Trump’s energy philosophy risks making America poorer

27 January 2017




Donald Trump’s US presidential election victory has been called a revolution against the establishment by supporters, while opponents and most of the media have been more apocalyptic in their commentary. But Trump’s energy policy, or philosophy, is anything but revolutionary with its prescription of protectionist actions and climate change denial.

Actions clearly speak louder than words. What Trump said during the campaign to get elected, and what he will actually do as president, may prove to be poorly correlated. In the week after the election the president- elect had already started to backtrack on healthcare, with the emphasis shifting from repeal to reform, while the great wall of Mexico will now be part-fence.

Trump the president-elect is showing some promising signs of morphing into a pragmatist. Many have commentated that the business mogul never really believed he would win, and now he has achieved the unexpected he will have to strike a balance between being true to the broad ethos of the policy pledges that got him elected and delivering the policy change that is both achievable and beneficial.

For a campaign that ran on the mantra of “make America great again” there was very little address of energy policy, with only one speech on energy throughout the 18-month campaign. But the speech in May in North Dakota, the birthplace of fracking, was full of the populist ‘Trumpisms’ that seemingly endearedhimtothedisenfranchisedelectors.

Trump declared he would “get the bureaucracy out of the way of innovation,” that “the government should not pick winners and losers” and that by “lifting draconian barriers” to exploration he “will ensure that we (the US) are no longer at the mercy of global markets”.

The draconian barrier referred to of course is climate change, which Trump amusingly argued was a Chinese conspiracy to undermine US economic growth. Environmentalists, themselves not shy in using hyperbolic language, responded by asking who would now save the world? As if the world will end as a result of four years of a Trump presidency.

On a more serious note, the subtext of the environmentalists plea was that Obama had guided the world toward climate salvation under his presidency Yet nothing is further from the truth. If Obama was so climate conscious he would have signed up to Kyoto in his first term in office, yet he waited until late in his second term, and only acted when China declared its climate hand. This is not a president that is seeking to save the world; it is a president seeking to salvage his political legacy.

For all his faults, and there are many, Trump has not been accused of seeking the office of president for his own personal legacy. He genuinely believes the country to be broken, lacking direction and disenfranchising vast swathes of the population. He also believes, much less magnanimously, that only he can fix these problems.

But when it comes to the energy market this is not a major problem that needs fixing. Through investment in fracking, and via global market forces, the US is on the point of being energy self sufficient, and Trump’s policies would be interventionist and ultimately damaging to the energy economy.

As an apparent climate change denier, Trump wants to remove the bureaucracy that over-regulates fossil fuels, yet he also wants to remove energy from what he calls the mercy of global markets. These are contradictory statements. A market is either regulated (or overtly bureaucratic in Trump’s language) or it is subject to market forces.

Of course we do not know if Trump is a sincere climate denier, or if he simply identified the populous electorate that faces beingdisenfranchisedbyconstraintsonfossil fuels, particularly coal, and adjusted his views accordingly. Cynics would suggest the latter.

Trump needs to embrace some energy market policy pragmatism if he is to retain the broad support of those who voted for him, while also ensuring the USA has a secure, sustainable and affordable energy future.

Just as with healthcare, Trump has to step back from repealing the central plank of Obama’s planned climate legacy, namely the Clean Power Plan (CPP). As with healthcare, the CPP has the right objectives but the wrong implementation in the sense that it lacks the provision of any significant economic benefits to the local coal-based economies that will be impacted by the mandated emission cuts.

Regardless of whether Trump believes in climate change, he surely cannot deny that coal-fired generation produces emissions and pollutants that can damage health, and that the workers at these plants are most exposed to these health risks. Reducing coal-fired generation is an environmentally responsible energy policy providing it does not undermine electricity supply security and increase unaffordability. And it must also ensure that the local economy is protected when the economic benefits of the coal plant are removed.

Trump should look at the CPP from the perspective of reforming the policy to ensure it provides sufficient socio-economic as well as environment benefits, not repealing it.

The other energy policy, or philosophy, that needs to be re-thought is market protectionism. Trump said he does not want the US to be at the mercy of global markets, but if energy policies are properly thought through then global markets can be highly beneficial, not damaging. Global markets can open up new opportunities, foster competition, reduce technology costs and improve affordability. Protectionism is more likely to have the opposite impacts.

Trump campaigned on an anti-establishment ticket, and if his administration’s energy policy is to be true to this political mantra then he has to support and embrace global market forces and reduce any regulatory bureaucracy that strangles technology development.

The president-elect also has to accept that the green economy will be a major driver of future economic growth and that corporate America will have a growing reputational risk, and risks becoming increasingly economically uncompetitive, if it does not reduce its carbon footprint.

A protectionist, climate denial energy policy will make America poorer, not greater. 


*Jeremy Wilcox is managing director of the Energy Partnership, an independent Thailand-based energy and environment consulting firm, T: +66 2 653 1263 Mobile: +66 860993375 S: energypartnership 

Wilcox Jeremy Wilcox*


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