December 21, 2016


Climate, energy, and Trump: Progress is still possible (Mark Muro, November 15, 2016, Brookings)

A first reassuring feature of the current situation is the fact that much of the legal power--and most of the creativity--to clean up the economy and reduce greenhouse gas emissions resides outside Washington, D.C.  To be sure, nations are the most prominent units in international climate negotiations--and rules like this nation's Clean Power Plan to compel power plants to slash emissions matter enormously.  However, states and cities arguably matter just as much because they control so many of the most crucial policy levers that can control emissions. State commissions will continue to regulate investor-owned electric utilities, for example. State legislatures will continue to set and update renewable energy targets and portfolio standards.  And cities will continue to manage land-use and transportation systems and enforce energy-efficient building codes.  What is more, every sign to date suggests that globally consequential states like California and New York are going to double down on their respective climate policies. A forthcoming Metropolitan Policy Program paper will demonstrate that state-level decisions about fuel sourcing, economic structure, and other factors are delivering significant emissions reductions in dozens states. The bottom line: Progress can still be made even if Trump begins to dismantle national and global policies and processes.

Technology change and market forces will continue to drive gains.

Similarly, much of the nation's recent progress on emissions reductions resulted from market dynamics, not policy, and will proceed without regard to Donald Trump's preferences.  For example, the largest major carbon advances in the United States over the last decade have resulted from market changes that have resulted from the onset, thanks to technology breakthroughs, of cheap natural gas and cheap renewables. The massive adoption of "hydraulic fracking" has unleashed a gale of cheap, lower-carbon natural gas that has been the main driver of a wholesale switch from coal to natural gas in fueling power plants. This will continue. At the same time, wind and solar power keep getting cheaper, and in some places they are becoming competitive with new fossil-fuel plants.  Soon such renewables will become cost-competitive without federal supports.  [...]

Private finance will continue to drive the transition to a low-carbon economy.

Finally, climate-oriented finance is gaining force. To be sure, direct federal investments, subsidies, and frameworks remain critical to support and accelerate favorable state-local and market-tech trends mentioned above. And to the extent those are reduced will be a problem.  However, the prevailing consensus is that the bulk of the $10+ trillion that the International Energy Agency estimates will be needed to finance global decarbonization in the next 15 years will consist of private capital.  And in fact, creative financing solutions have already been coming online to drive large-scale private and institutional capital flows into clean energy projects. 

Posted by at December 21, 2016 1:12 PM