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Make China Great Again: Six Ways Trump's Energy And Climate Policies Work... For China

15/12/2016 16:13
Mike Segar / Reuters

Mid-way through the two-week negotiation sessions at the UN climate talks in Morocco in November, results of the US presidential election landed with a thud. An oil and gas-funded climate sceptic was elected president of the richest country in the world, the very same country leading climate change efforts over the past eight years.

A profound funk descended over the gathering. Officials from 195 countries and countless representatives of think-tanks, non-governmental institutions and the private sector had worked for years to shepherd a credible response to a global warming fuelled by oil, gas and coal burning, which pose an existential threat to human civilization through sea-level rise and extreme weather events.

The president-elect apparently thinks global warming is a Chinese hoax created to hurt US manufacturing. His entourage ranges from Exxon-Mobil CEO Rex Tillerson as Secretary of State, to climate change denier Rick Perry as Energy Secretary, and Scott Pruitt as the head of the Environmental Protection Agency - an agency Pruitt himself has sued 13 times.

However, Donald Trump's planned initiatives to rev up coal mining, gas fracking and oil drilling, re-start the Keystone XL pipeline, and tell car companies to forget about pollution-busting mileage standards will only work to make China great again.

Here's why.

The global day-to-day fight against the pre-eminent issue of our time, climate change, is likely to experience a major and tragic setback. But, China is determined to step-up and lead. While Trump talks about walls, China is building bridges.

First, China quickly stepped in to take the climate change leadership mantle, lecturing the president-elect about climate change. The 194 countries that signed-up to the Paris agreement loved it.

Second, China isn't stopping there. Its government continues to take strong action to re-tool its economy into one fuelled by clean energy. China is continuing the build-up of its clean energy infrastructure at a clip of $125 billion per year and will continue to fuel a rapid decline in the cost of clean technologies.

Its manufacturing base for both will expand and it will cement its lead in the technologies of the future, including clean and renewable energies, energy efficiency, electric vehicles, and rapidly evolving energy-storage technologies. While Tesla is more often in the news, China already has 25 companies building 51 models of electric cars.

Third, China has already set out its stall as the Pacific Rim's lead advocate for free trade. The election of Trump, who campaigned on a protectionist platform, provided China with a geo-political window to deny the US any advantages from the Obama administration's pivot to Asia.

"China will not shut the door to the outside world but will open it even wider," said Chinese president Xi Jinping, ahead of the recently concluded Asia-Pacific Economic Cooperation summit in Lima, Peru. The reality of a rapid shift in power to China was already apparent in Lima two weeks from the US presidential election.

Fourth, in the US, Congress is highly unlikely to repeal the investment tax credit legislation it enacted last year with strong bipartisan support. This should keep US renewables going for two or three more years, and during that period costs will keep going down while the industry keeps creating more jobs. But, clean tech innovation is at this point much more likely to be owned by China rather than the US.

Fifth, if the president-elect delivers on his professed love for coal, US competitiveness will suffer. The Trump administration can try to reinvigorate the coal industry all it wants, that won't work. No one wants a coal plant nearby anymore. Even power companies don't want them. They prefer cheaper and cleaner natural gas alternatives.

To accentuate the terminal decline of coal, China will continue to close coal mines at pace while decreasing the energy intensity of its manufacturing base, closing export outlets for US coal. It's closing 1,000 coal mines this year alone.

Finally, OPEC will get a run for its money soon from a reinvigorated US oil and gas industry flexing its muscles in the export markets. That will be great for China: Cheaper oil increases its competitiveness because the country's onshore oil production has peaked and China is importing more and more oil.

If Trump is really intent on stopping the decline of coal caused by renewables and natural gas, he will fail while making China great again.

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