A Truly “America-First” Energy Plan

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By: Ryan McGuine

Recently, the myth that moving toward a less carbon-intensive economy damages America’s competitiveness has resurfaced in the national dialogue.This has prompted many to question the usefulness of reducing carbon emissions at home if other large emitters, such as China and India, will not likewise do so. However, both China and India have been working to decarbonise their economies, and compared to the west, the rate at which they have been doing so is phenomenal, given their level of development.

Before getting too far, it is useful to get an idea of where things currently stand. China leads the world in installed electricity generation capacity, with 1,505 gigawatts (GW), followed by the USA with 1,075 GW and India with 311 GW.[1] When considering carbon emissions today, China has the highest in the world at 11,735 metric tons CO2 (MtCO2e), the USA comes in second at 6,280 MtCO2e, and India third at 2,909 MtCO2e.[2] In per-capita terms, things look different, with the USA at the top of the list with 19 MtCO2e, China with 8 MtCO2e, and India a meager 2 MtCO2e.[3] Further, since the lifetime of carbon dioxide in the atmosphere is up to a century or more, it makes sense to consider the cumulative emissions of countries over time. Considering the time set 1850-2011, the USA accounts for 27% of all carbon emissions, China 11%, and India just 3%.[4] Of the three, carbon emissions are only declining in the USA, while China and India both aim to peak their emissions in 2030. Countries typically experience periods of high economic growth and high carbon emissions when beginning down the path of industrialization, followed by a gradual slowdown of both.

In China, slowing growth and movement away from state-led investments in heavy industry towards consumer spending, should reduce China’s carbon intensity (carbon emissions per unit GDP) in years to come.[5] The country has reduced the share of generation produced by thermal sources (fossil fuel-fired generation) 10% over the past decade, culminating in the cancellation of 103 planned, or under-construction coal stations at the beginning of 2017.[6] As coal units are cancelled and decommissioned in efforts to reduce local pollution, much of that capacity is being replaced with renewable energy sources. In 2015, 72.5 GW of capacity added was non-thermal sources, compared to 74.5 GW of thermal capacity added, accounting for 24.6% of the country’s total generation mix. [7]

India, which lags far behind China in per capita GDP and access to electricity, is more defensive of its right to economic development, and thus less inclined to such significant investments.[8] Prime Minister Modi has promised to expand manufacturing—a necessarily carbon-intensive sector.[9] However, manufacturing is just one piece of the equation. As a means of ensuring universal access to electricity, decentralized renewable technologies are cheaper and easier to deploy than large, centralized thermal plants, prompting Modi to take a stronger stance towards renewable energy installation. In its Paris Agreement commitments, India has pledged to generate 40% of its total electricity from non-fossil sources by 2030, and hopes to add 12 GW of solar capacity between 2016 and 2017.[10][11] There is some doubt regarding whether the country can reasonably achieve such bold targets (India currently has a total of 5.8 GW of installed solar capacity), but the country’s intentions are clear.[12]

The USA has seen a 12% decrease in carbon emissions between 2005 and 2015.[13] This sounds impressive, but despite having the highest GDP and most stable economy of the three, the majority of reductions have come from relatively easy measures, rather than meaningful structural adjustments.The largest annual decline was in 2008-09 because of the financial downturn, but there have also been gains in transportation and industrial energy efficiency.[14] Other than the recession, the most significant drop in emissions has come from fuel switching from coal- to natural gas-fired power generation, which emits about half as much CO2 per unit energy as coal.[15][16] This transition occurred mainly as a response to relatively low natural gas prices, not government regulation. It would be a disservice not to acknowledge the progress made in the renewable sector. In 2016, 76 GW of renewable capacity was added to the grid, accounting for about 15% of the country’s total generation mix. [17] However, most of these gains are due to resolute state- and industry-led efforts. At the federal level, President Trump and EPA Administrator Scott Pruitt have recently announced plans to undo the Clean Power Plan, the EPA ruling made under President Obama that provides the policy backbone for America’s Paris Agreement target, and the closest thing to a national carbon emissions reduction goal.

The climate is an example of what is referred to as a global public good, meaning that its benefits cannot be denied to any individual, and that its consumption by one individual does not diminish consumption by others. Due to the climate’s nature as a global public good, a ton of carbon reduced in one place has the same benefit as a ton of carbon reduced anywhere else on the planet. However, since the immediate costs of greenhouse gas abatement are generally higher than immediate benefits, it is notoriously difficult to spur collective action to ensure access to a healthy climate, and it tends to be under-valued in a free market.

One reason for efforts to decarbonise is the global push for a price on carbon. The combustion of fossil fuels is associated with real costs that are rarely internalized by the fossil fuel industry itself. For example, less predictable weather patterns due to anthropogenic climate change make it more difficult to earn a living farming, and coping with the cost of rising sea levels will place a major economic burden on coastal cities in years to come. These indirect costs are referred to as negative externalities, and make fossil fuels appear cheaper than alternatives. A number of countries, China included, have already initiated carbon trading schemes or carbon taxes. However, instituting such mechanisms is often politically difficult. Seeing as China has only established carbon markets in a few metropolitan areas and India has no pricing mechanism, there must be additional factors driving their actions.[18]

There are a number of strategic reasons that a country might pursue a low-carbon economy. First and foremost is the issue of energy security. Many countries expend significant resources to ensure a reliable stream of primary energy sources to power their economies. These efforts, such as military protection of important shipping lanes, large petroleum reserves, and prevention of foreign companies extracting domestic resources, usually revolve around fossil fuels. On the other hand, renewable energy sources do not require securing primary energy resources.

Further, renewable energy technologies are the product of manufacturing, and as such, generate increasing returns while creating many well-paying jobs. The solar industry alone employs more Americans than coal- and natural gas-fired generation combined, and “wind technician” is the fastest-growing job category in the USA. [19][20] When considering all clean technology industries together, they account for approximately 1 in 33 of every new American job created since the 2008 recession and pay an average of $21 per hour.[21] To give up on these industries as would be a mistake for the American economy. Meanwhile, Chinese investments far outweigh American investments. For example, China manufactures over 60% of the world’s solar photovoltaic (PV) modules, while the USA manufactures about 5%.[22] Wind is a similar story: Chinese Xinjiang Goldwind Science & Technology Co. Ltd. replaced American General Electric Co. (GE) as the world’s largest wind turbine manufacturer in 2015, receiving 7.8 GW of capacity orders to GE’s 5.9 GW.[23]

Finally, though less quantifiable, strong decarbonisation efforts provide a solid base for the export of soft power, a sector the USA has long dominated thanks to decades of active, purposeful effort. This top position should not be taken for granted, though. Both China and India have been asserting themselves more aggressively on the world stage in recent years. A failure by the USA to follow through on its commitments in the Paris Agreement would isolate the country and leave a void for China and India to fill. By stepping up as leaders in the global push toward decarbonisation, they stand to receive goodwill, as well as cooperation on other issues. [24] Additionally, as emerging economies increasingly turn towards renewable energy sources, there is economic benefit to be gained by filling the demand for “clean” technical expertise and equipment. [25]

None of this is to say that China or India has the way forward completely figured out. Both countries still depend on fossil fuels for the vast majority of their energy needs and have relatively high carbon intensities. There are also significant technical challenges associated with updating an electrical grid. China suffers from severe generation overcapacity and laws mandating coal generation, resulting in some renewable assets sitting installed but unused, while poor grid management in India means that millions lack reliable access to power, despite dismally low utilization factors.[26]

The idea that efforts to decarbonise the US economy are pointless without similar action by China and India is not only fundamentally untrue, but also based upon a lie. Both China and India have clear, bold—if somewhat unrealistic—national goals for decarbonisation compared to the US. In a global economy increasingly determined by innovation, technology, and global leadership, America would do well to rededicate itself to climate change mitigation, rather than turn its back on the issue.

[1] “Electricity – Installed Generating Capacity,” The World Factbook. <CIA>

[2] CAIT Climate Data Explorer. <WRI>

[3] Mengpin Ge, Johannes Friedrich, Thomas Damassa, “6 Graphs That Explain the World’s Top 10 Emitters,” World Resources Institute, November 25, 2014. <WRI>

[4] Ibid.

[5] Peter Dizikes, “Study: China’s New Policies Will Lower CO2 Emissions Faster, Without Preventing Economic Growth,” MIT News, February 9, 2016. <MIT>

[6] John Mathews, “China’s Continuing Renewable Energy Revolution – Can It Save the World?,” Energy Post, September 13, 2016. <Energy Post>

[7] Ibid.

[8] “Catching Up With China,” The Economist, October 10, 2015. <The Economist>

[9] Ibid.

[10] “India’s Intended Nationally Determined Contribution: Working Towards Climate Justice,” United Nations Framework Convention on Climate Change, October 1, 2015. <UNFCCC>

[11] Katherine Ross, “India Charts a Roadmap to Achieve Ambitious Solar Targets,” World Resources Institute, May 31, 2016. <WRI>

[12] Ibid.

[13] “U.S. Energy-Related Carbon Dioxide Emissions in 2015 are 12% Below Their 2005 Levels,” Today In Energy, May 9, 2016. <EIA>

[14] Ibid.

[15] Ibid.

[16] “How Much Carbon Dioxide is Produced When Different Fuels Are Burned?,” Energy Information Agency. <EIA>

[17] “Sustainable Energy in America – 2017 Factbook,” Bloomberg New Energy Finance, February 8, 2017. <Bloomberg>

[18] Mat Hope, “The State of Carbon Pricing: Around the World in 46 Carbon Markets,” Carbon Brief, May 29, 2014. <Carbon Brief>

[19] “US Energy and Employment Report,” United States Department of Energy, January 2017. <USDOE>

[20] Jigar Shah, “Solar and Wind Manufacturing is Thriving. Why Don’t Mainstream Reporters Know?,” OilPrice.com, August 17, 2016. <Oil Price>

[21] Ibid.

[22] “Global Solar Photovoltaic Manufacturing Production Slows in Recent Years,” Today in Energy, September 14, 205. <EIA>

[23] Daniel Cusick, “Chinese Wind Turbine Maker is Now World’s Largest,” Scientific American, February 23, 2016. <Scientific American>

[24] Timmons Roberts, Caroline Jones, “American Soft Power, The Paris Agreement, and Climate Finance Under Trump,” The Brookings Institute, February 24, 2017. <Brookings>

[25] Ibid.

[26] Max Dupuy, Ranjit Bharvikar, “Renewables in China and India: Two Asian Giants Struggling With Inflexible Power System Operations,” Energy Post, May 30, 2016. <Enregy Post>

 

 

 

 

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