What Does Trump Mean for the Climate?

It is easy to see how Donald Trump’s election to a second term would negatively affect the world’s climate – and not just the political one. During his first term, more than 125 US environmental rules and policies were rolled back. Trump returning to the White House would be significantly worse for the environment and public health, and the damage would be harder to reverse.

However, the technological revolution and fundamental market forces driving the low-carbon transition are too strong for this policy seesaw. Trump could, would, and already is delaying clean investments – and any such delay is bad. But delaying the inevitable is all he has. Even a Trump victory this November could not halt it.

Yes, elections have consequences. According to an analysis by the Lancet Commission on Public Policy and Health in the Trump Era, the Trump administration’s environmental policies resulted «in more than 22,000 extra deaths in 2019 alone», largely from worsened local air pollution. In terms of the total damage done to the climate, the Rhodium Group estimated in 2020 that «in the absence of new federal policy, Trump’s rollbacks will increase US emissions by 1.8 gigatons cumulatively through 2035».

Fortunately, enacting stronger climate policies has been a major priority for Trump’s successor. US President Joe Biden didn’t just reverse many of Trump’s environmental rollbacks; he secured the passage of many new ones. Together, the 2021 Bipartisan Infrastructure Law, the 2022 CHIPS and Science Act, and the 2022 Inflation Reduction Act (IRA) are mobilizing trillions of dollars in new federal investments, loans, tax credits, and other measures to address climate change.

Federal clean-energy subsidies have proved significantly more popular than anticipated. The Congressional Budget Office has more than doubled its original estimate of the IRA’s fiscal impact (from under $400 billion to around $800 billion) over the next decade. Over half of the additional $428 billion in outlays stems from wildly popular electric-vehicle tax credits. The rest comes from other kinds of tax credits, like those earmarked for renewables, green hydrogen, and carbon removal.

These estimates might still be conservative. Goldman Sachs Research calculates that the IRA will extend $1.2 trillion in federal subsidies by 2032, spurring $2.9 trillion in cumulative investments over the same decade, and around $11 trillion by 2050. Well over half of that spending will be on renewable energy («excluding nuclear and hydro»), which Goldman analysts expect to grow by around 9% per year between now and mid-century.

Short of a repeal of the IRA (a highly unlikely outcome even with Trump as president), the rapid expansion of US renewables and other clean-energy investments will continue to proceed apace, in part because of state-level policies. The deep-red Republican state of Texas recently edged out deep-blue California as America’s leader in installed solar-energy capacity, a trend that began well before Biden’s presidency and the passage of the IRA.

Of course, competent regulatory agencies are important for enabling such investments. There are plenty of hurdles to overcome. The Federal Energy Regulatory Commission’s transmission reform, for example, helps large solar and wind energy projects connect to the grid. Poor federal leadership could derail some needed changes like grid upgrades and other crucial infrastructure investments. But none of that would stop underlying technological and market trends, like relentlessly falling solar-panel prices.

Then there is the IRA itself. Ironically, it is often Republican-leaning districts and states that benefit the most from federal clean-energy investments. Despite Republicans’ best attempts to turn climate change into a culture-war issue, Biden’s strategy of making it a «pocketbook» issue appears to be working.

Even if Biden loses to Trump, the reframing of climate as an economic issue will help to ensure that many of today’s positive trends continue apace. Texas farmers are not going to turn off their wind turbines; roofers are not going to unlearn how to install solar panels; and contractors will not suddenly go back to recommending gas furnaces over heat pumps that are 3-5 times more efficient.

To be clear, Trump’s election would have profound effects in unlikely places. Early-stage clean-energy startups are typically seen as the purview of Silicon Valley venture capitalists, rather than Washington bureaucrats. But startups often depend on government grants to stay afloat. According to ImpactAlpha, at least 96% of climate-tech VC investors are just two degrees removed «from at least one government grant». Some are already holding off on their clean-energy investments, owing to the risk of Trump winning and scuttling key programs like the Department of Energy’s Loan Programs Office.

But one should not overstate this risk. US clean-energy investments are still setting records. Goldman Sachs estimates that heightened policy uncertainty tends to lower annual GDP in election years by 0.1-0.2 percentage points. Trump probably wishes it was much more, given that weaker GDP growth before the election favors the challenger.

Investors like policy certainty. A lack of it, in an election year, naturally leads to delays, and delays are the only thing vested fossil-fuel interests can hope for at this point. The question is not if the world moves off fossil fuels, but how fast. The renewables revolution is inevitable. Attempts by Trump to stand in its way would amount to little more than another wall that never gets built.

Copyright: Project Syndicate, 2024. www.project-syndicate.org

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