A Trump presidency does not put an end to climate protection.

A Trump presidency does not put an end to climate protection. However, a change in attitude towards climate policy and a redesign of some policy instruments will become necessary

By Philipp Niessen

The election of Donald Trump holds serious implications for the effort to avoid and mitigate the effects of climate change. Above all, it could strike a fatal blow to international climate diplomacy. The timing of President Trump’s election is crucial. Doubts about the ultimate effectiveness and enforceability of the Paris Agreement are likely to increase at a time when the available carbon budget continues to shrink rapidly, which would make a “2-degree-temperature-increase” scenario increasingly unlikely.

A less active United States – as the biggest historical polluter[1] and the most powerful actor in the international system – would leave a gap that other pro-climate-protection actors will find hard to fill.

However, once the shock waves will have abated among many in the international climate policy scene, it will become clear that significant climate action can continue without strong support from the US federal level and even without an internationally enforced climate treaty. For that to happen, a changed perspective on climate protection and a redesign of some policy instruments to a more bottom-up approach are necessary. In a nutshell, the perception of climate policy should be more about innovation, growth and “real jobs for real people” and less about the “invisible hand” of perceivably elitist, international treaties that appear to accomplish little but put industrial workers and coal miners out of work. Above all, increased emphasis should be put on the energy system’s technological shift towards greater efficiency, sustainability, and connectivity, which can lead to greater economic prosperity.

Climate diplomacy’s rollercoaster experience – from the Paris Agreement to the election of Donald Trump

Not even twelve months had passed since the much-hailed Paris Agreement in December 2016 when Donald Trump’s election sent shockwaves through much of the international energy and climate policy community. The candidate Trump promised not only to revitalize the troubled US coal industry and to strengthen oil and gas production. Skepticism towards climate policy was a recurring theme with Mr. Trump: He had called the mere idea of climate change a “Chinese hoax[2]” to ultimately undermine US economic competitiveness during his campaign.

So far, his communicated views on US domestic energy policy do not yet add up to a unified concept. Among others, it remains doubtful how coal, gas and oil can simultaneously be strengthened by political actions. Coal and gas are direct competitors in US power generation. Cost structures, prices and economics in a liberalized market are the principal forces at work here although the shale-gas revolution was also aided by federal research and development (R&D) spending: coal was largely priced out of the US power market due to cheap, abundant natural gas. As a result, the United States decreased its energy-related CO2-emissions by 12% between 2005 and 2015, more than any other G7-country in this period. The government would need to implement drastic legislation to switch the merit-order in US power production back to coal. The US government could, however, try to promote coal exports to markets overseas.

It is largely unclear today how future US energy/climate policy under Trump will play out. However, President Trump will likely follow up on at least some of his election promises. After inauguration, he took an explicit anti-climate science and policy stance by selecting Scott Pruitt, an outspoken critic of climate policy during Obama’s presidency, to lead the Environmental Protection Agency (EPA). It is also rather symbolic that the topic of climate change was entirely removed from the White House website after taking office on January 20th and replaced by „An America First Energy Plan“. It is likely that past core pillars of US federal energy and climate policy, such as the Clean Power Plan, the Clean Air Act or tax breaks for investments into renewables, could be entirely revoked or at least differently enforced by government agencies under new leadership in coming years. This in itself could have consequences for the available global carbon budget due the sheer size of the US economy.

At an international level, the President’s outspoken, rather isolationist “America first” rhetoric hints at less engagement in multilateral cooperation, at least in case it is perceived to be detrimental to core U.S. economic interests, i.e. economic growth and job creation. This happens at a time when efforts to enhance global governance in the sphere of energy and climate policy generally lack broad support. Not only did many observers doubt the ultimate enforceability of the Paris Agreement, also the Energy Charter process or energy and climate chapters in international trade agreements have suffered from setbacks. The Trump presidency could now irreversibly damage international climate diplomacy. If the US does not follow up on Paris or even walks away from the United Nations Framework Convention on Climate Change (UNFCCC), trust in multilateral burden-sharing might erode among other signatories. This would fragment the agreement, rendering it even more toothless. If even the United States – one of the wealthiest, most advanced countries – does not commit to the Paris Agreement and to the ‘polluter pays’ principle, how can poorer countries be expected to pursue any anti-carbon policy? Alternatively, as a continued “switch to gas” could in fact continue to reduce US emissions, the new administration may not see a threat in the Paris Agreement as the agreement does not include a compulsory shift to renewables, nor can it force countries to significantly raise their Nationally Determined Contributions (NDCs). Any US measure beyond “gas business as usual” to contain US emissions would, however, be very unlikely. The situation is also arguably worse compared to 2001 when the United States stood largely outside of climate diplomacy after failing to ratify the Kyoto-Protocol under President George W. Bush. Today, the window of opportunity for climate action is closing fast as the remaining global CO2-budget is quickly being consumed.

Climate policy is perceived as yet another elitist invisible force for the sake of some greater good among some

Today, opposition against climate policy in the West is mostly driven by a similar anti-globalist-elite sentiment that is also visible in other policy areas. Climate policy, in order to become more resilient to these sentiments, needs to be targeted and also communicated differently. Policy must be linked more closely with sustainable economic policy, technological progress and community prosperity. It cannot again be associated with a globalist, elitist invisible force that introduces policies for the sake of some “greater good”, while economic benefits and losses are unevenly distributed across regions and generations. If this change in perception does not succeed, it is likely that the resistance to climate policy strengthens.

The chances are good that this shift in narrative can be achieved. The most relevant climate protection efforts today are based on development and deployment of renewable energy, efficiency and demand-side technologies and processes. Innovation has significantly reduced costs over the last decade to make more sustainable energy systems increasingly competitive, sometimes even without political backing and generous subsidies in certain suitable geographies. The decline in the production and installation costs of solar panels is the most obvious example[3]. New digitized, consumer-friendly and sustainable business models challenge the incumbents in the energy system and in connected industries, such as mobility or chemicals. These trends will continue even without strong backing by international climate treaties because the economics increasingly make sense and consumers prefer these options. Ironically, the private sector in the United States, as well as on state level in e.g. California or Texas is among the leaders in this upcoming industrial revolution.

Policy support should be redesigned to encourage science and innovation to bridge risks to eventually bring down technology costs

Although a dynamic private sector comprised of the brightest scientists, engineers and developers is already transforming the energy industry today, policy support by governments will remain important to support this bottom-up energy transitions for years to come. International climate policy makers need to recalibrate towards a bottom-up-oriented de-carbonization approach as optimal “grand solutions,” like an internationally binding carbon-regime, become unrealistic in an increasingly fragmented global governance system.

Policy should shift towards more tangible outcomes, such as an increasingly market-based introduction of sustainable technologies and a strengthened R&D strategy, including clean coal. This is especially necessary as many second generation energy technologies show a high-risk profile due to their technological complexity and can be threatened by political intervention. Government support has thus a role to play to kick-start developments that the private sector would consider to be too risky for their shareholders.

In the 1970s, according to the International Energy Agency[4], OECD governments invested between 15 and 20 billion USD every year into energy R&D. Funds mostly went into basic research and development of nuclear technology in response to the oil crisis. The age of energy market liberalization then saw a significant decline in public spending. One extreme case was the UK, where spending was cut from an annual 700 million GBP in the beginning of the 1980s to just 50 million at the turn of the millennium. The negative trend was only broken in the early 2000s. In 2009 public spending reached a new record of more than 20 billion USD due to the so-called “stimulus package” at the height of the financial and economic crisis.

Governments must further nourish these positive trends in energy R&D spending even in case the US federal level cuts green energy R&D spending. The Paris Agreement also created the program “Mission Innovation”[5], a state-sponsored initiative whose 22 signatories promised to double public money to energy R&D until 2020, hoping to leverage further private sector investment. Also, investment vehicles like the Green Climate Fund that are supposed to facilitate clean energy development in fast-growing countries could in principle become „win-win policies“.

These funds are much needed to accelerate a technological and structural overhaul of energy markets, calibrating demand towards new equipment, infrastructure and business models. Industry experts currently especially see a priority for support to different storage solutions[6]. The speed of action needs to be increased, however, to make a difference in terms of climate change. Currently, despite of the historically unprecedented growth rates in renewable energy investment and development, variable renewables (non-hydro, non-biomass) still only comprise approximately 1.5% of total global primary energy demand according to the IEA. In 2000, their share was only 0.6%[7]. Also BP counted renewables in 2015 at only 2.4 % of global energy demand. The effort to keep global warming ultimately in check relies thus on enhanced R&D and in a new roll-out paradigm for clean energy solutions.

The success of new energy businesses will ultimately also put the story of climate protection in a better light. New fossil-intensive infrastructure will increasingly be priced out of the market as better alternatives become available. The fossil investment cycle will increasingly not be renewed. This will still result in negative effects for some countries and communities heavily invested in fossil infrastructure. These negative effects need to be addressed. However, it will be arguably easier for the losers of this energy transformation if the new structures are primarily the result of science, engineering genius and smart business ideas in comparison to uneconomic, government mandated closures by state bureaucrats. Eventually, the former businessman Donald Trump might see the benefit of energy transition.

[1] The US accounts for approximately 27% of the cumulative, global CO2-emissions (1850 – 2011), according to the World Resources Institute: https://wri.org/blog/2014/11/6-graphs-explain-world’s-top-10-emitters

[2] Trump tweeted on Nov. 6, 2012: “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.” He later referred to his statement as a “joke”.

[3] A recent tender for solar capacity in India (Madhya Pradesh government) resulted in capacity auctioned off at a leveled tariff of 3.29 RS/kWh (5 USD cents/kWh)

[4] For further details, compare: https://www.iea.org/media/statistics/topics/IEA_RDD_Factsheet_2016.pdf

[5] For more information, visit: http://mission-innovation.net/about/

[6] For more information, visit, for example: http://bdi.eu/media/themenfelder/energie_klima/bilder/Priorities_for_energy_research_in_Germany_in_2016_EN.pdf

[7] Fore more information, visit: http://energypost.eu/iea-policies-will-determine-go/ and BP Statistical Review of World Energy: http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

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