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Trump’s Quixotic Energy Policy

MADRID – April 22, 2017 – International Earth Day – marks one year since the signing of the Paris climate agreement, which entered into force last November, and now has 195 signatories. That landmark multilateral treaty still represents the most important step forward to date in the global fight against climate change. But its first anniversary has been darkened by US President Donald Trump’s energy policies.

In 2016, the hottest year on record, average global temperatures were 0.9º C above the twentieth-century average. The Paris agreement’s main objective is to prevent average world temperatures from rising more than 2º C above pre-industrial levels by 2100. Notably, developing countries such as China and India – the world’s largest and third-largest greenhouse-gas producers, respectively – have committed themselves to reaching this goal.

The Paris agreement established a revolutionary new framework for such commitments: the “Nationally Determined Contributions”. Each signatory country outlines in its NDC its voluntary contribution toward the common global goal of mitigating the impact of anthropogenic climate change.

After suggesting during the presidential campaign that he would “cancel” the Paris agreement, Trump later claimed to be keeping “an open mind” about it. But while the world waits to see what he decides, his administration has issued a budget blueprint that is hardly in line with the spirit of the accord.

Trump is proposing to eliminate federal funding for scientific research on climate change, and to slash the Environmental Protection Agency’s budget by nearly a third. As if that were not enough, he recently issued an executive order instructing government agencies to roll back the Obama-era Clean Power Plan, which was designed to limit emissions from coal-fired power plants, and promote renewable energies. “My administration is putting an end to the war on coal,” Trump declared while signing the order.

Trump went on to promise that he would deliver “clean coal, really clean coal.” But “clean coal” is an oxymoron. At best, we can aspire to cleaner coal, by implementing costly measures whose effectiveness is still debated among environmental experts.

In any case, Trump’s policies are not likely to reverse the steady decline in US coal production. And in the laxer regulatory environment Trump favors, so-called clean coal has no chance of competing with conventional coal. From a business standpoint, “clean coal” is viable only with the right incentives, not least a price on carbon.

Moreover, the US coal industry will continue to lose out to another industry that Trump supports: shale-gas production. Over the last decade, increased shale-gas extraction has driven down the price of natural gas, rapidly eroding coal’s position in the US energy mix.

While natural gas is also a fossil fuel, it generates only about half the CO2 that conventional coal does. In principle, it is less harmful, so long as production is strictly controlled to prevent methane, the main component of natural gas, from leaking into the atmosphere. Unfortunately, given the content of Trump’s executive order, such controls are not likely.

Though market forces alone will not give rise to a decarbonized economy, they do play a critical role. And the private sector has come around to viewing renewable energies as a potentially profitable business. In the US, the cost of wind energy has fallen by two-thirds since 2009, and the cost of utility-scale solar energy has decreased by 85%. In addition, according to a recent US Department of Energy report, the number of jobs in the wind and solar industries increased by 32% and 25%, respectively, in 2016 alone.

Trump’s policy priorities will inevitably clash with those of states such as California, which has been taking the initiative to encourage climate-minded technological innovation. And, fortunately for the planet, other global powers are not joining Trump in backing away from their climate commitments.

China – which is acutely aware of its severe environmental problems – understands the socioeconomic boon that investment in renewable energies can provide. The European Commission does, too, with recent signs that economic growth can be decoupled from emissions having provided further encouragement. Both Europe and China have also come to recognize the geostrategic advantages that renewable-energy sources confer – specifically, increased energy security, as vulnerability to natural disasters, and the threat of terrorism, decreases.

If anything, Trump’s policy of fossil-fuel promotion will end up undermining US energy independence, rather than strengthening it, as he claims, because it will allow other countries to take the lead on the central political and economic issue of the twenty-first century. The same can be said for his rejection of the Trans-Pacific Partnership (TPP), which China is already trying to replace with a regional trade pact that would exclude the US.

Trump’s policies could also endanger the long-term commitments that the US made when it signed onto the Paris agreement, even if the immediate effects of his policies are limited by market factors. But if Trump does finally decide to abandon – rather than “cancel” – the agreement, that choice could have an even stronger negative impact on international efforts to reduce emissions – a point that even ExxonMobil has made.

The fight against climate change is far from over. If we maintain existing levels of greenhouse-gas emissions, we will fall short of the objectives established in Paris. Regardless of how much markets come to favor renewable-energy sources, we will still need better national regulations – such as carbon pricing– to create economic incentives and manage negative externalities stemming from energy production.

A stable climate is a global public good that can be achieved only through the kind of international coordination embodied in the Paris agreement. That is why we must defend it. Sowing doubt about the deal’s importance or the scientific evidence backing it up would be a ruinous error.