Tag Archives: Trump

The Political Struggle in Eliminating Coal

By Stephen Zhao

Advancements in renewable energy and natural gas have appeared to make coal a thing of the past, with the costs of solar, wind, and gas generated electricity approaching or even undercutting that of coal power. Yet, while market conditions no longer favour coal, its political importance prevents an easy transition to these other energy sources. As such, successful management of the coal energy transition will need to account for political roadblocks that will arise from a push towards reducing coal use.

Recently, countries such as China, Germany and the United States have backtracked in their efforts to reduce coal consumption. With the cancellation of China’s mining moratoriums, repeals of Obama-era environmental regulations under the Trump administration in the US, and the revival in coal capacity construction in Germany post-2008, these are just some examples of nations  reversing previous political efforts to limit coal, actions which are typically preceded by some form of political backlash or resistance.

Smoke rising from nearby coal-fired power plants in the Shanxi Province, China (Source: NY Times | Kevin Frayer | Getty Images)

A common factor amongst these aforementioned nations is also the trading regime governing their coal market. One key difference between coal and other fossil fuels is that it has much more domestic-oriented market dynamics. Over 90% of coal production and 85% of coal consumption lies within ten countries, of which about 70% of both production and consumption lie within China, India, and the United States alone. Whilst efforts to reducing consumption of oil and gas in one country often hurt producers in another, this is not the case with coal.

Countries with the biggest coal markets (i.e. China, India, Germany and the United States) tend to be both producers and consumers, which severely complicates the politics of reducing coal use within these markets. The presence of both production and consumption activities can generate a strong political coalition in the coal industry’s favour. Since most of the coal produced would be consumed domestically, the industry would be severely resistant to any attempts to reduce the domestic demand for coal. As geographically concentrated sources of employment and economic activity, local communities and political actors tend to work together  in defending the coal industry within the policy making process.

US President Donald Trump signalling his support for coal mining at a rally during the 2016 presidential campaign (Source: CNBC | Dominick Reuter | AFP | Getty Images)

Moreover, supporting for the coal industry’s commercial activities is substantial. In 2016, the United States Bureau of Labour counted approximately 57,000 individuals employed in coal production. However, if these calculations also include those working in supporting services,  the total increases 30% to around 74,000 employees. As an integrated supply chain, the coal industry is also tied to other economic interests such as railways, steel and heavy metal production, and the financial industry. The collapse of coal companies could cause severe disruptions in supply, leading to considerable loss of business or resulting in defaults on loans. All these factors mean that a rapid decline in coal consumption would create substantial dissatisfaction and backlash from a large number of political stakeholders.#

The decline of coal’s competitiveness in the market paradoxically enhances its political voice. In China, the prospect of mass unemployment for the country’s 5.2 million coal miners has made the Communist Party think twice about its broad stroke policies to reduce coal capacity. Disaffected miners in Pennsylvania and Ohio helped propel President Trump’s electoral victory in 2016. After a boom in natural gas, struggling coal-based power companies in Germany have managed to secure lenient provisions in the European Union Emissions Trading Scheme (EU ETS), allowing them to remain competitive. If efforts to reduce coal use are to get anywhere, something must be done to compensate the losers of the energy transition.

Local villagers carrying coal from the local open-cast mine in Jharia, India (Source: Zimbio | Daniel Berehulak |Getty Images AsiaPac)

Moving forward, solutions may need to incorporate compromises with community and commercial coal interests in order to succeed. Germany has recently taken to paying utility companies to shut down their coal plants. Whilst an expensive option, this initiative helps ease the strain on these firms’ bottom line and allows for a smoother wind down of the industry. Such policies, incorporated with a real focus to invest in communities losing out due to  coal industry decline, can help alleviate the political pressure that builds to protect coal.

Unfortunately there is no single, simple path for this energy transition to take, and despite optimism surrounding the market competitiveness of renewables and natural gas, reducing and eliminating coal will be far more complicated than just a matter of simple economics.

This blog post is based on a larger work about trading regimes and coal reduction policy. To read more about the trading regimes and the political economy of coal, click here.

A more optimistic picture is presented in reports as part of Coal Transitions project, available to download from the project website.

About the Author

 

Stephan Zhao is a Researcher at the Munk School of Global Affairs, University of Toronto.

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Assessing the US Retreat from the Paris Agreement: Backtracking to Kyoto?

By Jonathan Pickering, Jeffrey McGee, Tim Stephens and Sylvia Karlsson-Vinkhuyzen

Perhaps the most widely debated event in global climate policy since the Paris Agreement’s adoption in 2015 was the United States’ decision in June 2017 to withdraw from the treaty, pending possible re-engagement under different terms.

BRENDAN SMIALOWSKI/AFP/Getty Images

When the announcement was on the cards, some commentators argued that the US would be ‘better out than in’, not least because US absence from talks on implementing the Agreement would reduce its ability to scuttle progress from the inside. Others argued that the net effect of the decision was just as likely to undermine global cooperation as to stimulate action in other countries.

At the annual UN climate talks in November, most parties to the Agreement (now numbering more than 170 countries) put on a brave face, although developing countries added the US decision to their list of reasons for doubting the willingness of developed countries to adhere to the Agreement.

Meanwhile, the US sent mixed messages about its stance: career diplomats on the US negotiating team were keeping a low and relatively non-obstructive profile; a White House adviser sat on a panel extolling the virtues of coal; and US states, cities and businesses were showcasing their ongoing commitment to the Agreement.

In a situation this murky, how can we get a clearer picture of what the US decision means for global climate policy?

How far from Kyoto to Paris?

Until the dust settles, it remains to be seen what the longer-term impact of the US decision will be. In the meantime, one promising way of assessing the implications of the decision to withdraw is to compare it with previous experience, rather than with a counterfactual (and inevitably speculative) decision to stay in. In a new article in the peer-reviewed journal Climate Policy we do just that, by comparing and contrasting US non-participation in the Kyoto Protocol and the Paris Agreement.

AP

The Clinton Administration signed the Protocol in 1998, but in 2001 the George W. Bush Administration announced the US did not intend to ratify it. The Kyoto Protocol did eventually enter into force in 2005, but US non-participation was widely seen as damaging for the Protocol’s effectiveness and legitimacy.

We focus on four key areas that may shape the effects of US treaty decisions for international climate policy

(i) Global Momentum on Climate Change Mitigation

We find that increasing global momentum on climate mitigation since 1997 means that US withdrawal from the Paris Agreement is potentially less damaging than its non-participation in the Kyoto Protocol. But despite the declining US share of global emissions, greater urgency for deep decarbonisation means that the non-participation of a major player such as the US remains problematic for achieving the Paris Agreement’s goals.

(ii) Opportunities to Form Rival Initiatives

US damage to the Kyoto Protocol framework resulted not only from its non-participation, but also from its creation of rival forums for international collaboration on climate policy, notably the Asia-Pacific Partnership on Clean Development and Climate (APP). While the APP ultimately withered on the vine, its presence was enough to cast a shadow over the UNFCCC’s legitimacy for a number of years.

Since our article went to press, news has emerged that the US plans to form a new international alliance to promote burning coal. It is likely that heavy coal users such as India, China, and Australia will be invited to join. With this move, the Trump administration is clearly taking a leaf from the G. W. Bush administration’s climate policy strategy. But in our view it is unlikely that this will prove as destabilising for global cooperation as the APP. There is now increasing global momentum to phase out coal, as reflected in the rival Powering Past Coal Alliance, which numbers around 26 countries (albeit none of the world’s biggest coal users so far).

In a related new article in Climate Policy, Detlef Sprinz and colleagues find that climate ‘clubs’ set up alongside the UNFCCC to accelerate mitigation could function even without the US being on board, although their coverage of global emissions would be modest and some potential members could be dissuaded by US non-participation. Ongoing dysfunction within the US Department of State may also limit the coal alliance’s prospects.

(iii) Timing and Circumstances of the US Decision to Exit

Because the US was not already a party to the Kyoto Protocol, President Bush’s decision not to ratify had immediate effect. But under the provisions of the Paris Agreement, the earliest that the US can formally withdraw is 4 November 2020, which happens to be the day after the next US Presidential election.

Given this delay, it is uncertain that withdrawal will ultimately go ahead. Despite the Trump administration’s continuing reluctance to take domestic action on climate change, the time lag for formal withdrawal from the Paris Agreement tends to diminish the short-term signalling effects of the US decision.

(iv) Influence of Treaty Design on Incentives to Participate and Comply

Differences in the design of the Kyoto Protocol and Paris Agreement suggest that US non-participation is more likely to prompt reluctant countries to stay within the Paris framework but reduce levels of ambition and compliance, rather than to exit the Agreement altogether.

A key reason for this is that the Paris Agreement’s ‘Nationally Determined Contribution’ approach gives countries considerable flexibility in how they frame their contributions to mitigation. This makes it less likely that they will find themselves bound to targets that lack domestic ownership and support. While parties are bound to prepare, communicate and maintain successive NDCs, they are not legally bound to achieve them.

In contrast, parties to the Kyoto Protocol were bound to meet their targets. Canada judged in 2011 that it was preferable to withdraw from the Protocol altogether, rather than risk non-compliance when it became clear that it would overshoot its Kyoto target.

Putting it All Together

Our comparison highlights important ways in which the negative effects of US withdrawal may be less severe under the Paris Agreement than under the Kyoto Protocol. This finding is complemented by another new article in Climate Policy by Johannes Urpelainen and Thijs Van der Graaf. Assessing the US decision from a broader international relations perspective, the authors argue that ‘the Paris Agreement has introduced a new logic of domestically driven climate policies’.

REUTERS/Ian Langsdon

Even so, the negative impacts of US withdrawal from the Agreement could still be significant, so it is hard to be confident that US withdrawal will be better for climate policy than if it had remained. Indeed, our analysis suggests that even now, some of the risks demonstrated by the US withdrawal from the Kyoto Protocol will remain major concerns for the future of the Paris Agreement. Crucially, US non-participation may demotivate other countries at a time when mutual assurance and greater ambition remain critical for a safe future climate system.

About the Authors

 

Jonathan Pickering is a Postdoctoral Fellow at the Centre for Deliberative Democracy and Global Governance, based at the University of Canberra.

 

 

Jeffrey McGee is a Senior Lecturer in the Faculty of Law and Institute for Marine and Antarctic Studies at the University of Tasmania.

 

 

Tim Stephens is Professor of International Law and ARC Future Fellow at the University of Sydney Law School.

 

 

Sylvia Karlsson-Vinkhuyzen is an Assistant Professor in the Public Administration Policy Group at Wageningen University.