cut the harmful carbon pollution that is fueling climate change from our power sector. We need to see the Clean Power Plan as a mechanism for moving toward a clean-energy future.

The good news is that acting on climate isn’t a defensive play here. It advances the ball. It’s an opportunity for us to capture creativity and innovation, pushing progress toward that strong, stable, low-carbon economy.

Make no mistake, I don’t mean to lay it all on your shoulders. But I could use company! It’s up to you be at the forefront of that change—understanding how we can invest and where it makes the most sense to design solutions that meet our environmental and economic challenges.

Because of you, the president was able to say, “Why do we have to wait? What are our solutions at hand?” The private sector has designed those solutions, they have invented them, they have tested them, and they have piloted them. These solutions are economically viable and ready for more investment.

When you use smart regulation, which we’re trying to do, you can clearly establish the goal line. We’re saying that every state now can carry the ball, because we have designed market certainty till 2030. We have provided a platform where investment can follow and where innovation can take hold. We should see you getting calls from others about how much you can do, how fast, and how far we can all run together.

The summit with the president was the biggest project I have been in where every room was filled with private-sector folks, not government talking heads. They were saying to government, “It’s about time we moved.”

The Carbon Disclosure Project was one of the biggest where we saw that companies like Delta, Google, and Disney are using an internal price on carbon in their business decisions. They have already internalized it. They see that it’s inevitable and want to be part of the game, not sitting on the sidelines. Investors and CEOs were seeing investments to their bottom line if we focus on taking action on climate now.

The summit was not negative. It was not led by government. It was a summit of private-sector businesses, investors, and large CEOs saying that the time is now to take action—we need this to be a broad investment strategy, not just in the US, but across the world. These CEOs were putting their money where their mouth was by all making big commitments. We need to drive that investment into the US to spark our own innovation, so that we can turn climate challenge into an opportunity for ourselves.

A report from The New Climate Economy showed that not only is global climate

change affordable, but it can actually speed up economic growth. That’s why banks are lining up behind clean-energy financing. This report showed that the transition to a low-carbon electricity sector would bring in a net of $1.8 trillion in worldwide financing benefits from 2015 to 2035. By anyone’s standards, that’s not chicken feet. That’s a lot of money to be made and we want to make it in the United States. That’s the incredible scale of the opportunity.

America is increasingly growing bullish on clean energy. We are in a different place than we were a few years ago, with better data available so that we can make more informed decisions. We have cleaner energy choices that are getting cheaper by the minute. In less than four years, the average cost of solar panels has dropped by 60 percent. Utilities and power generators have to rethink the way they do business because of these market issues. Every four minutes, another American home or business goes solar. And jobs in the solar industry are growing faster than any other sector in the United States. Clearly, this isn’t the result of environmental regulation. It is the result of market penetration.

Thanks in part to President Obama’s record investment in clean energy through the Recovery Act and other policies across government—down to state and local levels, including tax credits—we have laid fertile ground for clean-tech start-ups in a way that we have never done before.

Again, much of the leadership goes to the states, because the federal government was a little slow to get to the party. But we’re catching up. California and the East Coast have been remarkable allies in showing what states and local communities can do in recognizing that they have problems and solutions that match those problems.

DOE’s advanced energy research arm, called ARPA-E, has been phenomenal in their support for start-up technologies. 22 of their projects have attracted more than $625 million in private funding, after an initial investment of only $99 million. That’s pretty amazing. When you guys succeed and scale up, it’s a snowball effect that brings costs down even more. There is nothing like good competition in the United States of America.

California’s rules to tackle climate change—your response to AB32—doesn’t have the same mechanisms and pulleys as EPA’s proposed Clean Power Plan. But it doesn’t have to. Remember, we’re setting the goals, but we’re not telling you how to get there. The program in place is a remarkable testament to California’s continued leadership and creativity. It has the same underlying motivation that we have: to send market signals and let the market run with it.

The key to EPA’s national plan is being ambitious but achievable—along with flexibility. Again, our plan identifies tailored carbon emissions reductions goals in each and every state. That is what defines the long-term strategy they need to achieve in order to meet the goals we have defined for them in 2030. It’s up to each state to choose their own low-carbon path to get there. We’re hoping states will be smart—take a look at their own energy economy and use the Clean Power Plan to put wind in the sails in the direction that is best for them, continuing to grow their own energy infrastructure in their own economies. As long as they go to a low-carbon future in 2030 with those standards, I don’t care what kind of vehicle or plan they design. If each state does that, the United States will be very well off.

Flexibility means more choices. Folks, you don’t need to compete for investments that are going to follow the Clean Power Plan. All you need to do is recognize that there are many strategies these states can take. Anything from new technology choices like renewables, to terrific energy-efficiency programs, to the best and brightest ways of delivering and generating electricity. The sky is the limit in terms of what states can design.

Smart regulations can drive markets toward better public health and stronger economic growth. Most recently, EPA’s historic fuel-efficiency standard for cars and trucks—which we designed with DOE, as well as the California Air Resources Board’s Mary Nichols and her team—aims to cut carbon pollution, save families money at the pump, and refuel a resurgent auto industry that has added 250,000 jobs since 2009. Since we put the rule out, there have been more jobs, the industry is flourishing, the number of cars coming off assembly lines is the highest it has been in 12 years, and the numbers from last year look terrific. We have moved this industry in the direction it wanted to go and should’ve gone. It’s the direction that’s best for their business, our larger economy, and the environmental needs of this country.

Since President Obama took office, wind energy has tripled and solar energy has grown tenfold. That’s thousands of jobs that cannot be shipped overseas. A study by the group Environmental Entrepreneurs shows that in the second quarter of 2014 alone, we added 12,500 clean-energy jobs. America’s clean-energy progress is bringing down energy costs, bringing in good-paying jobs, and bringing back manufacturing.

When it comes to the American economy on the global stage, cutting pollution doesn’t dull our competitive edge—it sharpens it. From catalytic converters way back when, to smokestack scrubbers, America has a legacy of innovating the world’s leading environmental technologies. They accounted for more than $44 billion in exports in 2008 alone—more than other big sectors like plastics and rubber products.

If you want to talk return on investment, in over four decades, we have cut air pollution by 70 percent while our GDP has tripled. Today we have more cars, more jobs, and more businesses with extraordinarily less pollution than we had before. That is how we all must define both our past success and the future we need to achieve.

It’s worrisome when we continue to hear the old rhetoric: that if we move forward on climate change, there are no solutions and we’re going to put the US at an economic disadvantage. But American innovation wins out. Good policy matters.

We have great scientists at EPA, folks we trust (with our other federal agencies) to put astronauts in space, to tell us if our air is safe, and to determine whether playgrounds are safe places for our kids to play. I know we can do this together.

Simply put, the economy isn’t a reason to fear action—it’s a reason to embrace action. We will face our challenges as we have before. We will show the same commitment, the same intuitiveness, and the same success as this region did when it was faced with that blanket of smog enveloping the city. It did not shut itself down. It did not run away. It embraced that challenge in a rigorous way. It took steps forward even without the complete answer.

Many of the challenges in this country are marathon challenges. We have to innovate and spark investment in order to get closer and closer to that finish line.

This district knew that. It did not complain, and has never complained, about the establishment of clear, science-based standards for air quality, knowing full well that higher standards would challenge the district’s ability to meet them. It embraced the public health challenges and the opportunity to turn those challenges into business solutions—like the ones you are bringing to the table. If we all keep that momentum, then we are going to be able to address the defining challenges of our time, including the challenge of climate change.