While Canada’s climate policy is steadily moving in the direction of carbon pricing, policy south of the border is in disarray with the Trump administration taking office this month. Trump’s picks for key positions—namely, the Environmental Protection Agency and the Department of Energy—suggest that much of the progress made under the Obama administration will be undone.
In this Q&A, UBC Sauder School of Business professor Werner Antweiler discusses the future of climate policy under President Trump.
How much of an impact will Trump’s administration have on global climate policy?
The fate of climate change is not decided in the White House, but in global energy markets. Change will take place because no country can escape the force of a market where one energy source is cheaper than another. This is true in both directions: if fossil fuels remain cheaper than clean energy, clean energy will only exist in a government-subsidized niche. However, if the price of clean energy drops below some or all fossil fuels, the era of fossil fuels will wane.
But the main challenge facing us is whether this change will come fast enough. According to statistics provided by the International Energy Association, in 2014, 81 per cent of total primary energy supply came from oil, gas, and coal, while biofuels and hydro dominated among renewable energy sources. Wind, solar, and geothermal together only contributed 1.3 per cent, but for electricity generation, these three renewable sources contributed 4.2 per cent of the world total. Even if the cost of renewables reaches a tipping point, unfortunately the age of fossil fuels will not be over for a while.
A key point to remember about the Trump administration is that while it may be able to slow down innovation, it can never reverse it. So, if natural gas is cheaper than coal, Trump won’t be able to revive the coal industry. To displace fossil fuels, innovation is critical to bringing about cheap clean energy because it will drive cost reductions. For example, wind energy has reached the point where it is competitive with other energy sources even without subsidies, while geothermal systems have become one of the cheapest energy sources available.
How can countries accelerate the move towards cleaner energy sources?
Governments have a role to play with research and development to promote innovation. They can also help invest in infrastructure such as smart grids, which facilitate distributed energy generation and storage. Regulatory hurdles also need fixing, such as promoting the adoption of geothermal energy. A carbon price is also enormously helpful because it levels the playing field among competing technologies. In addition, as the share of renewable energy grows, economies of scale will grow and further decrease costs.
Even smaller economies such as Canada can help bring about this kind of change in other countries. It is not just about being a good citizen, or taking moral leadership on climate change. If countries like Canada embrace renewable energy, every wind and solar farm that is built will ultimately contribute to more innovation and further cost reductions in these industries. The countries that build the capacity to innovate will also be home to the renewable-energy industries of the future, with high-quality jobs in engineering and high-end manufacturing.