Politics & Policy

On Energy, Trump Almost Makes Sense

(Jonathan Ernst/Reuters)
To the extent that he has an actual plan, Trump is a bit less bad than Hillary.

As faithful readers of National Review well know, Donald Trump gives Americans hope — the hope that he won’t be as awful tomorrow as he is today, and the prospect that one’s despair won’t again be justified by his utterances. When pondering Trump’s various affronts, hope springs eternal as a form of surprise — the prospect of being shocked by flashes of coherent ideas, which are as rare as his displays of decency.

Trump’s glimmerings of good sense are infrequent, but he was more tethered to reality than usual last Thursday, as he spoke of his vision of America’s energy policy at the Williston Basin Petroleum Conference in North Dakota.

Many Trump devotees justify their support for him by way of contrast — Trump is acceptable only because Hillary Clinton is dreadful. Indeed, Trump’s unwillingness — unlike his likely Democratic opponent — to cheerlead for “green” corporate interests was the speech’s primary redeeming quality. Approving the Keystone XL pipeline, fully tapping American energy resources, combating EPA overreach — much is here to hearten conservatives.

And yet Trump’s proposals on energy remain confused. When he veered off script last Thursday, his thinking lapsed into incoherence. Energy policy under a Trump presidency may make a virtue of his ideological flexibility: His thoughts (if one may call them that) on energy perhaps can, at least, be properly steered in the right direction.

Trump correctly contends that government should “not pick winners and losers.” Yet Trump will surely be unwilling to invest considerable presidential political capital in the quixotic quest to eliminate near-immovable, and bipartisan, subsidies for all sectors of the energy industry, including oil, gas, and solar.

Moreover, Trump is likely blissfully unaware of how state regulatory bodies, of one of which I am a member, interface with regulated monopolies in order to ensure an affordable, reliable and abundant supply of power nationwide. Energy policy today involves navigating a complex web of regulation-based and market-based components. Electric-power monopolies were established over a century ago in light of the enormous costs and restraints of establishing competing forms of energy infrastructure. These monopolies were to be regulated by elected or appointed utility commissions invested with the authority of a regulatory compact to ensure they earn a reasonable rate of return and provide just and reasonable rates in the public interest.

In other words, the nation’s little-known energy commissions, in concert with the industries they regulate, have broad authority to pick winners and losers. Many elements of this authority are integral to the functioning of the nation’s grid and power supply. Would Trump reform this compact? Would he pursue electric retail competition and smash power monopolies to eliminate the picking of winners and losers? We have not a clue.

Even as he disparages the picking of winners and losers and exalts the power of “free markets,” Trump declares, in the same breath, that the government will pick coal as a winner: “We’re going to save the coal industry.” The decline of coal is not merely a result of federal environmental policy’s tightening emissions of mercury, sulfur dioxide, and carbon dioxide from coal-burning plants. Shale exploration, which produced an abundance of cheap (and cleaner-burning) natural gas, has been more ruinous to the coal industry than any government edict. Utilities and commissions, regulating in response to the market Trump claims to revere, continue to choose cheaper and cleaner gas over coal.

Solar, wind, and gas — not coal — constitute most newly built power generation in the U.S. In the spring of 2015, gas overtook coal as a share of U.S. power generation for the first time in U.S. history.

Owing to market forces and more stringent environmental regulations, the coal industry is on death watch. This trend shows no sign of abating, and Trump’s plan to expand natural-gas production would exacerbate it: More fracking means lower natural-gas prices, which dampens demand for coal. Would Trump seek to persuade Congress to grant subsidies to coal to render it competitive with natural gas? If restoring coal jobs is his overriding energy-policy preoccupation — as it appears to be — will he reverse course and support efforts to hamper the natural-gas industry, a move the Sierra Club would celebrate? Moreover, Trump cannot criticize, say, the solar industry for pursuing subsidies to create jobs and profits if he advocates — on precisely the same basis — the renewal of jobs and profits in other sectors of the energy industry.

Trump’s promise to usher in a coal renaissance is a pander and a source of false hope for communities devastated by the decline of a once widely relied-upon energy source.

“We’ll get the bureaucracy out of the way,” says Trump, “so that we can pursue all forms of energy.” He continues: “This includes renewable energies and the technologies of the future. It does include nuclear and wind and solar, but not to the exclusion of other forms of energy, and other forms of energy that right now are working much better.” Does Trump propose building, at enormous expense, new nuclear plants, the cost of which cannot be justified by most regulators — not to mention the marketplace — in light of basement-bottom natural-gas prices?

#share#In the final analysis, should the market be ignored, and should regulators and politicians — like Trump — choose the “winners” they prefer, even at greater cost to ratepayers? Moreover, why “pursue all forms of energy” if “other forms of energy . . . are working much better” and if solar and wind energy are “very, very expensive”? “Wind is a problem,” Trump says. “Despite that, I am into all types of energy.” Is Trump “into” all forms of energy production to ensure a diverse energy portfolio, which conduces to reliability and hence national security? Unlikely, given that he made no mention of this key component of sound U.S. energy policy.

“Under my presidency,” Trump says, “we’ll accomplish a complete American energy independence.” Boosting domestic energy production to achieve this end is a goal usually worthy of applause. Yet an overemphasis on the illusory aim of “energy independence” fails to acknowledge the inescapable effects of world oil markets and the reality of global interdependence. Moreover, domestic oil production is at a 40-year high, and the shale revolution has flooded the market with an abundance of inexpensive natural gas. Ensuring an embarrassment of riches, as Trump would, is a poor economic principle if prices plummet further.

For a candidate who declares that he “loves China,” it was conspicuously and strangely absent from his speech. China’s energy future cannot be detached from ours: From 2002 to 2012, China drove a majority of global energy demand, and its economic slowdown contributed mightily to the historic collapse in the price of oil. China’s current growth will likely be less energy-intensive, and new capacity will include hydroelectric power, renewables, and nuclear at the expense — you guessed it — of coal. China is installing solar at a record pace: In 2014, China added more solar and wind than Europe and the United States combined, and China’s solar photovoltaics-manufacturing sector dramatically drove down U.S. solar costs. While peering into his cracked crystal ball, Trump should look to the East for hints of what’s in store for the United States’ energy future. Thus far, his isolationism, which extends even to our energy supplies, makes this unlikely.

Even so, Trump’s penchant for bombast and incoherence on policy, on lurid display last Thursday, are preferable to Clinton’s fantastical plans, among which is an untenable proposal to “increase the amount of installed solar capacity by 700 percent by 2020.”

#related#Clinton’s claim that “thousands of premature deaths and tens of thousands of asthma attacks each year” will be avoided by these installations is based on tendentious “studies” claiming to calculate the “costs” on society exacted by fossil fuels. While the public-health effects of pollution are, of course, real, most studies have “monetized” political, irreducibly subjective policy preferences and fail to account for the financial impact of promoting less-polluting energy sources on individuals’ pocketbooks. Barring a Trump victory, a Clinton-administration EPA will dispense more of the same dreadful regulatory medicine to the states, and special interests that tart up their economic self-interest in ersatz environmental piety will continue to rule the roost.

Trump is a candidate who redeems himself to some voters only by way of contrast to a disastrous alternative. As such, Trump’s energy vision renders him a mitigated, as opposed to unmitigated, disaster. Should he win the presidency, let us hope that Trump can be reformed, in many more ways than one. On energy policy, we could do worse — which is faint praise for a candidate almost entirely undeserving of it.

— Bob Stump (@bobstump) is a former chairman and current member of the Arizona Corporation Commission, a statewide elected body that regulates most Arizona utilities.

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