New York. Elections are supposed to clarify political uncertainty, and in terms of the economy, Donald Trump’s victory over Kamala Harris has done just that. The three major US stock indexes and US Treasury yields jumped the morning after Election Day, reflecting expectations for both strong economic growth and rising debt and inflation.
In terms of climate policy and (especially) environmental policy, another Trump Presidency is clearly bad news, compounded by extreme political uncertainty and mixed signals for closure, especially in cases where Trump can try to resist the biggest technology and market trends.
Let’s consider electric vehicles (EV). Trump, who has revealed himself as a defender of the internal combustion engine, says he will eliminate tailpipe emissions regulations on “day one.” ” He has all the power to do it, and he might breathe some life into a failing business. Meanwhile, Tesla shares rose 15% on the election news. Investors were clearly betting that the company will benefit from its CEO, Elon Musk, spending more than $100 million of his own money to elect Trump.
All of this is happening at a time when EVs are demonstrating the superior quality of the technology that came before them. EVs convert 90% of their energy into travel distance, compared to only 20% for gasoline-powered vehicles. Although the overall efficiency increase depends on the proportion of electricity that comes from renewables, even coal-fired power plants are more efficient than an internal combustion engine. In West Virginia, where about 90% of electricity comes from coal, an EV reduces carbon pollution by about 30 percent. The average increase in efficiency in the United States is already around 50%, and increasing.
As a result, basic physics dictates that any attempt by Trump to block the transition to VE is doomed to failure. That said, it can still do a lot of damage down the road, especially where American competitiveness is concerned. American automakers already face strong competition from China and other countries, and any change in US policy on EVs or other clean technologies will not slow the expansion of green business in the rest of the world.
More than half of all new vehicles registered in China are already EVs or plug-in hybrids, more than double the global average. The United States is a lost country, and Trump’s victory only ensures that it will remain so for some time. Imposing 10-20% tariffs on all imports, and 60% tariffs on Chinese products, will not protect domestic manufacturers, he says. Trump already imposed a 25% tariff in his first Presidency, and did nothing to prepare American car makers for the electric future; Biden didn’t have 100% tariffs on Chinese EVs either.
Trump’s efforts to slow the low-carbon transition may slow when it comes to solar, wind and other technologies. Here too, China dominates the world market: it produces 97% of solar wafers, 85% of solar cells and 80% of solar modules. That is why the Biden administration, with the Inflation Reduction Act (IRA), tried to move part of the renewable energy supply chain in the country by subsidizing domestic production. This led to projects like Illuminate USA, a joint venture with Chinese solar manufacturer LONGi in Pataskala, Ohio. The plant is expected to assemble more than 9 million solar panels annually, enough to power 1 million American homes.
The Trump administration may well want to maintain the IRA withdrawal tax credit, which subsidizes roughly 25% of Illuminate costs. Either way, Trump’s strategy will primarily affect the 1,000 Ohio residents the plant now employs. The impact on the global solar panel market will be minimal; LONGi will find ways to make the panels cheaper elsewhere if it needs to.
In fact, Trump can and will restrict the use of renewable energy in the country. He has said he will stop offshore wind permits; Shares in turbine producers Ørsted and Vestas lost almost as much as Tesla gained on the election news. The Trump administration will also make it more difficult to connect renewables to the grid, and try to extend the life of fossil fuel infrastructure, while giving money to special interests. But that technique would only delay the inevitable.
During his first administration, Trump tried to revive the domestic coal sector. He didn’t. Coal was already on its way out long before he became President, and the decline of the industry has only accelerated since then. The trend is being led by states like Texas, which recently surpassed California in total commercial-scale solar power installed.
It’s true, Trump can and will do a lot of damage, including to public health by rolling back environmental regulations and protections. In the previous term, he repealed more than 125 such rules, most of which were reinstated under the Biden administration. This time, he will be more ruthless and effective in ensuring that his recall continues. In 2019, an estimated 22,000 additional deaths in the United States were attributed to higher levels of local air pollution; These numbers will become our new normal.
But Biden repaired the damage Trump had done on the climate front, and went further. The outgoing administration’s climate policies were even more ambitious than what US Senator Bernie Sanders proposed in his IRA-anchored 2016 presidential platform, fueling the race for green technologies in United States. Yes, and Trump will hurt national businesses that try to compete in that global competition, but he won’t be able to stop it.
In terms of climate and, in particular, environmental policy, it is clear that Donald Trump’s return to the White House is bad news. But the outlook is uncertain, as Trump has sent mixed signals about the kinds of policy changes he might implement, and it remains to be seen what impact that might have. to be aware of wider technology and market trends.
The author
Gernot Wagner is a climate economist at Columbia Business School.
Copyright: Project Syndicate, 2024
2024-11-22 04:40:00
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