Could Rising Seas Yield Common Ground? (Part 1)

Editor’s note: This is the first of two articles we will be publishing concerning President Trump’s attitudes towards climate change and what they mean for energy policy in his administration. This week’s article examines President Trump’s energy action plan and the barriers facing it,  while the second article examines the energy implications of his infrastructure plan and a possible shift back towards Republican environmental stewardship. The second article can be seen here.

 

Try it yourself. A quick Twitter search demonstrates the depth of U.S. President Donald Trump’s skepticism of the science behind human-induced climate change. Unsurprisingly, this belief formed the foundation for much of Trump’s campaign platform for energy policy. Combined with the prospect of full Republican control in Congress for at least the next two years, it is likely that the Trump administration will diminish President Obama’s legacy for climate action, which is supported strongly by a majority of Americans. However, silver linings for a sustainable U.S. energy future may yet be visible in the populist agenda adopted by the incoming administration. Could Trump have a positive, albeit unintentional, climate legacy?

Trump’s Climate Agenda

In May 2016, then-candidate Donald Trump released his America First Energy Plan, including a number of measures to be taken within the first 100 days of his presidency. Broadly speaking, these commitments reflect the intent of the Trump administration to deregulate domestic U.S. energy production to drive private sector growth for coal, oil, and natural gas. So far, the President seems to be fulfilling this promise. By greenlighting the Keystone XL and Dakota Access pipeline projects, nominating climate skeptic Scott Pruitt to lead a silenced Environmental Protection Agency (EPA), and ordering a review of the Paris Climate Agreement, Trump has sent an unmistakable signal.

It is worth noting, however, that this platform is surprisingly muted toward domestic renewable energy itself—seen by most as a core pillar to meeting U.S. climate goals set at the December 2015 climate talks in Paris. Instead, Trump’s Energy Plan seems to echo growing public sentiment about perceived federal regulatory overreach over fossil fuels and its impact on economic growth and, most importantly, job creation. The implication here is that federal regulations, rather than fundamental economics, are driving the declines in domestic fossil fuel industries such as coal and oil.

Energy Regulations: A Red Herring?

The unfortunate reality for Trump voters inspired by this message is that America’s declining fossil fuel industries have little to do with federal regulation. Rather, new research is making clear that cheap and domestically sourced natural gas and renewable energy are outcompeting coal for electricity generation. Driven primarily by the advent of hydraulic fracturing or “fracking” technologies, domestic consumption of natural gas for electricity rose to a record high in 2015.

Similarly, 2015 easily broke records for U.S. renewable energy, adding over 10,000 megawatts (MW) in new capacity—3,500 times more than the 3 MW added from coal. Even for regions of the country with the cheapest coal resources, such as Wyoming’s Powder River Basin, coal now competes poorly with both natural gas and renewable alternatives. Unsurprisingly, U.S. electricity consumption from coal in 2015 fell to one third of peak levels in 2007.

The strong performance of renewable energy technologies in the United States has come despite disproportionately high federal support for fossil fuels. An estimated $150 billion was spent through federal stimulus programs and subsidies for renewable energy during the Obama administration. By comparison, fossil fuel subsidies in the United States exceed $37.5 billion annually, and totaled a whopping $300 billion over the course of Obama’s presidency.

Skeptics of this comparison correctly point out that fossil fuels account for more of the U.S. primary energy mix than renewables and therefore have higher generation productivity per unit of federal monetary support. What this perspective ignores, however, is the tremendous historic skew in federal support for fossil fuels over renewables. Existing estimates of federal support for fossil fuels also do not incorporate the tremendous costs borne by U.S. taxpayers related to the military, climate, local environmental, and health impacts of the fossil fuel industry, estimated to be nearly $700 billion annually or 3.8 percent of gross domestic product.

The marked decline in coal jobs in the United States is closely associated with increased automation in the industry as well. Although new positions in the coal industry are being created in the development, observation, servicing and maintenance of these machines, automation is expected to dramatically reduce operational jobs in drilling, blasting, and transport, which constitute roughly 70 percent of coal mine employment. Overall, it is estimated that automation is likely to replace 40 – 80 percent of workers in coal mines, with newer mines and those with substantial remaining reserves being the most targeted for automation.

Scraping the Bottom of the Barrel

Putting aside the emergence of cheap American energy alternatives and accelerating industry automation, domestic oil and coal companies are simply running out of affordable options to maintain historic output levels. Gone is the age of surface-mined high-quality coal reserves and bursting shallow oil rigs. Having already exploited this “low-hanging fruit,” modern fossil fuel companies are facing the unenviable choice between increasingly capital-intensive extraction processes and lower quality-fuel resources. In both cases, companies are struggling to match historic profit-margins due to the energy needed to extract or upgrade modern coal and oil resources.

For oil companies, this choice is often among expensive and environmentally destructive extraction practices such as tight shale oil fracking, deepwater oil extraction, and low-quality oil tar sands resources. Meanwhile, coal companies are deploying expensive mountaintop removal and deep underground mining techniques to extract increasingly low-energy-content lignite coal. These factors are reflected in the U.S. Energy Information Administration’s 2017 Annual Energy Outlook, which projects that coal and crude oil prices will generally increase through the year 2040. These fundamentals are not, however, restricted to coal and oil. Already, market analysts are speculating when, not if, the natural gas industry will face similar constraints.

Trump’s Growth Dilemma

If President Trump’s campaign promise of sustained jobs growth is not forthcoming from America’s fossil fuel industries, where then can he turn? Clean energy technologies and associated infrastructure present a massive, and so-far underutilized, opportunity for meaningful collaboration on climate change with the Trump administration. Indeed, Trump’s campaign platforms for infrastructure investment in a “modern and reliable electricity grid” and creating 25 million new jobs in the next decade dovetail with the continued strong performance of renewable energy in the United States.

Wind plant manufacturing is currently the fastest growing job sector in the U.S. economy—and this employment has been concentrated in the “Rust-Belt” states, which were pivotal in swinging the presidential election toward Trump. Similarly, domestic solar companies are growing 12 times faster than the overall job creation rate in the U.S. economy. In total, renewable energy sector employment in the United States grew 6 percent in 2016 to 769,000 jobs, while employment in gas, coal, and oil exploration and extraction combined fell 18 percent, to 375,000 jobs.

 

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