Centralized Climate Planning Like Paris Wasn’t Going to Work Anyway
Beware of hyperbole: President Trump “canceling” Paris doesn’t mean much. All the hand wringing about the wavering U.S. commitment to climate diplomacy misses the larger message. International agreements don’t solve climate change. Good intentions don’t count. And moreover, when it comes tackling climate change, the U.S. is beating its Paris partners anyway.
First, some history. To date, our national approach to greenhouse gas emissions has been to do nothing. The Obama administration unfolded an aggressive Climate Action Plan, a suite of regulations, executive orders, private sector partnerships, grant programs, research investments and other commitments across government, but in the end, it didn’t amount to much. Instead, the real driving force in emissions reductions over the last decade has been surging volumes and falling prices for natural gas.
The fracking revolution was transformative in the United States, yielding enough low-cost natural gas that the electric grid cleaned itself up. Since peaking in 2007, U.S. energy-related carbon emissions are down nearly 14 percent. Over the most recent decade for which global emissions data are available, the United States beats the OECD average in emissions reduction every year.
Fracking also spurred dramatic changes to global oil markets and a feverish pursuit of a robust global trade in natural gas. The technological breakthroughs that created our domestic oil and gas boom can bring lower-carbon energy to a global community hungry for cheap, reliable sources.
But while cheap gas drove our emissions down over the last decade, other changes emerged. Prices for new wind and solar now beat out large fossil-powered facilities in much of the world. The cheapest global source for contracted power is sourced from a solar farm in central India. While renewable sources struggle to provide predictable, reliable power, better predictive modeling and cheaper, more diverse storage options are addressing those limitations. Individuals and companies are seeing real benefits to producing power on their roofs or in their backyards, installing distributed generation that makes both sense and cents.
These trends are global. As the western world invests in renewables out of environmental policy, convenience or preference, the global south uses renewables as a way to side step the expensive process of building out new large-scale power grids. Communities are lighting up all at once as distributed power becomes increasingly available and cheap.
Innovators, technological breakthroughs and global markets are driving a transformation in the energy sector capable of addressing the climate challenge, even – perhaps especially – in countries that haven’t expressed commanding leadership during international climate negotiations.
So here’s the lesson: centralized planning is unnecessary for aggressive emissions reductions. Diplomatic entanglements like the United Nations Framework Convention on Climate Change and the Paris agreement are simply an extension of the (poor) idea that government policies can and should lay out prescribed emissions trajectories and specific policy pathways.
Participating in the Paris Accord means buying into a set of norms. Countries exchange individual domestic action to reduce emissions in line with agreed upon targets for a seat at the international negotiation table and a voice in the discussions. As a diplomatic instrument, it’s effective coercion. As climate policy, it’s a far cry from sufficient. Even if every country achieved its pledged emissions reduction targets, the Paris agreement would fail to limit warming to the 2 degrees Celsius target agreed to by UNFCCC nations.
Paris will not solve climate change. To this preemptively failing agreement, the Obama administration pledged emissions that were larger and more aggressive than any other nation. The domestic platform offered in pursuit of those targets was built around restricting choice and reshaping the market according to the dictates of federal policy.
There’s a role for government in addressing climate change. It is by nature a market failure, the product of an unpriced carbon externality. The R Street Institute and many other organizations, politicians and companies have long advocated for a revenue-neutral carbon price as the most elegant, least intrusive solution to account for the true costs of carbon emissions.
While government has a role to play, though, the footprint of government should be subjugated to the influence of the market. The solutions to solve and best weather climate change will come from innovators, not the ambitious plotting of an emboldened bureaucracy.
Leaving the Paris agreement is not without consequence. Our diplomatic and trade partners may seek some measure of recompense for undermining the value of the first legally binding international greenhouse gas agreement. But the true goal is to solve the climate challenge. We should gladly trade hand waving and politicking for a new focus on the engines of innovation and trade that are already tackling the problem.