With Donald Trump as new president in the United States and the Republican Party in majority control of both Houses of Congress, big changes to the country’s climate and energy policies are expected in 2017 and beyond.
By Guri Bang, CICERO
After eight years of progressive climate policy under the Obama Administration, a major backlash seems to be underway. Trump’s campaign promises targeted Obama’s range of executive actions such as regulations to cut domestic GHG emissions, restrictions on oil and gas extraction on federal lands, and participation in the Paris Agreement. Shortly after his inauguration, President Trump began fulfilling campaign promises.
During the first week of the Trump administration, the president signed executive orders that signal a shift in climate and energy policy priorities towards less regulation on fossil energy industries and more weight put on facilitating fossil energy production. The building of controversial pipelines connecting oil sands fields in Canada with refineries in the US (the Keystone XL and Dakota Access pipelines) that were stopped by the Obama Administration can with Trump’s executive orders get ready for a re-start. It also seems likely that Obama’s signature climate policy - the Clean Power Plan (CPP) – will be dismantled by the Trump administration.
CPP was designed to cut CO2 emissions from the power sector with 32 per cent by 2030. The plan was especially important because the power sector represent as much as 30 per cent of total US GHG emissions according to 2014 numbers from EPA. The CPP targeted old, energy-intensive coal plants in particular, incentivizing a transition from coal to more natural gas and renewable energy in electricity production. When introduced, CPP met with heavy resistance among federal and state-level lawmakers alike and among Republicans in particular. Increasingly stringent regulations on coal plants have played a significant role in the decline of the US coal sector during the Obama era. Some of these regulations were not designated to tackle climate change, but to mitigate other forms of hazardous pollution. Whether these regulations will be upheld by the Trump Administration is an open question, but one of Trump’s key campaign promises was to ‘restore the coal industry’, and getting rid of the CPP and other regulations on coal plants would be in line with this objective.
The ongoing political turnaround operation is the result of deep polarization between the political parties regarding how (or even if) to address climate change. Polarization on climate change has grown increasingly worse since 1997, with a majority of Republican voters and politicians dismissing climate science as untrustworthy and rejecting the need for climate policy programs. The majority of Democrats have the opposite view. During the eight years of the Obama Administration, a range of climate policies were introduced that enraged Republicans as a ‘war on coal’ or ‘government overreach’, and they now see an opportunity to get rid of these policies.
Even if Trump has pledged to restore coal’s foregone position in the US energy market, market forces will make it almost impossible. Demand for coal is decreasing by the day while renewable energy and shale gas are gaining stronger market positions. In more and more states, natural gas is taking over from coal as the main power production source, while renewable energy capacity is also growing. With the shale gas revolution – made possible by new technology for hydraulic drilling – the access to huge domestic reserves of natural gas has changed the US energy market completely in just one decade. The abundant availability of cheap natural gas is expected to continue for decades, displacing coal as the preferred energy source for electricity production. As long as shale gas is abundant and prices remain low, it is highly likely that natural gas will continue outcompeting coal. Moreover, renewable energy technology is better and cheaper than ever, contributing to the displacement of coal. However, there will be less political and institutional support to accelerate this trend, and the transition to more renewable energy can become much slower with the new US administration.
Trump’s election promise to invest massively in infrastructure will also affect the energy market. For instance, new natural gas and oil pipelines will cement the position of natural gas in the energy sector for many decades to come. While Obama saw natural gas as a transitional energy source aimed at quickly reducing the use of coal, Trump’s infrastructure investments will prolong the lifetime of natural gas considerably and, in worst case, delay investments in renewable energy. On the bright side, in 2016, the Congress extended the federal tax breaks for renewable energy production until 2020, providing the sector with unprecedented stability and predictability. Both parties voted in favor of the tax breaks and these are expected to remain unchanged under the new administration.
Approximately 4000 new bureaucrats are entering federal agencies with a new policy agenda, and fresh agency leaders will steer policy implementation in line with Trump’s political priorities. The new Secretary of State Rex Tillerson, Energy Secretary Rick Perry, and Administrator of the Environmental Protection Agency (EPA) Scott Pruitt occupy three key cabinet posts that will be instrumental in setting the course of the US’s climate and energy policy for the coming years. All three are controversial picks, having expressed reservations towards accepting climate science and, in the case of Perry and Pruitt, with a history of skepticism towards the federal agencies they are going to lead. For instance, Pruitt was engaged in more than a dozen litigations against EPA aimed to reduce the agency’s regulatory power during his tenure as state attorney of Oklahoma.
Trump will likely slash the EPA’s budget significantly, and as a consequence strongly limit the agency’s capacity to implement existing policies to cut greenhouse gas emissions, reduce air pollution and monitor water quality. The Republican Party’s climate and energy platform is similar to Trump’s policy program, and holding a majority in both the Senate and House of Representatives, Republican lawmakers can use the budget process as a key instrument to steer climate and energy policies in the direction they prefer.
Climate and energy policy changes in Washington DC will also influence decisions taken at the state level. Many states have now put policy action on hold, awaiting final decisions regarding the Clean Power Plan and other energy policies at the federal level. Some states might reconsider their own reform plans for the energy sector if federal action dwindles. With the Clean Power Plan weakened or cancelled, there will be less political pressure on the states to implement green energy programs.
In some states, like California, Oregon and Washington the green transition will likely continue regardless of what happens at the federal level. California has already implemented an ambitious climate policy with an economy wide cap-and-trade system, a low carbon fuel standard in the transport sector, and a renewable portfolio standard for the energy sector. Governors Jerry Brown, Jay Inslee and Katherine Brown have announced the resolve of California, Washington and Oregon to keep pushing for strong climate policies regardless of the Trump Administration’s actions.
The Trump Administration’s climate policy actions will also have significant effects internationally. Should the US withdraw its participation in the Paris Agreement, the consequences will be severe for international climate cooperation. The United States is a crucial player in the Paris Agreement, not only because it is the world’s second largest emitter of GHGs but also because it has a special role to play in terms of triggering action from other countries. The Agreement relies inherently on vagueness in its specification of commitments, compliance requirements and the ratcheting-up mechanism. While this vagueness was necessary for forging the Agreement itself and attract broad participation in it, it also locks reliance on key countries into it as the agreement needs to unleash a snowball effect in order to be successful.
The US must play an important role in climate leadership for at least two reasons. As the largest economy in the world and the second largest carbon emitter, the US is often pointed to as a key actor because of its major historical responsibilities for the climate change problem. What happens with US climate policy will have an effect on the world. Second, in the history of international climate negotiations the US has often played the role as crucial laggard, blaming lack of participation by all major emitters and flawed treaty design for its own non-participation—for instance in the Kyoto Protocol. Experience indicates that for any comprehensive international climate agreement to work, it is vital that the world’s most powerful country shows interest in participation and compliance with its pledges. If a pivotal actor like the US should fail to implement its commitments, it will likely negatively affect other parties’ incentives to adopt and implement ambitious cuts in emissions.
There is little doubt that Trump, his administration and the Republican majority in Congress will try their best to reverse Obama’s signature climate policies. They will use institutional power and procedural strategies to set a new policy direction on climate and energy. Jointly, the White House and the Republican majority in the Congress have strong powers and can achieve many of their objectives.