Republicans start 2018 with two big economic accomplishments under their belts. The first is passing the $1.5 trillion tax-reform package. The second is withdrawing from the Paris climate treaty and rolling back the Obama administration’s Clean Power Plan, in effect repealing an Obama tax hike that would have cost Americans $1.3 trillion over eight years.
Cutting taxes is what successful Republicans do. Every Republican president since 1980 who subsequently won reelection cut taxes in his first term. By contrast, President Trump’s pro-growth energy policies are very much his own idea. Perhaps others in the field of 17 primary contenders in 2016 would have acted similarly (such as Ted Cruz), but others would not (such as Jeb Bush), and it’s hard to imagine any of them appointing Scott Pruitt to head the EPA, who has turned out to be one of the stars of the Trump administration.
The potential economic gains are colossal. According to Heritage Foundation’s Kevin Dayaratna, over the next eight years ending the war on hydrocarbon energy will generate 900,000 jobs, add $1.9 trillion to the economy, and cut electricity prices and household energy bills with negligible effects on the climate and sea level. Fully taking advantage of fracking and America’s vast hydrocarbon reserves to 2035 would increase GDP by $3.7 trillion — equivalent to America’s adding two and a quarter Texas-size economies — and make an average family of four over $40,000 better off, all with a temperature change of less than three thousandths of a degree Celsius and a sea-level rise of less than one hundredth of an inch. Like all the best policies, in retrospect, Trump’s energy policies will appear obvious common sense.
While Trump is pushing hard on the gas pedal to accelerate the growth of the American economy, his opposite number in Paris is applying the brake. At President Macron’s behest, in December, the French parliament passed a law banning all production of oil and gas in France and its overseas territories from 2040. Casting himself as savior of the planet, a week earlier, Macron hosted a One Planet summit, ostensibly to commemorate the second anniversary of the Paris climate accord.
A sycophantic promotional video of the event shows the planetary hero planning the summit lunch as an Elysée Palace flunky serves coffee from a silver tray, then hugging guests on their arrival. Like millions of visitors to Paris before them, they board a Bateau Mouche and view the sights of Paris as they sail down the Seine. Everyone looks bored as Macron speaks, apart from the hero’s wife, Brigitte, and his lead supporters (“really good, really fantastic, congratulations,” Arnold Schwarzenegger tells him).
It all looks a bit stale. There’s a roundtable with former secretary of state John Kerry. Michael Bloomberg, Bill Gates, and Richard Branson are given front-row seats. “We are in the middle of losing this battle,” Macron tells them. There are, he claims, five, ten, 15 heads of governments whose nations will disappear in 50 to 70 years’ time. It’s hardly an inspiring rallying cry.
The highlight of the One Planet conference turned out to be the speech by World Bank president Jim Yong Kim. Although the U.S. is the World Bank’s largest shareholder, the institution has been entirely captured by the Europeans and their radical decarbonization agenda. To whoops and cheers, Dr. Kim announced that the bank would stop financing upstream oil and gas projects after 2019.
Applaud as the audience did, Kim’s announcement masks a deep failure. The Paris climate conference two years earlier had agreed to work on defining a clear roadmap on ratcheting up climate finance to $100 billion a year by 2020, an amount first put on the table by Hillary Clinton at the failed 2009 Copenhagen climate conference. For developing countries, the promise of huge flows of climate finance was the sine qua non for their participation in the Paris Agreement. But the money’s not there. The summit produced tiny dribbles of climate money, not the gusher they’d been promised, and the billionaires at Macron’s summit didn’t become billionaires by throwing their money into black holes. Instead of the hundreds of billions of climate dollars they were promised, they’ve ended up on the wrong end of a fossil-fuel financing ban from the World Bank.
For developing countries, the promise of huge flows of climate finance was the sine qua non for their participation in the Paris Agreement. But the money’s not there.
Indeed, Macron’s climate grandstanding is symptomatic of the decay of the U.N. climate-change cycle of annual climate conferences periodically punctuated by landmark climate treaties. The drama of negotiating brinkmanship and the presence of large numbers of world leaders generated news flow and extraordinary levels of media coverage, all of which are now being drained from the process, in part, because the architecture of the Paris Agreement does not require any further treaties.
This creates an opportunity for the U.S. to construct an alternative pole based on energy realism and attract countries that recognize that cheap hydrocarbon energy will remain essential to developing and growing their economies for the foreseeable future. The U.S. is uniquely able to do this: It is the only country that is withdrawing from the Paris Agreement. At the same time, its vast reserves of coal, gas, and oil make it a hydrocarbon superpower with the technological and business expertise that no country can match.
Macron’s silver-tray, Davos-style approach to economic development is emblematic of what has been called the West’s “carbon imperialism.” In a lecture last August, Indian prime minister Narendra Modi’s chief economic adviser, Arvind Subramanian, declared the time ripe for creating a “green and clean coal coalition.” The Trump administration appears to be alive to the opportunity. At an energy summit in South Africa two months later, Energy Secretary Rick Perry said he backed the formation of a “global clean coal alliance” including the U.S., India, Australia, and South Africa.
It means that, for the first time, the U.S. is in a position to change the direction of the global energy debate, which up until now has been dominated by the push toward high-cost, low-dependability renewable energy. As his desultory speech implied, the Macron approach of trying to save the planet on the backs of the world’s poor is foreordained to fail. Big developing nations such as India, the ASEAN bloc (which in August called for increased promotion and enhanced deployment of clean-coal technologies), and the countries of sub-Saharan Africa are not going to submit to Macron’s vow of poverty. Approaching the end of his first year in the White House, President Trump can showcase his energy-policy accomplishments and offer the world a positive alternative to President Macron’s losing climate battle and financing bans.