Early Impacts of Trump 2.0 on Domestic Climate Policy

In my podcast series, “Environmental Insights: Conversations on Policy and Practice from the Harvard Environmental Economics Program,” I’ve had the pleasure of engaging in conversations with environmental economics scholars who have also had significant experience in the policy world.  My guest in the most recent episode is a great example of this, because I was joined by Joseph Aldy, my colleague at the Harvard Kennedy School, where he is the Teresa and John Heinz Professor of the Practice of Environmental Policy.  Joe’s research focuses on climate change policy, energy policy, and regulatory policy, and, importantly, from 2009 to 2010, Joe served as Special Assistant to President Barack Obama for Energy and Environment, which game him significant experience both in the economics and the politics of climate change policy.  You can listen to our complete conversation here.

This was Joe’s second visit to the podcast, the first having been in November of 2019, in what was the 7th of 66 episodes we’ve now produced.  I believe he was the first guest to come back for a return visit, and the reason why I double-dipped was that when I decided to ask someone to assess what has happened and will happen in the second Trump administration’s first 100 days, particularly in regard to domestic environmental, energy, and climate policy, Joe Aldy was my first choice.  (I emphasize domestic policy, because I’ve already written in two recent blog essays about what to expect in the international domain, but not in the domestic domain:  The Evolving China-USA Climate Policy Relationship; and What Trump’s Exit from the Paris Agreement Will Really Mean.)

We’re about half-way through the first 100 days of this new administration (although it feels like it’s already been several years).  So, before we discussed Joe Aldy’s expectations for the next two to four years, we focused on what has already happened. 

Aldy begins by describing how the Trump administration has moved quickly on many fronts using numerous executive orders, rolling back regulatory policies, and creating a National Energy Dominance Council to confront what it has termed a “national energy emergency.” 

“It’s a little bit of a challenge to say we’re actually dealing with a kind of energy emergency that was described by the President because we’re producing more energy now than we ever have.  When we look at the fact that we’re at record highs in oil production, gas production, and renewable power production on the supply side, we’re not necessarily facing what one might think of as an emergency when it comes to energy.”

Aldy goes on to note that he is alarmed, however, by some of the brazen early moves the administration is making in the energy and climate space.

“We see efforts going on now that I think are potentially more fundamental in undermining the ability of the federal government to regulate greenhouse gas emissions. Tasked on day one to EPA was to assess the prospect of undoing the Endangerment Finding under the Clean Air Act. That’s the necessary foundation [for] the EPA [to exercise its] authority to regulate greenhouse gas emissions,” he says. “They’re moving in that direction, and a lot of this is going to end up in the courts.”

But Joe contends that the courts may not be so sympathetic toward the administration. 

“Part of the response from those who want to slow this kind of retrenchment when it comes to clean energy and climate policy is to litigate, and some of what is happening is happening so fast. I mean, we saw this in Trump 1.0 where some things they try to do very quickly. What they did was not consistent with the process that is established under law that you’re supposed to follow, or you will be found to have been in the language of the Administrative Procedure Act that governs how we implement the administrative state, ‘arbitrary and capricious.’ You lose in the courts on process grounds, not even on the merits.”

Aldy also argues that the administration seems to be pursuing a number of countervailing objectives using a variety of tools that will cause unintended consequences.

“The prospect of tariffs generally really interact with an agenda focused on trying to advance oil and gas development in the United States. If we are going to put tariffs on imported steel [the price of oil extraction will go up],” he remarks. “So, [when] importing crude oil, natural gas, or electricity from Canada… with tariffs, [it will] make [those] more expensive domestically and affect… both the business case for using energy as well as the domestic politics about energy.”

The clean energy tax credits contained in the Inflation Reduction Act may also be in jeopardy, Aldy observes, although he admits there may be pushback from some Republicans representing areas where the tax credits have positive economic impact. And those may be key votes, Aldy says, when the president’s proposed tax cuts come before Congress.

“I think there were more than a dozen Republicans who voted against the tax bill, the Trump tax cuts of 2017, in the House of Representatives. They can’t lose a dozen votes this time. It’s a much tighter margin. And so, there’s a question about, is there sufficient support for sustaining at least some clean energy tax credits going forward?”

Importantly, Joe notes that even if the administration is successful in efforts to slow down the clean energy transition, it won’t be able to stop it altogether.

“The clean energy economy in the U.S. is so much more advanced now that signing executive orders doesn’t affect the 30-plus gigawatts of solar that was installed last year. It doesn’t affect the fact that we have been installing more wind power every year for the past decade than we have natural gas in terms of incremental capacity investment. All… the people who recently bought EVs, they’re still going to drive their EVs. We’re still going to produce power from these renewable power facilities,” he argues.

“I think that we’re going to see more and more business investment, because the business case for clean energy is getting better and better, even if the policy environment is getting more uncertain,” he says. “It means that the worst-case scenario, at least in terms of what happens to our emissions and our energy economy, is basically like stasis. We need to accelerate if we’re going to be up to the challenge of the problem, but I think we will just find ourselves treading water for a while. The challenge is whether or not there’s really bad spillovers to other countries.”

For this and much more, please listen to my complete podcast conversation with Joe Aldy, the 66th episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunesPocket CastsSpotify, and Stitcher.

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The Evolving China-USA Climate Policy Relationship: The Future of All Societies May Depend Upon It

Last night, I was privileged to deliver an after-dinner speech at Harvard’s Loeb House for the close to 100 attendees at the “Harvard-Tsinghua Workshop on Climate Change, Carbon Neutrality, and Energy System Transformation,” sponsored by the Harvard China Project, which was itself founded 30 years ago and still chaired by the legendary Micheal McElroy, Gilbert Butler Professor of Environmental Studies, Harvard Paulson School of Engineering & Applied Sciences and Department of Earth and Planetary Sciences, and led with Executive Director, Chris Nielsen.  I was asked to discuss “The Evolving China-USA Climate Relationship,” which is what I did. 

My comments in my after-dinner talk seemed to be well received by the audience, and prompted some interesting questions and follow-up discussion, so I thought I ought to share my commentary with the readers of this blog.  Hence, this brief essay draws on my equally brief speech.

I discussed one of the most consequential relationships shaping the future of our planet:  the evolving climate policy dynamic between China and the USA.  These two nations, the world’s largest economies and biggest carbon emitters, hold the key to global efforts to combat climate change. How they cooperate — or fail to do so — may determine not just their own environmental futures, but the future of all societies.

I tried to provide some historical context, because I believe that in order to understand where we are today, we need to look at where we’ve been.  For much of the 20th century, the U.S. and China approached climate change in vastly different ways.  The U.S., as an early industrialized nation, contributed significantly to historical emissions but also played a leading role in scientific research on climate change.  China, on the other hand, industrialized later but very rapidly, surpassing the U.S. in annual emissions in the mid-2000s.

But, despite differences, there have been moments of intense collaboration. One of the most significant was surely the lead-up in 2014-2015 to the Paris Climate Agreement, including joint announcements of emission reduction targets by Presidents Xi Jinping and Barack Obama, which helped pave the way for the historic 2015 accord, in which nearly 200 countries pledged to limiting GHG emissions.

So, why did China and the USA take on such co-leadership?  I attribute it to a convergence of their perspectives: their annual CO2 emissions converged in 2006; their cumulative emissions are gradually converging, the future date of which will largely depend on relative rates of economic growth; both countries have huge coal reserves; and both countries have featured sub-national, emissions trading policies.

This partnership has not been without serious setbacks, however.  Political shifts have influenced the trajectory of climate diplomacy.  During the first Trump administration, cooperation began to collapse. To some degree, climate policy problems at that time (and since) were collateral damage of geopolitical tensions regarding international trade, human rights, democracy in Hong Kong, independence of Taiwan, security in Asia, and other issues.  But to a considerable degree, the lack of cooperation was intentional with Trump’s announcement in 2017 to withdraw from the Paris Agreement, which did not take effect, of course, until November 2020.

So, climate negotiations persisted, with China and the U.S. co-chairing the Enhanced Transparency Framework negotiating stream of the UNFCCC throughout the Trump years.  And the U.S. position did not seem to affect other countries’ commitments:  China proved happy to evolve from co-leadership to sole leadership; and India did not retrench.  Only Brazil did so, among the major emitters, but that was because of the election of Jair Bolsonaro, not because of Trump’s actions.

Of course, in recent years, we’ve seen renewed commitment to climate action.  The Biden administration re-entered the Paris Agreement, establishing ambitious climate goals, including net-zero emissions by 2050. Likewise, China pledged to peak emissions before 2030, and achieve carbon neutrality by 2060.  And at the G20 Summit in Bali, Indonesia in 2022, just before COP27 in Sharm El-Sheikh, Egypt, the two Presidents met and signaled – without much detail – their renewed cooperation on climate change.  Then, a year later, just before COP28 in Dubai, U.A.E. in 2023, the two Presidents signed their “Sunnylands Statement,” signaling that they might indeed return to co-leadership on global climate change.

But important impediments remained, Biden accepted parts of Trump’s “America First” approach, creating his own “American Manufacturing First” theme of industrial policy, highlighted by (protectionist) investment and production subsidies for a range of climate technologies and strategies in the Inflation Reduction Act (as China has employed for many years!).

Today, domestic politics, economic competition, and mutual distrust continue to create serious roadblocks.  And with the second Trump administration, we’ve gone from bad to worse.  The U.S. imposed new tariffs on imports from China, and China quickly responded with countermeasures.  And this time, Trump’s withdrawal from the Paris Agreement will be completed in just one year, not four years.  Also, this time, U.S. withdrawal may have significant effects on other countries.  For example, Indonesia, Argentina, and even New Zealand have talked about withdrawing.  Equally important, India and a number of other major countries did not bother to meet the February 10th deadline for submitting new targets under Paris.

Much of that may sound quite pessimistic, so I tried to offer a somewhat positive conclusion.  Eight years ago, the annual climate talks took place in Marrakech, Morocco, just a week after Trump had been elected the first time in November 2016.  I was invited to speak in the China Pavilion, as I have been each year.  There was much lamenting on the panel about the 4-year Trump presidency that was about to begin, and I was last on the panel to speak.  My Chinese host and moderator introduced me with, “Now, we hope that Professor Stavins can bring some good news from the United States.”  I did not know what to say, so after a long pause, I stated, “When you get to be my age, you realize that four years is not a long time.”

Where does this leave us in 2025?  At present, civil society, businesses, subnational governments, and academics can continue to play critical roles in fostering collaboration between China and the United States, as Harvard’s China Project has done for many years.  And, in any event, climate policy developments will continue, such as with ambitious new targets — and the Carbon Border Adjustment Mechanism — from the European Union, which may lead to an international “carbon-pricing club.”

In conclusion, I’ve tried to suggest in these brief comments that the evolving relationship between China and the U.S. on climate policy is complex, shaped by history, shaped by competition, shaped by domestic politics, and – we hope – perhaps shaped by an urgent need for action.  As the two largest carbon emitters, these nations have a strategic, even a moral responsibility to lead the world toward a sustainable future.  The path ahead will not be easy, and I will add – as an economist – that it will not be cheap.  But if these two global powers can again find common ground in addressing climate change, as they have in the past, then they can set a remarkable, effective precedent for rest of the world.  The future of all societies may depend upon it.

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Hope and Expectation for Bottom-Up Climate Progress

Vijay Vaitheeswaran, whom I have known and worked with for over 30 years, is the long-time global energy and climate innovation editor at The Economist. In the latest episode of “Environmental Insights: Conversations on Policy and Practice from the Harvard Environmental Economics Program,” he expresses his appreciation for bottom-up climate approaches. The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

Visionary entrepreneurs and the private sector will play increasingly important roles in driving climate progress, Vijay Vaitheeswaran argues, particularly in an era of what he calls “slowbalization,” during which nations will attempt to regionalize and even nationalize supply chains, and establish industrial policies, a trend he says “will have some deleterious consequences” on climate policy. However, he also notes that there could be some longer-term positive effects.

“From the perspective of emissions, I worry. Making very expensive solar panels at home in America or very unattractive and expensive electric cars that nobody wants to buy because you’re reliant on domestic technology or energy storage [is inefficient]. Another example where we have at scale with quite a lot of innovation embedded cutting edge technologies that are available quite inexpensively because China invested and got them to scale and is making them available, but very high tariffs will keep them out of markets like the U.S. And what will happen?,” he asks. “My prediction is that a number of those technologies will be redirected to the emerging world. If that happens, that would be a good thing. It might even help with a green leapfrog in India or certainly in Africa, Latin America.  It doesn’t matter to the planet where the emissions cuts are made in the long term.”

Vijay observes that much of current-day green energy solutions are driven by the private sector, and that trend, he says, shows no signs of slowing.

“I have a great deal of appreciation for bottom-up forces, understanding that whatever the cycle and rhythm of international negotiations… and the vicissitudes of domestic policy, that in fact the momentum often builds from the bottom-up, from markets, from the role of business, from the opportunities that are created from technology innovation advancing,” he remarks.  “That’s where I keep my eye on both – what’s happening from the top-down… The framework matters, but oftentimes the longer-term trends are determined by what comes from the bottom-up.”

He also notes the trend toward increased use of alternative fuels in several important industrial sectors.

“I think the long game for oil is already in sight that in the long term we know how to electrify transport. That’s a problem that we have a pathway for, certainly in passenger transport. With freight we have to see which technology wins out, whether it is indeed electrification, which is making gains even with freight, even though batteries are heavy and cannot go as far,” he states. “There is an argument for hydrogen or some other kinds of synthetic fuels as well. So, there’s an open competition, but we have pathways to alternatives there. We’re seeing shipping as well moving quite rapidly, in fact, towards some alternatives… to petroleum-based fuels.”

As these alternative fuel technologies come to scale, Vaitheeswaran says, they will help the world lessen its reliance on oil, thereby reducing global CO₂ emissions.

“The way we should work for change faster is to develop these alternatives, make them attractive, make them affordable, keeping in mind energy poverty is still a significant problem for 800 million to a billion people around the world [who have] little or no access to modern energy and to accommodate a world that’s going to use much more energy in future, and rightly so, in developing countries. And in developed countries, of course with the AI surge, we will certainly use more energy for that purpose – to make it clean and firm,” he remarks. “So, I think those are the kinds of outlines of… [a] future that probably calls for fossil fuels to be with us for some time and for more thought in how we think about the emissions from those fuels.”

Vijay also addresses the challenges posed by upstream methane, an issue which has become front and center in recent climate negotiations.

“We now understand, although scientists have known this for a very long time, but much more in the political consciousness, that methane is a much more potent greenhouse gas in the short term in the 10-to-20-year timeframe because it does have a shorter life than CO₂,” he says. “And global accords were reached at Dubai, at the COP Summit, and reaffirmed in Baku, to try to dramatically reduce the methane footprint of oil and gas companies during their production process.”

For this and much more, please listen to my complete podcast conversation with Vijay Vaitheeswaran, the 65th episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunesPocket CastsSpotify, and Stitcher.

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