international analysis and commentary

President Trump’s climate and energy policy: one year in

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Almost one year after US President Donald Trump’s inauguration, the general contours of his administration’s approach to climate and energy policy is coming into focus.

In terms of climate change, the most attention-grabbing item was Trump’s June speech announcing an intention to withdraw the United States from the Paris climate accord. Though viewed by some in fatalistic terms, this is unwarranted: the speech signified neither an immediate retreat from US participation in the Paris process, nor was it an indicator of the administration’s climate views. It was, however, an affirmation of Trump’s reflexive dislike for multilateral institutions that he does not perceive to bestow clear and immediate benefits – particularly of the zero-sum variety – for the United States.

There are clearly significant losses for both Americans and the broader global effort to address climate change by having the US unilaterally surrender its seat at the table to become the only country in the world outside of the pact. However, the non-binding nature of the pact means that in material terms, the domestic energy and climate policies designed (or dismantled) by the Trump administration are likely to have far greater bearing on the US emissions trajectory over the years to come.

On this front, there has been no less of a dramatic break with the course set over eight years of the Obama administration. Environmental Protection Agency (EPA) Administrator Scott Pruitt has halted implementation of the Clean Power Plan, a greenhouse gas (GHG) emissions standard for the power sector that would have the practical effect of advantaging high efficiency natural gas and renewables. The EPA is statutorily required to devise a replacement for the Clean Power Plan, leaving a specter of uncertainty over the US power market and leaving unchanged the fact that precious few, if any, private investors are willing to finance new coal power plants in the US for both economic and regulatory reasons.

The EPA has also delayed implementation of rules meant to better control emissions of methane – a potent GHG – from oil and gas production activities. It remains to be seen how exactly the administration will proceed, though it is likely to leave the lion’s share of methane management to voluntary industry actions. Although these voluntary initiatives have proliferated over the past year in response to growing investor and customer sensitivity to environmental issues, they still are highly disparate in terms of their approach and rigor. They also leave the least responsible actors at best unchecked or, at worst, with a clear economic advantage in terms of their cost of production.

Other critical pieces of Barack Obama’s climate policy platform, such as more aggressive federal vehicle fuel efficiency standards, have been delayed or watered down. However, there appears to be little appetite on the part of the administration to actively oppose the rights of states to exceed the climate ambitions of Washington. California has long enjoyed an exemption under the 1970 Clean Air Act that allows it to set more strict fuel efficiency standards than the federal government. There has been speculation that the Trump administration may move to revoke this right, but to date no such challenge has materialized and statements from the White House have been so far supportive of a states’ rights approach to environmental policy.

Nevertheless, tensions between the administration and various states are increasingly spilling into the legal realm, as a new bevy of lawsuits are launched against the federal government for what some perceive to be non-transparent processes and delays of policies or polluter penalties, among other actions.

At the Bonn climate talks this past autumn, observers could be forgiven for thinking that the United States is led by a European-style coalition government, given the mosaic of messages – and messengers – that were present.

Administration officials organized only one official public event – focused on the role of more efficient use of fossil fuels, as well as relatively cleaner fuels such as natural gas, in addressing climate change. While the panel was criticized by many as “promoting tobacco at a cancer summit,” it was far from the most deleterious obstructionism that the US could have employed, and also featured the Obama administration’s former energy envoy, Amos Hochstein, in a sign of at least some political goodwill.

Meanwhile, much of the US delegation to Paris was comprised not of political appointees, rather by career officials with significant past climate negotiation experience. This was undoubtedly a welcome sign for many countries in attendance, and offered the opportunity for serious engagement by the US on a variety of Paris Agreement issues for which it remains a critical party, including the monitoring, reporting, and verification of greenhouse gas emissions.

Finally, perhaps the most visible presence in Bonn was neither of the aforementioned contingents, but the “alternative” US pavilion comprised of various subnational, corporate, and civil society representatives, organized and funded in large part by former New York City Mayor Michael Bloomberg. The parallel pavilion offered a starkly different vision of American climate action, featuring new commitments by cities, companies, and universities, and the unveiling of various new alliances and coalitions meant to fill the gap left by the US’s intended withdrawal from the Paris Agreement.

One bright note for environmental multilateralism in 2017 was the entry into force of the Kigali Amendment to the Montreal Protocol, the outcome of a global environmental agreement brokered in large part by the Obama administration that would help to address refrigerant and coolant chemicals that have an outsized climate impact. US government officials under Trump have not opposed the agreement, and have indicated that they will send the treaty to the Senate for ratification.

What explains an approach starkly at odds with that of the Paris Agreement?

To put it simply, political economy. Major US industrial firms are better placed to seize the market opportunities created by global refrigerant and cooling standards that will arise to comply with the Kigali Amendment, and have actively lobbied the government to aid with the Amendment’s entry into force. The lesson, then, is that future common ground on broader climate and clean energy issues is possible if business and conservative communities can be made stakeholders in a clean energy economy that increasingly offers greater and greater wealth creation opportunities.

Further along the climate policy horizon, 2017 may be remembered as the year that climate engineering (or “geoengineering”) began percolating from academia into broader societal consciousness. On one end of the spectrum, The New Yorker published an in-depth piece on the quest of a handful of scientists and startups to capture carbon directly from ambient air. On another end, the very unserious blockbuster film “” implicitly raised a number of quite serious questions against the backdrop of a plot centered on a global weather Armageddon. Meanwhile, Harvard scientists put into motion the first steps behind what may eventually become the world’s largest atmospheric geoengineering experiment to date.

Congress also took note, with a number of different House Science, Space and Technology subcommittees holding hearings on the state of climate engineering science and techniques. Discussing climate engineering has thus far remained far from the public priorities of the current administration, perhaps a welcome fact in the sense of avoiding the premature politicization of a quite inchoate field. Nevertheless, the way that climate engineering is framed in increasingly public discussions will be of growing importance.

Ahead of the Congressional hearings, a group of scientists wrote a sober letter to Republicans, warning that climate engineering is no “silver bullet” that negates the need for continued climate mitigation and adaptation measures. In stark contrast, Republican Representative Lamar Smith opened up one of 2017’s hearings with a tacit recognition of climate change, but urged: “Instead of forcing unworkable and costly government mandates on the American people, we should look to technology and innovation to lead the way to address climate change.”

If and when a broader swathe of elected Republican leaders are ready to acknowledge the threat posed by climate change, climate engineering may offer a way for them to moderate their climate skepticism without necessarily pushing for energy efficiency, renewable energy, and climate adaptation programs. This would, of course, risk putting too many eggs in an untested suite of climate engineering techniques and would ignore the many non-climate benefits of advanced energy technologies (job creation, economic competitiveness, lifecycle cost savings), but nevertheless poses a possible political trajectory worth watching in the years ahead.

The year concluded with the unveiling of the Trump administration’s first National Security Strategy (NSS), a document meant to translate the “America First” rhetoric of his 2016 campaign into a coherent conceptual framework for American foreign policy. The NSS did not completely ignore climate, acknowledging climate policies’ role in “[shaping] the global energy system,” it also diverged from recent national security strategies in neglecting to identify climate as a threat multiplier, or even a risk unto itself. This omission was at odds with previous statements by a number of military leaders and the current Secretary of Defense, as well as with a recent defense spending bill that received bipartisan support for a mandated assessment of military facility vulnerabilities to future climate impacts.

On energy, the NSS was more explicit and deliberate, dedicating an entire section to fleshing out the “energy dominance” strategy that had been introduced only in vague terms earlier in the year. The strategy in broad rhetorical strokes breaks down into a combination of deregulation, export promotion, and innovation support. All things considered, this represents a fairly conventional approach to energy policy – both domestic and international – and one that would not have been out of place in the administration of George W. Bush.

The administration has chosen to freely permit and promote the export of liquified natural gas (LNG) – largely a continuation of trends that began under the Obama administration. One could easily have imagined it instead putting in place policies to prioritize the domestic consumption of gas for certain purposes, not least of which the revitalization of an American manufacturing base that served as a leitmotif for much of Trump’s 2016 campaign. This did not come to pass, however, and instead the administration has seemed intent to, if anything, accelerate and expand the US government’s LNG commercial diplomacy.

In November 2017, a new “US Gas Infrastructure Exports Initiative” was launched as the expansion of an existing joint effort by the US Trade & Development Agency (USTDA) and US industry. The initiative provides expertise, capacity building, and financing for gas sector projects that expand markets for US goods and services. In addition to US government support for LNG terminals in Europe (an extant terminal in Klaipeda, Lithuania and a prospective terminal along the Romanian Black Sea coast), USTDA is also supporting a bevy of projects in developing markets, ranging from an LNG terminal in Thailand to coal bed methane development in India, to unconventional gas exploration in Indonesia. What remains to be seen is how dramatically these efforts will depart from the commercial energy diplomacy of previous administrations, and in particular whether the US government will be able and willing to bridge the financing gaps needed to catalyze long-mooted projects such as the prospective LNG terminal in Krk, Croatia.

In an unusual move, Environmental Protection Agency Administrator Scott Pruitt used a visit to Morocco in late 2017 to promote US LNG exports, as well as environmental cooperation, in the energy-importing nation. In November, China’s Sinopec also signed a joint development agreement with Alaska Gasline Development Corp. on a $43 billion project that would see gas produced in the Alaskan northern shore and transported abroad from a terminal in the south.

On coal, the administration has chosen a similar mix of inwardly and outwardly focused initiatives to promote the fuel. As noted earlier, the administration has halted the implementation of the Clean Power Plan, unsuccessfully proposed a rulemaking procedure around power plant fuel security that would have provided additional support to coal (as well as nuclear) plants, and with Republicans in Congress successfully shepherded through a tax bill that is largely unfavorable to investment in renewables currently competing with coal (in addition to offering new benefits for the oil and gas sector, and opening up the Arctic National Wildlife Refuge for future drilling). Internationally, the administration has announced its intention to promote and finance coal-related infrastructure abroad in an attempt to grow markets for US coal exports.

However, this energy policy orientation should not be interpreted as formulating without internal contention and debate. Gary Cohn, Chairman of the National Economic Council, remarked in the early months of the Trump presidency that coal indeed appeared to be an outdated energy source set to decline in the US over the coming decades. The Paris Agreement decision was notably divisive, with a number of key officials in the State Department, the National Economic Council, the National Security Council, and even the President’s own daughter advocating for remaining inside the Agreement.

Outside of the administration but within the President’s own party, there also exists a critical – if fragile – mosaic of pragmatic conservative lawmakers who are strong advocates of renewable and advanced energy resources for a host of reasons – from job creation to resilience to self-sufficiency – that have nothing to do with anything “green”. From Chuck Grassley’s warning that wind energy support would be removed “over [his] dead body,” to Susan Collins’ support for energy efficiency and clean energy, to Lindsey Graham’s support for a carbon price, to Lamar Alexander’s work to protect the funding of the “ARPA-e” energy innovation agency, the Republican Party has a strong contingent of energy modernists that are currently less visible amid the current administration’s reflexive inclination toward fossil energy nostalgia.

These senior lawmakers, and many young Republican leaders rising beneath them, view a strong US role in the clean energy economy as a catalyst for improving livelihoods, revitalizing US manufacturing, creating economic opportunity at home, and promoting American competitiveness abroad.

And, beyond Washington, there remains a quiet but noteworthy evolution in the energy economies of many states, including some whose politics are hardly accommodative of such an energy transition. It would surprise many European observers, for example, to learn that Texas has more installed wind capacity than any other US state. In ERCOT, the electric grid that serves most of the state, there is already more installed wind capacity than coal capacity (significant, as Texas also has the highest coal capacity of any US state). This is a commercial evolution, as well: the Port of Corpus Christi now handles more than 3,000 wind turbine components.

In terms emerging stories to watch over 2018, one will certainly be the administration’s approach to the strategic, international dimensions of the US nuclear sector. Westinghouse, the bankrupt American nuclear technology unit of Japan’s Toshiba, is still working out a resolution plan. Additional intrigue was added by Brookfield, a major Canadian private equity firm with extensive energy assets, with its announcement of a plan to purchase Westinghouse for $4.6 billion. The deal still needs regulatory and bankruptcy court approval, but both could conceivably be secured by the end of 2018. Combined with Dominion’s purchase of SCANA and assumption of costs associated with its failed nuclear project, the last vestiges of an old nuclear age in the United States seemed to be fading, with the possibility of a new nuclear era still uncertain.A number of US firms are also pushing Washington to re-open discussions with Saudi Arabia over a civil nuclear cooperation agreement, coinciding with Riyadh’s recent invitation for US firms to take part in its planned nuclear power buildout. This too will be a story worth watching, coinciding with both President Trump’s courting of Saudi Aramco to choose New York as the venue for its greatly anticipated partial IPO, as well as rumors of Aramco’s interest in investing significant sums to acquire shale assets in the United States.

As the curtains close on what will inevitably again be one of the hottest years in recorded human history, a climate system that is increasingly out of control looks set to take the backseat to a set of US energy policies increasingly focused on control – or, more specifically, “dominance,” in the preferred parlance of the administration. Whether the promised economic and security dividends of the latter will outweigh the neglect of the former remains to be seen, but rarely before has a US administration enjoyed such a rich endowment of energy resources and leverage. Only time will reveal the prudence, or lack thereof, with which they are wielded.