Thirteen years ago, a Republican president who had pulled the United States out of an onerous climate treaty faced isolation at the annual gathering of Western leaders. “Tony Blair is contemplating an unprecedented rift with the U.S. over climate change at the G8 summit next week, which will lead to a final communiqué agreed by seven countries with President George Bush left out on a limb,” the Guardian reported of the meeting at Gleneagles, Scotland. France and Germany preferred an unprecedented split communiqué to a weak one, the article said.
George W. Bush, who had pulled the country out of the Kyoto Protocol in 2003, blinked and agreed to an official document that affirmed global warming was occurring and that “we know enough to act now.” The 2005 G8 put the United States back on the path that ultimately led through the Copenhagen climate summit—when China and India thwarted U.S.-led attempts at a global climate treaty—to the Paris Agreement 11 years later.
There was a very different American president this June at the Charlevoix G7 (as it has been since Russia’s suspension in 2014). Had it not been for the row with Justin Trudeau, when the Canadian prime minister responded to President Trump’s steel and aluminum tariffs with retaliatory tariffs of his own, the big story would have been the climate split. Where 15 years ago the mere possibility of isolation pushed Bush to compromise, Trump embraced the isolation and inserted an America-only paragraph into the summit communiqué outlining a position fundamentally contradicting the rest of the group’s.
“The United States believes sustainable economic growth and development depends on universal access to affordable and reliable energy resources,” it reads, going on to offer a manifesto for global energy realism. That single paragraph is more definitive than the president’s announcement last August that the United States would be withdrawing from the Paris treaty. After all, George W. Bush nixed the Kyoto Protocol that Bill Clinton signed. And Trump, when announcing the Paris withdrawal, left the door open to U.S. participation in a renegotiated climate deal. At Charlevoix, he closed it. Unlike in 2005, it’s very hard now to see any way back.
This is about far more than process. Trump is breaking the spell of inevitability of the transition to renewable energy. The impression of irresistible momentum has been one of the most potent tools in enforcing compliance with the climate catechism. Like socialism, the clean-energy transition will fail because it doesn’t work. But it requires strong leadership to avoid the ruin that will disprove the false promise of cost-free decarbonization.
That reality is already hurting those countries that are farther down the renewable-energy path of ruin than the United States—and, when offered the chance, voters are taking it out on politicians. In March, a fanatically pro-wind and solar energy Labor government in South Australia, one of the eight states and territories that make up the country, decided to make the state elections a referendum on renewable energy. With some of the world’s most expensive electricity and a serious blackout in 2016, South Australia voters kicked out Labor and voted in a government vowing to repeal the state’s renewable-energy target.
Days before Justin Trudeau took the center of the global stage as host of the G7 summit, his Liberal party was trounced in provincial elections in Ontario. The province’s party had won four consecutive terms in office and had pressed virtually every pro-renewable, anti-hydrocarbon policy imaginable. In the June 7 elections, they took just seven seats in the 124-seat legislature. “I made a promise to the people that we would take immediate action to scrap the cap-and-trade carbon tax and bring their gas prices down,” newly elected premier Doug Ford announced.
Nowhere has confrontation with the physical and economic realities of renewable energy been more painful than Germany, the birthplace of renewable-energy ideology. As party leaders negotiated a new coalition agreement after the September 2017 elections, they acknowledged for the first time that Germany was going to miss the sacrosanct 2020 target to cut greenhouse gas emissions by 40 percent from 1990 levels. This had been set in 2007, and the first 20 percent had been easy. Thanks to German reunification, the former East Germany had seen its industries collapse, and there were plenty of inefficient power stations to close. It had always been clear, Angela Merkel declared three weeks after the September federal elections, that it was not going to be easy to cut the other 20 percent “at a time of relatively strong economic growth.” Note: Stronger growth equals higher emissions.
Launching the German renewables transition in 2004, energy minister Jürgen Trittin promised that it would put no more than the cost of an ice cream on monthly electricity bills. Nine years later, his successor, Peter Altmaier, admitted that the costs could amount to $1.34 trillion by the end of the 2030s. At a meeting in June of E.U. energy ministers, Germany ran up the white flag. Altmaier shocked fellow E.U. energy ministers by rejecting higher renewable-energy targets. “We’re not going to manage that,” he told them. “Nowhere in Europe is going to manage that. Even if we did manage to get enough electric cars, we wouldn’t have enough renewable energy to keep them on the road.”
No country has a greater abundance of hydrocarbon energy than the United States. The corollary is that no country was as big a loser from participating in the Paris Agreement and its intention to progressively decarbonize the world’s hydrocarbon superpower. On July 10, the Energy Information Administration forecast that next year, the United States will produce 12 million barrels of oil a day and overtake Saudi Arabia to be the world’s number-one producer. When it comes to the politics of energy, the interests of the United States and European green ideology are irreconcilable.
Donald Trump understands this. “Our country is blessed with extraordinary energy abundance, which we didn’t know of even 5 years ago and certainly 10 years ago,” the president said in 2017. Those remarks were not only a paean to America’s energy resources, they were a full-dress rejection of the policies of his predecessor and of the Democrats’ goal of Europeanizing American energy policy.
For the first time since 1992, when George H.W. Bush went to the Rio Earth Summit, an American president was outlining a global energy strategy diametrically opposed to the tenets underlying the U.N. climate process. Trump was establishing a rival pole based on energy realism and energy abundance.
The Rio Summit was the brainchild of Canadian Maurice Strong, and he understood that what most motivates political leaders, bureaucrats, and corporate CEOs is the fear of being left out. “The process is the policy,” Strong said, and the annual climate conferences that have been held since the U.N. Framework Convention on Climate Change was adopted in Rio created a sense of irresistible momentum. It’s that spell Trump is now breaking. Countries around the world are being damaged by the anti-hydrocarbon policies encouraged by the U.N., but leaving the Paris Agreement was a step only the United States was strong enough to take. Now it is up to the Trump administration to help other countries act in their economic interests.
Energy secretary Rick Perry has talked of U.S. willingness to lead a global alliance of countries wanting to make fossil fuels cleaner rather than abandoning them. Of the G7, Japan has traditionally been most leery of decarbonization, and after the 2011 Fukushima accident Japan decided to expand its coal-fired generating capacity by half, building 45 new coal power stations.
Poland is another coal-based economy that has no intention of phasing out coal. Of all energy-realist nations, Poland is the one that sees eye to eye with the Trump administration. During the Brezhnev years, Poland—alone of the Eastern Bloc nations—refused to sign up to sulphur-emission cuts designed to isolate the U.K. and the United States at the height of the acid rain scare. As host of the next round of U.N. climate talks, at Katowice in December, Poland is more than usually important as a U.S. energy ally. Australia, the world’s largest coal exporter, is another obvious U.S. partner.
Where the United States can make the biggest difference, though, is with the developing nations who depend on overseas finance to build out their electrical grids and need the cheap, reliable energy only coal can supply. Last September, Southeast Asian energy ministers, noting the rising use of coal in the region, called for greater promotion of clean coal. In June, India struck a strategic energy partnership with the United States, described by Perry as an “amazing opportunity for U.S. energy” to sell clean coal, nuclear technology, oil, and gas.
In October 2016, Nigeria’s finance minister, Kemi Adeosun, railed against the West’s energy imperialism and the hypocrisy of using coal to industrialize and then denying it to Africans. “By telling us not to use coal they are pushing us into the destructive cycle of underdevelopment; while you have the competitive advantages, you tie our hands behind us,” she said.
Denying the world’s poor cheap electricity is the official policy of the World Bank. In 2012, Barack Obama agreed to the appointment of Jim Yong Kim as president of the World Bank, and the next year, the bank stopped the financing of coal-fired generation. Although the Trump administration publicly opposes the coal ban and the United States has the largest number of votes at the World Bank, the institution is doubling down on its anti-fossil-fuel agenda. At Emmanuel Macron’s climate summit in December 2017, Kim announced the bank was extending the financing ban to upstream oil and gas. Here is the first order of business for a global energy alliance—to pressure the World Bank to lift its hydrocarbon financing bans and serve the world’s poor rather than sacrifice them to a regressive climate agenda.
As it is, China is the biggest winner from the World Bank’s energy policies. A June 2017 World Bank report notes China’s “global dominance” in the supply of materials needed by renewable energy technologies. In addition to China’s control over the supply of base and rare-earth metals, last year 7 of the top 10 global suppliers of solar panels were headquartered in China. An eighth is in Hong Kong and a ninth in Canada, but with Chinese links. For as long as the World Bank’s hydrocarbon-financing bans remain, American taxpayers will be funding a war on American coal and subsidizing China’s solar industry. If this seems an unappealing prospect, the Trump administration should move fast to assemble the necessary votes ahead of the World Bank meeting in October.
Domestically, the climate caravan keeps rolling. At the beginning of June, 13 Republican senators wrote to the president urging him to submit the Kigali Amendment to the Montreal Protocol, described by the U.N. as “another global commitment to stop climate change,” for the Senate’s advice and consent. Two weeks later, the New York Times carried a report and associated op-ed by former senators Trent Lott and John Breaux on a new group, Americans for Carbon Dividends, which has hired the bipartisan pair to lobby for a carbon tax. “We must put a meaningful price on carbon,” they wrote, arguing for a $40 per ton tax “high enough to encourage a turn to cleaner energy sources.”
Former Fed chair Janet Yellen, another member of the group, told the Times that taxing carbon emissions is “absolutely standard textbook economics.” The textbook actually teaches that a carbon tax would be efficient if it replaced all the tax credits, subsidies, portfolio standards, and regulations supporting the expansion of uneconomic wind and solar energy. Their inherent defect is that the amount of energy they produce depends on the weather, not on demand. Because of the way the electrical grid works, they dump their intermittency costs on other generators, particularly the reliable coal and nuclear plants. It is not surprising that the backers of Americans for Carbon Dividends and its seven-figure annual budget include First Solar, Inc. and the American Wind Energy Association.
Only a small portion of the putative climate benefits of a carbon tax would ever flow back to the United States in the form of avoided climate impacts. Insofar as cutting greenhouse gas emissions creates environmental benefits, it’s a vast foreign aid program in which costs are incurred domestically and most of the benefits go abroad. Worse still, federal government estimates of the social costs of carbon still rely on climate models using computer-simulated data. These produce higher values than estimates based on actual climate data. According to a 2017 paper by the economists Kevin Dayaratna, Ross McKitrick, and David Kreutzer, a $37 per ton carbon tax using model-based estimates for the climate sensitivity of carbon dioxide would be halved if based on empirical data. Dayaratna, a fellow at the Heritage Foundation, has also noted that one of the impact assessment models used by the Obama administration even produces a negative estimate for the social cost of carbon under “very reasonable assumptions.” A negative carbon tax—subsidizing carbon emissions—is hardly what First Solar and the American Wind Energy Association are funding some of Washington’s most expensive lobbyists for.
For all the energy revolution so far, the Trump administration’s energy agenda remains incomplete. The Clean Power Plan is being rolled back, but the EPA’s 2009 greenhouse-gas endangerment finding on which it stood remains in place. There has been talk from the administration of creating red and blue opposing teams of climate scientists to give politicians and the public a more balanced view of our understanding of climate. On energy policy, Rick Perry’s grid-security study can be extended to examine how wind and solar subsidies distort the costs of electricity. That way, Americans will begin to see the true price of renewables and the extra they’ll have to pay to keep the lights on thanks to the intermittency problem of generating energy from the winds and the sun.
Exiting Paris was the first step. The president has also ended his predecessor’s war on coal. Globally, the administration’s continued advocacy for energy realism can win friends among the world’s poor and make allies of some of the world’s most dynamic economies. The geostrategic potential of American energy is already being felt. American gas is being shipped to Poland and American coal to Ukraine—reducing the region’s dependence on Russian gas. As the president pointed out at the NATO summit in early July, Germany’s pipeline will see it paying “billions of dollars” a year to Russia, although he subsequently undercut the strategic logic of his argument at the disastrous press conference with Vladimir Putin in Helsinki on July 16. The Trump administration should now formalize its ties with other energy-realistic nations and show the world the benefits of America’s energy exceptionalism—jobs at home, booming exports, and an escape from dismal energy policies predicated on bogus resource shortages. Having broken the spell, America and its friends around the world can reap the benefits.
