Trump´s reversal on climate policy: a misguided decision?

The 28th of March was marked by one major event “the single biggest attack on climate action in U.S. human history”. The stage was the U.S and the lead actor President Donald J. Trump, who signed an Executive Order to dismantle the initiatives taken by his predecessor Barack Obama with the aim to reverse the fortunes of struggling coal-miners.

This order, isn’t new and the President has been taking this policy position since the 2016 presidential campaign. Flanked by cheering coal miners, he initiated an Executive Order with the intention to dissolve a number of existing legislations that were introduced by the Obama administration, who set combatting climate change as the centrepiece of his second term.

Some changes will happen immediately. Some will take years of work and will be more challenging to unwind. Legislations under risk include the Climate Action Plan, the moratorium on the Federal Coal Programme and the centrepiece: The Clean Power Plan.

President Trump’s Executive Order received mixed reviews from environmentalists, politicians, business leaders and citizens. Given its diverse reception, judging whether this step is a potential way to support the economy or a misguided decision that will eventually harm society and the planet remains to be seen.

The protagonist of the reversal: The Clean Power Plan

The Clean Power Plan is a legislation that President Obama signed into law to effectively combat climate change. It was unveiled in August 2015, following a proposal by the Environmental Protection Authority in June 2014. Specifically, it required States to meet standards with the final purpose to reduce greenhouse emissions from electrical power generation with respect to 2005 levels by 32 % within 25 years. Effectively this rule has the potential to provide significant pollution reductions: Climate, Health and Net Benefits of $20, 14$ -$34 and $26-$45 billion respectively. The Clean Power Plan marked the strongest action ever taken on fighting climate change by an Administration in history.

Since February 2016, the plan, however, has been in limbo. Currently it is pending a challenge in the US Court of Appeals. Trump, sees it as an opportunity to fulfill his pledge and eradicate the Plan once and for all.

Reversal on climate policy: A misguided decision?

Image source: Voanews

Trump champions the idea that “perhaps no single regulation threatens our miners, energy workers and companies more than this crushing attack on American Industry”. The question that emerges with this statement is whether this statement is actually justified. Clearly, the coal industry is facing rising unemployment (despite the fall with respect to the previous year from 9.2 % to 4.6 %) but the causes of this rise are manifold. Will the abolition really increase internal demand by lowering the cost of extracting coal? This hypothesis is doubtful.

Indeed, the coal industry has been experiencing slumping demand already since decades, as manual labour was progressively replaced by automated machinery and stiff competition from clean energy sectors, such as gas emerged.

A time series analysis of the U.S Bureau of Labor Statistics illustrates that unemployment rates were experiencing a sharp fall over the course of the year. The unemployment rate in February 2017 stood at 4.7 %, from 4.6 % in the previous year. The highest rate was experienced in construction with an unemployment rate of 8.8 % (from 8.7 %) taking away the prior rank from agriculture as the sector experiencing the highest unemployed rate. Government workers, with a comfortable 2.1 % rate (from 2.7 %) experienced the lowest unemployment rate. Mining, quarrying, and oil and gas extraction was midway, with an unemployment rate of 4.6 % (from 9.2 %).

U.S Unemployment Rate 2007-2017

When Obama took office, he took over one of the most turbulent economy in U.S history. The unemployment rate was at 9.3 %. Although the rate peaked in 2010 at 9.6 %, it progressively declined since then. In this context, Trump´s argument that Obama is promoting “job-killing” policies is likely to be misleading. Although certain sectors did experience a rise in unemployment rates, it is likely to indicate only a restructuring of the industry to an industry based on clean energy.

Taking this into account, investment in clean energy is key. This will eventually entail a formation of a low-carbon economy which is likely to reduce the unemployment gap the fossil fuel industry experienced caused by the shift by consumers to clean energy resources. One reason why anxiety exits among society is that both industries and technologies are in transition. Eventually this transition should be accompanied with the adequate re-training of workers to avoid a mismatch between skills provided and the skills demanded by employers. In the long-run effective promotion of smart businesses and sustainable growth will pave the way to a better planet for the environment and its people.

During the Presidential campaign, Trump called climate change a “hoax”, but climate change is real. Science states clear results and human activity is the main cause. Necessary steps need to be taken to risk losing what we have achieved together in the past decade in the united fight against climate change.

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WRITTEN BY LARISSA VALENTINA CHANDUVI KOZLOVA FOR BESA

PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT