January 30, 2017

A Policy Agenda for Climate Realism in the Age of Trump

Former President Obama wrote recently in the pages of Science about “the irreversible momentum of clean energy.” If clean energy momentum is indeed “irreversible,” what should climate activists be doing over the next four years, and how should they accommodate themselves to new political realities?

Amidst the flurry of battle plans making the rounds, here’s ours.

Defend International Climate Action

The first thing is that even Mr. Obama’s essay, despite the title, makes clear that the clean energy “momentum” is perfectly capable of being slowed down and stopped. If the Trump Administration walks away from the Paris agreement, Obama argues, the United States will lose its ability to hold “countries to their commitments, demand transparency and encourage ambition.”

We believe that walking away from Paris is the pressing important threat to climate progress posed by the Trump Administration. Our concern, however, is not that the U.S. would lose the ability to hold countries to their climate commitments. Rather, we fear that U.S. withdrawal could lead to a massive loss of confidence in, and thus potential abandonment of, the entire international climate process. While there are plenty of reasons to rethink many of the approaches underlying the Paris agreement, the loss of the entire, painfully constructed structure would be a serious setback.  

Because we doubt that many in the Trump Administration would lose sleep over any of the issues that concern Mr. Obama, it will be very hard to persuade them to support Paris on those grounds (all the more because the Trump administration is certainly not going to be excited about having international bodies formally monitor U.S. compliance with the Paris agreement).

A much better argument for staying with Paris is the one Defense Secretary James Mattis cited in reference to the Iran nuclear deal: it is critical to U.S. credibility overseas that our word is our bond. Getting, say, leaders of the G20 to start talking about that with the new president (perhaps when Trump reminds them about their commitment to NATO spending) seems to us a promising avenue. Climate activists ought to be banging on doors in Berlin, Paris, London, and Ottawa to make that point, and encouraging their friends abroad to do the same.

Embrace the “Eco-Right”

Here at home, there is a relatively small but significant number of Republican legislators and influencers who are either in favor of climate action or, at the least, very uncomfortable with the party’s embrace of climate denial. They include members of the House, a senior Cabinet nominee, large companies, and even the president’s own family. This collection of right-of-center and business climate realists, moreover, reflects the views of the Republican base and is a potentially powerful constituency for effective, bipartisan climate policy.  

The imminent unwinding of the EPA’s Clean Power Plan demonstrates that building some meaningful degree of Republican support for climate action is critical if policy measures are to be stable over the long run. Excommunicating right-of-center climate realists for having insufficient policy ambition, for embracing market based policies in lieu of regulatory policies, or just for having some perceived ulterior motive will cost the cause of climate action necessary allies. The “eco-right” should be praised and supported, perhaps even (gasp!) with activist PAC dollars where appropriate. Confine obloquy to those who truly have their “heads in the sand,” and there are plenty of them to go at.

Federal Incrementalism

The immediate climate agenda in Congress should focus on:

  • Supporting policies that encourage R&D, especially for batteries and electricity storage in general;
  • Ensuring that grid modernization is a major component of any infrastructure bill;
  • Defending existing renewable energy tax breaks only through their agreed-upon sunset dates starting in 2021;
  • Eliminating fossil fuel subsidies (which are rather small but potentially significant) as a means of paying the administration’s corporate and middle-class tax cuts; and
  • Requiring that existing tax credits for CCS (if they’re going to stay in place) be conditioned on addressing two (huge) heretofore neglected issues: how long the CO2 must remain underground, and what liability provisions should be in place for leaks. Until those matters are addressed, CCS is an aspirational goal.

Efforts to revive the coal industry are likely doomed by the reality of low natural gas prices and utilities who can see the writing on the wall. A sensible program of support for affected communities economically reliant on coal production, however, looks politically attractive from both sides of the climate—and political—aisle.

Defensive Line in the States

It is vital for climate activists to build upon policy successes in the states. Numerous states have requirements for minimal levels of renewable energy production that are both popular and demonstrably successful; so much so that EPA’s Clean Power Plan would have had little impact in its early years because most states were already doing more than it required under local mandates.

Many of these mandates, however, expire in the near term or are up for review. These laws are another instance of a second-best policy filling the breach while the first-best policy response (carbon pricing) languishes in political exile. And while assaults on these laws are often wrapped in free market rhetoric, some of the hostility is nakedly anti-market, such as the bill introduced in the Wyoming legislature to ban the sale of renewable power.

Climate activists should also work to improve and expand the Regional Greenhouse Gas Initiative (RGGI) along three different axes: geographically (New Jersey should certainly be ripe to return to the RGGI next year when Chris Christie is no longer Governor); sectorally (adding sources beyond power plants); and more aggressive emission caps for power plants. In other words, turn it from a revenue raising vehicle into a serious environmental program.

Finally, California should be encouraged to exchange its truly delusional (and legally shaky) targets for the next round of cap & trade under AB 32 in favor of a carbon tax.  Note there are potential time bombs out there too, the most serious perhaps being the California High Speed Rail project, which seems doomed to be an expensive and embarrassing failure, and may take down a generation of worthwhile and necessary public transport projects with it.

What Not to Do

Domestically, the immediate question is how hard to fight for the Clean Power Plan and other Obama EPA climate regulations. With a majority of States, both Houses of Congress, and the President opposed, the chances of actually implementing most of the Obama-era rules are close to nil (with the exception of light-duty vehicle emission standards, which as a practical matter are set by California). We think activists and their funders would be well advised to give up hoping for anything beyond EPA eventually issuing new proposals that would confine action to “inside the power plant fence”, which is what the CPP’s critics argue is the limit of EPA’s authority. This would be based on improving heat rates at power plants (although the lawyers should continue to try and salvage what they can from these rules).   

Interestingly, the legal foundations for those regulations—EPA’s GHG regulatory authority (and the subsequent Endangerment Finding)—are on far firmer ground. From what the Trump nominees have said so far, the threat of common law tort cases and the chances of getting 60 votes in the Senate —or even 51—for excising GHGs from the Clean Air Act is unlikely. And while some hard-core climate skeptics still harbor their old dream of undoing the Endangerment Finding, it would not only take years of agency effort, but the chances the D.C. Circuit would uphold such a reversal are close to nil. Nor would the Supreme Court be interested in entertaining such an appeal: after the D.C. Circuit upheld the Endangerment Finding, opponents could not even get four justices to grant review of that decision.  

On the legislative front, there will be sentiment on the left for pushing additional tax credits or preferential policies for clean energy (and perhaps even—for nuclear—on the right). This would be a mistake.

A 2012 study published by the Pew Charitable Trusts calculates that federal spending and tax programs serving to reduce greenhouse gas emissions only reduced total U.S. emissions by 1.4 percent in 2009. A 2013 study from the Natural Research Council (NRC) found that existing federal production and investment tax credits for renewable energy, if they are extended forward, will only reduce greenhouse gas emissions from the power sector by 0.3 percent over the next two decades (0.8 percent in a future high-economic growth scenario). According to the authors, that works out to greenhouse gas emission reductions of $250 per ton.

More lavish tax preferences will not improve outcomes. That’s because tax subsidies for clean energy lowers the price of power (that’s what subsidies do) and thereby serves to boost electricity demand. This reduces investments in energy efficiency and sacrifices emissions reduction that might otherwise have been achieved. Moreover, most of the clean energy the federal tax credits are designed to provide is already being mandated by state production orders. Hence, at the margin, federal tax preferences produce little emission reductions.

There will be plenty of student and activist enthusiasm for action to stop or delay infrastructure projects, particularly those aimed at bringing fossil fuels to the marketplace. While many feel that such action is worth its education value even if it is doomed to failure, we think the climate issue is far too important for that behavioral luxury. Harnessing enthusiasm in that manner should be weighed against further alienating Republicans and the blue-collar audience the Democrats lost in the Presidential election. Environmentalists need the support of both if they are to make policy gains in the near future.

Some will argue that this kind of approach is too low-key because it doesn’t build a mass movement for climate action. But twenty years of such building has been conspicuously short on success. A more focused approach—and especially one that has an eye to building the longer term constituency—may be harder than rushing the faithful and already converted to the barricades, but we think it has a much greater chance of sustainable success.