Economic Policy Archives - Page 29 of 40 - An Economic View of the Environment

What Does the Trump Victory Mean for Climate Change Policy?

Those of you who have read my previous essay at this blog, “This is Not a Time for Political Neutrality” (October 9, 2016), know that my greatest concerns about a Trump presidency (then a possibility, now a certainty), were not limited to environmental policy, but rather were “about what a Trump presidency would mean for my country and for the world in realms ranging from economic progress to national security to personal liberty,” based on his “own words in a campaign in which he substituted impulse and pandering for thoughtful politics” … and “built his populist campaign on false allegations about others, personal insults of anyone who disagrees with him, and displays of breathtaking xenophobia, veiled racism, and unapologetic sexism.”

That’s a broad indictment, to be sure, but whatever real expertise I may have is actually limited to environmental, resource, and energy economics and policy, and so that has and will continue to be the real focus of this blog, “An Economic View of the Environment.” With that in mind, I return today from last month’s brief immersion in partisan politics to discuss climate change policy.

Yesterday, an editor at The New York Times asked me to write a 500-word essay giving my view of what the Trump victory will mean for climate policy. This morning, my very brief essay was published under the headline, “Goodbye to the Climate.” Given the brevity of the piece, it does not touch on many issues and subtleties (I come back to that at the end of today’s blog post), but rather than take the time to expand it, I want to get this to you quickly, and so I am simply reproducing it as it first appeared in the Times (along with an interesting group of other essays, under the overall heading, “What Happened on Election Day: How the election and Donald Trump’s victory looks to Opinion writers.”

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The New York Times

Goodbye to the Climate

By Robert N. Stavins

Donald J. Trump once tweeted that “the concept of global warming was created by and for the Chinese in order to make U.S. manufacturing noncompetitive.” Twitter messages may not be clear signs of likely public policies, but Mr. Trump followed up during the campaign with his “America First Energy Plan,” which would rescind all of President Obama’s actions on climate change.

The plan includes canceling United States participation in the Paris climate agreement and stopping all American funding of United Nations climate change programs. It also includes abandoning the Clean Power Plan, a mainstay of the Obama administration’s approach to achieving its emissions reduction target for carbon dioxide under the Paris agreement.

What should we make of such campaign promises? Taking Mr. Trump at his word, he will surely seek to pull the country out of the Paris pact. But because the agreement has already come into force, under the rules, any party must wait three years before requesting to withdraw, followed by a one-year notice period.

Those rules would seem to be mere technicalities. The incoming Trump administration simply can disregard America’s pledge to reduce carbon dioxide emissions by 26 to 28 percent below the 2005 level by 2025. That is bad enough. But the big worry is what other key countries, including the world’s largest emitter, China, as well as India and Brazil, will do if the United States reneges on its pledge. The result could be that the Paris agreement unravels, taking it from the 97 percent of global emissions currently covered by the pact to little more than the European Union’s 10 percent share.

In addition, Mr. Trump’s Environmental Protection Agency probably will stop work on regulations of methane emissions (a very potent greenhouse gas) from existing oil and gas operations. Undoing complex existing regulations, such as the Clean Power Plan, will be more difficult, but a reconstituted Supreme Court will probably help President Trump when that plan inevitably comes before the court. Also, the new president will most likely ask that the Keystone XL pipeline permit application be renewed — and facilitate other oil and gas pipelines around the country.

On the campaign trail, Mr. Trump promised to “bring back” the coal industry by cutting environmental regulations. That may not be so easy. The decline of that industry and related employment has been caused by technological changes in mining, and competition from low-priced natural gas for electricity generation, not by environmental regulations. At the same time, Mr. Trump has pledged to promote fracking for oil and gas, but that would make natural gas even more economically attractive, and accelerate the elimination of coal-sector jobs.

If he lives up to his campaign rhetoric, Mr. Trump may indeed be able to reverse course on climate change policy, increasing the threat to our planet, and in the process destroy much of the Obama legacy in this important realm. This will make the states even more important players on this critical issue.

Robert N. Stavins is a professor at Harvard, where he directs the Harvard Project on Climate Agreements.

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Given the brevity of the piece, it is not intended to be comprehensive of the many implications for climate change policy of the Trump victory (nor the implications of the Republicans continuing to hold majorities in both houses of Congress).

And I did not get into the many subtleties of the issues I identified. At a bare minimum, these would include:

the possibility of the new administration trying to bypass the four-year delay involved in dropping out of the Paris climate agreement by taking the one-year route of dropping out of the overall United Nations Framework Convention on Climate Change (UNFCCC) – signed by President George H.W. Bush and ratified by the U.S. Senate in 1992;

federal “climate change policies” that have been bipartisan and are therefore much less likely to be repealed, such the latest CAFE and appliance efficiency standards, and the recently extended wind and solar tax credits; and

the myriad of sub-national climate change policies, ranging from AB-32 in California to the Regional Greenhouse Gas Initiative in the northeast (It’s not a coincidence that there’s a high – although not perfect – correlation between the states Secretary Clinton won in the election and the location of the most ambitious climate change policies).

On another occasion, after I’ve had an opportunity to reflect more calmly and carefully on the implications of the forthcoming Trump presidency for environmental, natural resource, and energy policy, I will return to this topic. But for now, I have to prepare for my trip in a few days to Marrakech, Morocco, for the annual UNFCCC negotiations. Given the election results, my meetings there may be quite strange, if not surreal. I hope to write about that in my next essay at this blog.

This is Not a Time for Political Neutrality

I have been writing essays at this blog for over seven years, and throughout that time, through perhaps 100 more-or-less-monthly essays, I have tried very hard to keep politics at bay, and to view each and every issue I discussed from a politically neutral, yet analytical economic perspective. But I find it difficult to remain neutral in the current U.S. Presidential election cycle.

Since before the summer, I had resolved to write today’s essay, but I decided to wait until one month before the November U.S. election to post it, simply because I thought this was the point in time when people would be paying most attention to the upcoming election but would not yet have completely made up their minds. In particular, I want to address this message to people who – like me – are political independents.

Background

I have been teaching at Harvard for close to 30 years, and every year I take pride in the fact that at the conclusion of my 13-week course in environmental economics and policy, my students cannot say – on the basis of what I have said in lectures or what they have read in the assigned readings – whether I am a tree-hugging environmental advocate from the political left, or an industry apologist from the political right (actually, I am neither, although hostile voices in the blogosphere have sometimes wanted to peg me as being on the opposite of whatever extreme they occupy).

Likewise, I have remained bipartisan in politics, ever since I directed Project 88 more than 25 years ago for the bipartisan coalition of former Democratic Senator Timothy Wirth and the late Republican Senator John Heinz. Starting with the White House of President George H. W. Bush, and continuing with every administration – of both political parties – since then, I have worked on substantive matters of environmental and energy policy, in some cases closely and intensively, and in some cases indirectly and on the periphery.

Such professional bipartisanship and political neutrality have been important to me, and have been consistent with my voter registration, as I am officially registered as an independent (in Massachusetts, this goes by the designation of “unenrolled”).

So, over the years, I have voted for Democrats and I have voted for Republicans, for various offices ranging from the Mayor of my town to the President of my country. And in each and every one of those elections, although I preferred one of the two principal candidates (sometimes very strongly), in no case did I fear for the future of my community, my state, or my country if my candidate lost and the other candidate won.

This time is different. In all honesty, I fear for the United States and I fear for the world if Donald Trump is elected President. The time for my professional bipartisanship and political neutrality has ended – at least temporarily. And so I apologize to my readers for using this platform – An Economic View of the Environment – to express my broader, personal views on the upcoming election. This is a departure that I hope never again will be necessary.

I am not part of a campaign, and I am not recommending a candidate. Rather, I am recommending that everyone vote! Of course, today’s essay, like all my posts at this blog, expresses only my personal views, and is not written on behalf of my employer, nor in my capacity as a faculty member of the Harvard Kennedy School.

What Drives My Fear of a Trump Presidency? His Views on the Environment?

My fear of the consequences of a Trump victory in the Presidential election is not simply because of Mr. Trump’s misleading, (consistently) inconsistent, and fundamentally incorrect statements in the realm of environmental and energy policy.

Let me be clear. I do find Mrs. Clinton’s policy positions in my area of expertise – environmental and energy economics and policy – to be superior to Mr. Trump’s positions. I will not repeat here my views of Trump’s environmental and energy positions, because I have frequently been quoted in the press as critical of his pronouncements and positions in this realm (Climate Central, E&E News, Scientific American, New York Times, Washington Post, The Verge, New York Times, The Week, Law Street, Climate Central, New York Times, The Hill, Newsmax, Climate Central, Grist, and National Public Radio). And a few times I have been quoted as criticizing Hillary Clinton’s policy prescriptions in the environmental and energy realm (New York Times, Denver Post, and High Country News). (For that matter, I have been quoted perhaps hundreds of times over the past seven and a half years as sometimes supportive and sometimes critical of Obama administration environmental and energy policies.)

So, yes, I believe that the world would be worse off with what I anticipate would be a Trump administration’s environmental and energy policies. But that is not what really frightens me.

What Really Does Scare me about a Trump Presidency?

What frightens me is much broader and more profound. I worry about what a Trump presidency would mean for my country and for the world in realms ranging from economic progress to national security to personal liberty. This comes not from any analysis of policy proposals, but from Trump’s own words in a campaign in which he has substituted impulse and pandering for thoughtful politics. From the first day – his June 16, 2015 announcement of his Presidential bid (in which he described Mexican immigrants as drug smugglers, criminals, and rapists, and promised to “build a great wall”) – until today, Mr. Trump has built his populist campaign on false allegations about others, personal insults of anyone who disagrees with him, and displays of breathtaking xenophobia, veiled racism, and unapologetic sexism.

As disturbing as Trump’s stated positions are in economic policy, national security, and personal liberties, possibly even worse is the reality that Donald Trump, if elected President, would – intentionally or unintentionally – provide cover and support for the ignorant, racist, and xenophobic tendencies that sadly inhabit a substantial fraction of the U.S. population. In many ways, Trump represents not the best that my country has to offer, but rather the worst excesses of American culture.

Trump is clearly a politician who seeks support by appealing to popular desires and prejudices rather than by using rational argument. That is the definition – word for word – of a demagogue.

The Bottom Line

If you are an independent, like me, please do not sit on the sidelines of the upcoming election, condemning both candidates for their failings.

It has been said many times by many people that Hillary Clinton is not an ideal candidate for President. I do not disagree with that sentiment. Nor can I dispute the fact that her primary campaign against Senator Bernie Sanders pushed her to adopt positions of the left, including her unfortunate reversal regarding the Trans-Pacific Partnership Agreement.

But Mrs. Clinton would bring significant, positive experience to the presidency from four decades of public life, including as a member of the U.S. Senate and as Secretary of State. In contrast with Mr. Trump, she has surrounded herself with legions of smart and experienced advisers in dozens of key policy realms. Her campaign has produced detailed proposals on the most important challenges facing the country (although I do question some of her environmental positions). But she is, if anything, a realist – not an ideologue, and certainly not a demagogue, which is precisely how I would characterize Mr. Trump.

I recognize that many people harbor very negative feelings about Mrs. Clinton. The low approval ratings (of both candidates) validate that. I respect those voters who have serious concerns about a Clinton presidency.

My core argument is that there are great differences between the two major candidates. I disagree strongly with those of my fellow political independents (and others) who say that because both candidates are flawed, they will not vote.

In my view, that would be a mistake. The fate of the United States and the fate of the world are really in our hands. If you are an independent, please do not sit out this election. It is much too important.

Misleading Talk about Decoupling CO2 Emissions and Economic Growth

You can call it my pet peeve or even my obsession, but whenever I read about the claimed “decoupling” of CO₂ emissions and economic growth, I get annoyed. Webster’s Dictionary defines decoupling as “eliminating the interrelationship” between two processes. But the interrelationship between CO₂ emissions and economic growth has certainly not been eliminated.

Decoupling is the wrong word and metaphor to describe what has been happening. When a caboose is decoupled from a train, it stops moving altogether. A better metaphor, although less linguistically appealing, would be a “slipping clutch.” The engine continues to transmit power, and as a result the driveshaft continues to rotate, but with less velocity than when the clutch was new.

What Has Been Happening

True enough, the carbon intensities of many economies in the world, particularly those of the industrialized nations, have – for many years – been falling, as those economies have become less energy intensive (less energy use per unit of economic activity – Gross Domestic Product or GDP), and therefore less carbon intensive. For each dollar of economic activity, CO₂ emissions are less than they used to be. For each unit of economic growth, there is less growth in CO₂ emissions than previously.

Furthermore, in some cases, as economies grow, CO₂ emissions can actually fall. First, picture an economy which is growing exclusively in its services sector. In this case, economic growth might be accompanied by no change in CO₂ emissions. Now picture an economy which is growing in its services sector, while shrinking in its manufacturing sector (sound familiar?). In this case, economic growth might be accompanied by reduced CO₂ emissions. Now add to this picture the presence of some public policies, such as those that cause the closure of coal-fired electric generation plants, as well as greater dispatch of electricity from natural gas-fired plants. The result: economic growth continues, with falling CO₂ emissions. But there has been no decoupling.

Confusion Due to Failure to Employ Appropriate Counterfactual

The problem and the confusion arises from a very common mistake in the popular press and, for that matter, in many casual conversations: failure to use the right counterfactual for analysis. The fact that GDP is rising while emissions are falling does not mean that GDP is not affecting emissions. The appropriate counterfactual for comparison is how much would emissions have fallen had there been no growth in GDP. Presumably, emissions would have fallen even more. The excess of emissions in the factual case, compared with the counterfactual case, is the magnitude of emissions growth due to (actually, “associated with”) economic growth. There has been no elimination of the relationship between the two, although the nature and the magnitude of that relationship has changed.

What Factors Affect CO₂ Emissions?

So, why have CO₂ emissions been declining in some countries? Or, more broadly and more to the point, what factors have affected CO₂ emissions? Four stand out (although there are others).

First, energy comes at a cost in all economies, and so economic incentives exist to economize on energy use through technological change. The energy-intensity of the U.S. economy has gradually fallen – almost monotonically – since early in the twentieth century.

Second, putting aside energy-intensity and focusing on carbon intensity, some technological change has worked against the use of carbon-intensive sources of energy. The most dramatic example, specific to the United States, has been the combination of horizontal drilling and hydraulic fracturing (fracking), which has caused a significant increase in supply and dramatic fall in the market price of natural gas, which has thereby led to a massive shift of investment and electricity dispatch from coal to natural gas.

Third, in the richer countries of the world, including this one, the process of economic growth has led to changing sectoral composition: heavy industry to light manufacturing to services. The deindustrialization of California is a graphic example. Does the fact that California’s economy has grown while emissions have fallen mean that decoupling has occurred? Of course not. And, in the California case, there has also been a fourth factor …

Fourth, public policies have in some jurisdictions of the world (Europe, the United States, and most of the other OECD countries) discouraged carbon intensity. In the USA, this has happened both through climate policies and other, non-climate policies. Some non-climate policies, such as EPA’s Mercury Rule, discourage investment, encourage retirement, and discourage dispatch of coal-fired electricity, while other non-climate policies, such as CAFE standards for motor vehicles, bring about greater fuel efficiency of the fleet of cars and trucks over time. Climate-specific policies have also mattered, such as in California, where the Global Warming Solutions Act of 2006 (AB-32) has brought down emissions through a portfolio of policies, including an economy-wide CO₂ cap-and-trade system.

The Bottom Line

So, yes, the carbon intensity of many economies continues to fall – for a variety of reasons, including but by no means limited to public policies. And, in some cases, the combination of energy price changes, technological change, changes in sectoral composition, and climate and other public policies has meant that emissions have fallen in years when economic growth has continued. But don’t be fooled. Economic growth does affect CO₂ emissions. There has been no decoupling; just some (desirable) slipping of the clutch.

Of course, this is not an anti-environment message. On the contrary, a belief in decoupling per se could lead to a misguided laissez-faire attitude about the path of CO₂ emissions. Being honest and accurate about the links between (desirable) economic growth and (desirable) CO₂ emissions reductions puts our focus and emphasis where it ought to be: finding better ways to have both.