Thursday, April 13, 2017

Trump's Executive Order

On March 28, President Trump issued an executive order titled “Presidential Executive Order on Promoting Energy Independence and Economic Growth.”  In it, he lays out his intentions to promote the expansion of energy production from fossil fuels by removing the regulations put in place by the Obama administration to fight global warming.  While nothing in it is surprising based on the positions Trump took during the debates (which I discussed very critically in a previous post), it is worth looking at the order in detail to see what specific actions are going to be taken by our government, and what the reasons for them and actual implications really are.

The order begins by stating two premises.  The first is that “It is in the national interest to promote clean and safe development of our Nation's vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.  Moreover, the prudent development of these natural resources is essential to ensuring the Nation's geopolitical security.”  The second premise is that “It is further in the national interest to ensure that the Nation's electricity is affordable, reliable, safe, secure, and clean, and that it can be produced from coal, natural gas, nuclear material, flowing water, and other domestic sources, including renewable sources.”  The conclusions based on these premises are that all existing regulations will be reviewed by the government agencies under the Executive Branch, with the aim of removing any that “unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.”  Regulations that are perceived to disrespect laws passed by Congress and different states, or to produce more cost than benefit, are to be put under particular scrutiny.  A directive is then given to all government agencies to review all their regulations.  The agencies have 45 days to construct a plan, 120 days to submit a draft report, and 180 days to submit a final report.

Trump then goes on to revoke and rescind a number of Obama’s executive orders and actions, most notably the Climate Action Plan and its Strategy to Reduce Methane Emissions and the Council on Environmental Quality’s guidance requiring federal agencies to take greenhouse gas emissions and global warming into account when evaluating proposed actions.  He also calls on EPA administrator Scott Pruitt to review the details of Obama’s Clean Power Plan, rescind any part of it that Pruitt deems inconsistent with the stated objectives of this executive order, and inform the Attorney General if any of the changes affect pending litigation.  Trump then calls for a detailed cost-benefit analysis of any regulations in place that relate to climate change, and replaces all of the Obama Administration’s guidelines for evaluating the social cost of greenhouse gases with a set of guidelines from the administration of George W. Bush.  The section from that document (called Circular A-4) that pertains to cost-benefit analysis begins with the following two sentences: “Your analysis should focus on benefits and costs that accrue to citizens and residents of the United States. Where you choose to evaluate a regulation that is likely to have effects beyond the borders of the United States, these effects should be reported separately.”  The Secretary of the Interior is ordered to lift all moratoria on coal leasing on federal lands, and to examine all the Obama-era regulations on the natural gas industry in order to eliminate those regulations which do not comply with this executive order’s objectives.

So what is is Trump’s intent with this executive order?  The best place to look for an answer to that is in the premises.  Much of the language in the document, starting with the first clause in the first premise, cannot be argued with on objective terms.  It is the difference in how people would define words like “necessary” and “prudent” that will lead to considerable objections.  The second clause suggests that regulations have caused burdens on the energy industry that have killed jobs, but is that actually true?  As I described in a previous post, coal has declined because of the surge in natural gas production, not from any regulations.  And the fact that natural gas production has surged indicates that the gas industry did quite well for itself in the years that Obama was President.  The second premise is more telling.  Trump announces his preference for certain forms of energy, with renewables qualifying as an “other.”  Why?  According to the 2017 U. S. Energy and Employment Report published by the Department of Energy, solar energy in 2016 employed more than four times as many people as coal in electricity generation (373,087 vs. 86,035); even when fuel production is added in, it was still more than twice as many (373,087 vs. 160,119).  Wind power employed an additional 101,738 people in the United Sates last year.  So when Trump says that prioritizing industries like coal and not renewables is about job creation it means one of three things: either he doesn’t know the DOE’s statistics on energy jobs in America, he doesn’t believe the DOE’s statistics on energy jobs in America, or he is not being honest. 

If Trump is not promoting conventional energy sources for the sake of creating jobs, is he instead doing it to promote cheaper energy?  Again, the available data suggests otherwise.  The financial institution Lazard annually publishes an assessment of the levelized cost of energy, and in 2016 they concluded that land based wind ($32-$62 per megawatt-hour or MWh, depending on location) and utility-scale solar ($46-$61 per MWh) had reached a cost level where they were usually cheaper to create the facilities and produce the energy than even natural gas ($48-$78 per MWh).  Even “dirty” coal ($60 per MWh on the low end) has trouble competing with those prices, before any added cost for regulations (or transportation and storage, for that matter) is even considered.  “Clean” coal (meaning incorporating a system to take carbon dioxide out of the emissions of burning coal and store it in the ground) would bring the price as high as $143 per MWh.  For clean coal to have any chance of being cost-competitive in the coming years, engineers would have to find a way of bringing its price down at least below what could be done with renewables generating excess energy at peak times and storing it in a battery.  At present, Lazard estimates the cost of utility-scale solar plus battery storage to be $92 per MWh.

So Trump’s apparent favoritism of the fossil fuel industry does not mesh with the current state of jobs or costs in the energy sector.  As I said when discussing his debate performance, he appears to be clinging to old narratives that aren’t true and that need to be countered with more vigor than they have been up to this point.  Now granted, I am for giving renewables preferential treatment.  I believe that there is overwhelming scientific justification for doing so, and that the economic conditions to begin the transition to a renewables-based energy sector are favorable.  It will be interesting to see what kind of counter-argument the Trump Administration makes, and whether any aspect of it is defensible.  Trump states his desire to make sure that regulations “achieve environmental improvements for the American people, and are developed through transparent processes that employ the best available peer-reviewed science and economics.”  Where global warming is concerned, the peer-reviewed science is clear and unequivocal in concluding that the Earth is getting warmer and human activity is the reason.  For our sake, I hope the President meant what he said.

To be fair, I can understand why Trump would like to show some sympathy to this country’s coal miners.  My grandfather was a coal miner from the town of Pottsville, Pennsylvania, which thrived in the early 20th century as a hub for the transportation of coal from the mines to the power generators across the state.  Collectively we all owe a huge debt to the people who extracted the coal, often at a significant expense to their own health, which powered this country and the world.  And I get that nobody wants to hear that the planet would be better off if their job didn’t exist anymore, even if — and perhaps especially if — that happens to be the truth.  I also understand that, when your career is in danger of being taken away, an amorphous promise of “training” just seems like condescension from people who aren’t directly affected.  But coal is being phased out in a number of places, not just here.  The reasons for that are many, and are economic as well as environmental.    In Australia, for example, coal mines are closing at a steady clip despite a government that’s at least as far to the right as ours currently is, and communities are indeed being affected.  What makes these closures especially damaging, according to a recent article, is the lack of time the communities have to prepare for them.  As the article indicates, the best way to mitigate the damage is with proper planning, and by making sure that the people affected are listened to in every step of the process.  Making promises to revive the coal industry, when basic economics dictates that the promises can’t be kept, will do more harm than good over the next decade for coal workers and the cities and towns that have depended on the industry.  And for the rest of us, there is simply no good mixed in with the harm.

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