In the lead up to the Paris Agreement, the United States and China played a crucial role in showing how cooperation between the two largest economies and greenhouse gas emitters on addressing climate change could accelerate the transition to a clean energy future. Attacking Obama-era climate and clean energy policies last month, however, President Trump has signaled that under his direction, the U.S. federal government will sit and watch while China pushes forward on addressing climate change and clean energy deployment. Trump’s announcements mark a significant change in U.S. federal climate policy, and widen the gap with China in four key areas:
1. Expanding renewable energy. Wind, solar and other renewable energy sources are growing faster than fossil energy sources, with new investment in wind, solar and other renewables representing 55 percent of all new capacity in 2016, the highest share to date. Electricity generation from renewables (excluding large hydro) increased to 11.3 percent last year. An additional 12.1 trillion USD in renewable energy investments is needed through 2040 in order to meet a 2 degrees Celsius target, providing a huge opportunity for countries and businesses up to the challenge.
Trump Reverses U.S. Progress on Clean Energy Policy
China Leads World in Renewables
Despite the clear need for greater renewables investments, President Trump’s March 28 executive order seeks to roll back the Clean Power Plan, a federal regulation that seeks to reduce carbon pollution from U.S. power plants by requiring greater levels of renewable and low carbon power.
While Trump’s executive order purports to be focused on economic growth and job creation, it ignores the fact that, based on a recent Department of Energy report, the solar industry alone employs roughly twice as many workers in power generation in the U.S. as coal, oil, and gas-fired power plants (374,000 vs. 187,000), and that solar and wind jobs are growing at much higher rates (solar jobs grew by 25 percent in 2016 and wind jobs by 32 percent).
Still, it may take years for Trump to repeal the Clean Power Plan—NRDC and its partners are now defending the plan in court—and during this period renewable energy is still expected to be the fastest growing source of electricity capacity in the U.S. Moreover, states will continue to adopt wind and solar because it makes economic and environmental sense. Five Midwestern states—Iowa, South Dakota, Kansas, Oklahoma and North Dakota—now generate more than 20 percent of their electricity from wind, with Iowa generating a record 36.6 percent of its electricity from wind.
China continues to be the largest investor in wind, solar, and other renewable energy sources. In 2016, China invested $88.2 billion in renewables, compared to $58.8 billion in the United States. And China is planning to invest an additional $361 billion in renewables projects through 2020 that will help to generate over 13 million clean energy jobs.
In 2016 China added more than three times as much wind energy capacity as the U.S. (23.3 GW vs. 8.2 GW), cementing its status as the world leader in both wind capacity and wind power generation. And China has set a goal to grow wind energy to 210 GW by 2020, a goal that it is likely to overachieve.
China’s solar energy growth has been even more spectacular. In 2016, for the second year in a row, China smashed the world record for installing the most new solar photovoltaic power, nearly doubling its solar energy generation capacity to 77.4 GW. Like wind, China’s solar capacity and total solar energy production are the largest in the world. One anlaysis has forecasted that in the next five years, nearly 40 percent of global new solar and wind growth will be financed and developed by Chinese companies.
2. Reducing coal consumption and emissions. Coal is the most carbon-intensive fossil fuel, responsible for 46 percent of global CO2 emissions from fossil fuels. If the world is to keep average global temperature rise to under 2 degrees Celsius, over 80% of the world’s known coal reserves must remain underground.
Trump Crusades for Polluting Coal
China Cutting Coal and Shifting to Cleaner Energy Sources
Coal in the U.S. has fallen dramatically from 50 percent of electricity generation in 2008 to only 33 percent in 2016, driven by cheap natural gas and renewable energy.
While Trump’s lifting of the federal leasing moratorium and attack on the Clean Power Plan cannot revive the coal industry, these actions may slow its continued decline.
China consumes half the world’s coal, but coal consumption has been falling the last three years as the government seeks to re-orient the industrial and energy structure away from coal and improve air quality.
Chinese Premier Li Keqiang pledged at this year’s National People’s Congress in March to continue making cutting excess coal mining capacity a national priority. Last year, China cut 290 million tons of excess coal mining capacity. It will increase that number to 800 million tons in the next several years.
China’s Thirteenth Five Year Energy Development Plan has also set for the first time a mandatory target to reduce the share of coal in energy consumption to 58 percent or less by 2020, from 62 percent in 2016. (See our blog explaining this target).
China has every reason to clamp down on coal: in its power sector alone, it could face USD 500 billion to USD 1 trillion in economic losses from “stranded coal assets” if it does cut back on coal power plant overcapacity.
3. Reducing oil consumption and expanding clean vehicles. After coal, oil is the next largest source of CO2 emissions, responsible for 34 percent of CO2 emissions from fossil fuel combustion. More efficient gasoline-powered vehicles and electric cars will be needed to meet the challenge of climate change: the IEA estimates we need 150 million electric vehicles on the road by 2030 and 1 billion by 2050 if we are to keep global warming under 2 degrees Celsius.
Trump Orders EPA to Review Vehicle Fuel Efficiency Standards
China Accelerates Electric Vehicles Growth, Strengthens Vehicle Emission Standards
Prior to Trump’s inauguration, the EPA had affirmed a set of vehicle efficiency standards that would require automakers to reach a fleet-wide average of 54.4 miles per gallon by 2025. Trump pledged in mid-March to weaken these standards.
Again, Trump is touting this as a “pro-growth” move, despite the fact that the U.S.’s auto industry has added 700,000 jobs while achieving record fuel efficiency.
In addition to weakening fuel efficiency standards, Trump may also seek to weaken the California Zero Emissions Vehicle mandate that is incentivizing electric vehicle adoption in the U.S. That could hurt American automakers’ competitiveness in the growing global market for EVs and other zero emissions vehicles. The California Air Resources Board, however, recently reaffirmed its commitment to maintaining and strengthening its clean car standards, a powerful statement given that twelve other states and Washington, D.C., representing one-third of the U.S. auto market, follow California’s standards.
After leading the world with over 500,000 electric vehicle sales in 2016, China is aiming to put an additional 800,000 electric vehicles on the streets this year.
And despite manufacturing scandals and planned reductions in government subsidies, China is aiming to have 5 million total electric vehicles on the road by 2020.
For gasoline-powered vehicles, China is implementing tougher National VI vehicle emission standards in 2020, which will be on par or even higher than standards in the U.S. and E.U.
The government is also requiring the average fuel economy of automakers’ vehicle fleets to reach 47 mpg (100 kilometers per 5 liters) by 2020, effectively requiring domestic automakers to increase electric vehicles sales to 1/4 of total car sales.
4. Pricing carbon to account for its climate impact. Pricing carbon takes into account the cost that each ton of CO2 emitted into the atmosphere has in terms of contributing to the economic impacts from climate change, such as more extreme weather, decreased agricultural production, and sea level rise threats to coastal cities. It also puts zero-emission renewables on a level playing field with fossil fuels. Under the Obama Administration, the US federal government began to take into account the social cost of carbon in developing cost-benefit analyses for new regulations. The EU, California, and now China are implementing carbon cap-and-trade systems to account for the environmental and climate cost of carbon.
Trump Fudging the Math on Carbon Accounting
China to Initiate National Carbon Market in 2017
Trump’s executive order seeks to undo the interagency determination of the social cost of carbon, which is now estimated at $41 per ton of CO2 reduced. This cost estimate has thus far been used in cost-benefit analyses for regulations including refrigerator and washing machine energy efficiency standards, vehicle fuel efficiency standards, and the Clean Power Plan.
By changing the calculation methodology—such as by changing the “discount rate” (read David Robert’s excellent piece on it here)—Trump could change the social cost of carbon by as much as 80 percent and thus dismantle regulations protecting us from future climate impacts. Doing so, however, ignores the very real threat that a changing climate has in terms of more extreme weather, worsening air quality, less biodiversity and risks to coastal cities, as well as on public health.
This year, China will unveil a much-awaited national carbon trading market in an effort to reduce carbon emissions and speed the transition to clean energy.
This national carbon market will be an expansion of China’s existing seven carbon trading pilots, which by June 2016 had already traded a cumulative 94 million tons of carbon, worth roughly 350 million dollars.
China’s carbon market will be the world’s largest, and will cover eight carbon-intensive industries. While the initial price of carbon may start at around 30 rmb per ton (a little over 4 dollars per ton), the national market will be a significant step towards pricing and capping carbon emissions.
On expanding renewables, transitioning from coal, supporting clean vehicles, and pricing carbon, Trump is taking the U.S. in the wrong direction. China, the EU, and other countries, as well as states, cities and companies in the U.S., however, are sticking with their commitments to address climate change and create a clean energy future.
This post was co-authored with Princeton-in-Asia Fellow Noah Lerner.