An Uncertain Anniversary

This blog post is based on the Introduction to my forthcoming book, Clean Power Politics: The Democratization of Energy (Cambridge University Press, 2017).

One year ago, 195 nations met in Paris and signed what has been hailed as an historic climate agreement.1 To date, 116 parties have ratified the convention, and it went into force on November 4 of this year.2 President Obama acknowledged the talks as a “turning point, that this is the moment we finally determined we would save our planet.”3 The signatories pledged to reduce carbon emissions with the intent of keeping global warming below 2 degrees Celsius while pursuing the more ambitious target of limiting temperature increases to 1.5 degrees Celsius from pre-industrial levels. Although the 11-page agreement does not set legally binding emissions limits, the parties committed themselves to a regime that requires them to report on the progress of their commitments every five years beginning in 2020.4

The technical, economic, and political complexities of climate change mean that the agreement will not, by itself, solve the climate change problem, and not everyone cheered the agreement.5 Further, the election of Donald Trump raises serious questions about the continued viability of our participation in the Paris convention. Equally troubling is that his election also threatens the continued viability of President Obama’s Clean Power Plan (CPP) as evidenced by a transition team memorandum that eviscerates both climate change and clean energy efforts in favor of increased fossil fuel development.6

Additionally, Trump’s announcement of Oklahoma Attorney General Scott Pruitt to head the Environmental Protection Agency (EPA) demonstrates his hostility to both initiatives. Pruitt is a staunch opponent of environmental regulations, including the CPP, and is considered a climate change denier.7 Putting an oil and gas man who has sued to overturn the CPP at the head of the agency responsible for it is compounded by the fact that Department of Energy employees have also been targeted for their participation in clean power and climate initiatives.8

Nevertheless, the Paris agreement, together with the CPP, is noteworthy. First, as a signatory to the Paris accords, the United States took an international leadership role on the global climate stage.9 We are currently seen in the international arena as a country committed to addressing the challenges posed by climate change. Next, U.S. leadership on the international front is supported by its domestic energy initiatives that pay greater attention to climate challenges. And third, regardless of the future of the Paris agreement or the CPP, the reality is that U.S. energy policy can no longer operate independently of and unconnected to climate change, nor can it operate independently of the international dimensions of the environment. Instead, as forthcoming book, Clean Power Politics: The Democratization of Energy, argues, a clean power future is the most promising course for our nation’s energy policy.  

Consider first that the Paris conference emphasized the need for continued investment in energy and environmental innovations. Of central concern to the success of the Paris talks was the necessity of financial commitments to address both adaptation and mitigation measures. Those financial commitments were based on the recognition that industry participation and further public-private clean power investments are necessary.10 Significantly, a group of more than 20 billionaires announced the formation of a multi-billion dollar fund named the Breakthrough Energy Coalition11 to innovate and invest in a new, clean energy mix for the future. Thus, a clean power future is and will continue to be an attractive investment in and an avenue to economic growth and stability.12

In addition, the Coalition will work together with a group of countries through a project known as Mission Initiative, which is intended to accelerate the clean energy revolution.13 More importantly, the need for investments in clean power is now being recognized in the marketplace as financial institutions such as Goldman Sachs, Citigroup, and Bank of America also announce multi-billion dollar investment commitments14 in a clean energy market currently estimated to be worth more than one-half trillion dollars.15

It is an inescapable reality that our country, as well as the world, is experiencing an energy transition away from a dirty fossil fuel economy to a cleaner economy grounded in renewable resources and energy efficiency. The shift away from fossil fuels to cleaner ones has been underway for decades now. For too long, though, U.S. energy policy has been narrowly focused and limited to a handful of energy resources and, in turn, to a fossil fuel economy dominated by a limited number of producers and by passive consumers. The traditional hard-path energy policy contributed to U.S. power and its economy for most of the 20th century, and the incoming Trump administration appears hell-bent on pushing for a fossil fuel revival.

However, that approach is focused on short-term economic gains that would be concentrated on a few corporate interests while ignoring long-term environmental and social costs as exemplified by the investigation of ExxonMobil’s concealment of information about the damaging effects of carbon emissions.16 That concealment led the Rockefeller Family Fund to announce its divestment of its holdings in fossil fuel companies because of their “morally reprehensible conduct.”17 Generating short-term private gain and imposing long-term social costs is not a new phenomenon; however, it is a dispiriting one.

In a prior book, Ending Dirty Energy Policy, I demonstrated that since the energy crises of the 1970s, energy policy studies have been moving toward and then actively supporting a clean power transition for both economic and environmental reasons. Economically, the U.S. wanted to wean itself from dependence on Middle East oil. Environmentally, we became more conscious of the social costs of degradation. Combined, it became necessary to acknowledge the environmental consequences of the energy fuel cycle.

There is a natural physical connection between the exploration, processing, transportation, consumption and disposal of the natural resources that we use to produce energy. More dramatically, at every stage of the energy fuel cycle, negative environmental consequences follow. Energy studies supporting a clean power future acknowledged the inextricable link between energy and the environment, and sound policies must follow suit.

Although a transition to a clean energy future has been occurring for decades now, particularly at the state level, various actors can undertake additional initiatives, despite what Trump and his Cabinet selections may wish to do. Clean Power Politics identifies three elements necessary for a rapid and successful transition.

First, three preconditions must be satisfied: (1) federal leadership, both domestically and globally, will facilitate, but not end, the transition;18 (2) clean energy resources must be clearly defined and supported; and (3) the transition must be placed in its proper economic and political contexts. In this latter regard, a clean power transition is not inimical to economic growth. Instead, a clean energy economy is more labor intensive than the traditional fossil fuel economy and will provide more jobs. Further, by diversifying energy sources and utilizing new energy technologies, the energy sector will become more competitive as new markets develop.

Once the preconditions have been specified, innovation must continue to occur along three dimensions; (1) federal innovation policy and funding must continue to support clean energy technologies; (2) business innovations in the private sector must continue to follow; and (3) supporting regulatory innovations must also continue at the state and federal levels.

It is important to recognize that energy industries and regulators operate symbiotically; they are not at odds with each other. Historically, energy businesses and their regulators promoted the production and consumption of energy based upon the belief in a direct and positive correlation between energy and the economy. As we transition to a clean power future, then, businesses and their regulators must acknowledge the economic gains to be made from the transition and must make energy conservation and energy efficiency a greater part of our energy economy. In a clean power future, all consumers can continue to rely on the availability of energy, continue to operate as before, and, at the same time, pay less for that energy.

In short, our previous belief in the need for continued expansion of energy production and consumption must give way to a smarter and more efficient use of energy. Energy firms and their regulators must recognize that the traditional energy paradigm has shifted, and it has shifted away from dirty fuels, not only to cleaner fuels but to increased efficiencies and reduced energy consumption. In order to accomplish this change, not only must businesses innovate, but regulators must also innovate precisely because they play a role in supporting and sustaining our energy economy.

The transition to a clean power future that is brought about by innovations in technology, business practices, and regulation will lead to a new political narrative about energy and the environment. The new politics is more democratic in two ways. First, incumbent large-scale energy firms that have long grown accustomed to government regulatory and financial support must recognize and accept that the energy sector is becoming more competitive and, therefore, incumbent firms must participate in that sector with a variety of new entrants with new products and new technologies. The new entrants will provide energy services and products of a smaller scale, and at more localized venues, and will sell efficiency as well as energy.

Second, decision-making power over the energy future will shift away from large-scale incumbents to not only smaller new entrants, but decision-making power will also shift from federal regulatory authorities to local and state actors and, ultimately, to consumers themselves. Consumers of the future will enjoy more energy choices than they have in the past, and they will have greater control not only about their energy budgets but they will play a more significant role in energy planning and the administration of energy regulations. The increasing energy market competition, the expansion of choices available to consumers, and the development of new energy resources and products are all part of the democratization of energy.

To be sure, this transition is something that will happen over the long term. It will not occur overnight, and it will face serious roadblocks over the next several years as Trump and his energy and environmental agency leadership attempt to drag America back toward heavy reliance on dirty energy, particularly coal. Despite the power of the federal government and the bully pulpit of the presidency, though, they will face immense hurdles, not the least of which is the ongoing market shift away from expensive, polluting fuel sources.

The anniversary of the Paris agreement should be cause to celebrate, even though the election of Donald Trump casts an ominous shadow. Regardless, consciousness about the inextricable connections between energy and the environment; about the risks of pollution for our economic future, as well as the risks to our health and lives; and about the promises of new technologies and more competitive markets is now in the air. In time, that consciousness will be acted upon not only by smart policymakers, but by smart businesses and smart regulators, as well.