Monday, November 14, 2016

Paris Climate Agreement and the United States Election Result

Many people who are concerned about climate change view the election of Donald Trump with trepidation. He has denied that climate change includes a substantial response to human activities, arguing that it is a hoax, and he has vowed to open up more federal lands to oil and natural gas drilling. He will probably withdraw from the recent Paris climate agreement. Yet, even if he did all of these things and more, in terms of outcomes actually relevant to the portion of climate change induced by human activities, the talk may be all bark and little bite, and I think the fear is more political than based on facts. My reasoning is that market forces are already changing the carbon emissions patterns of the United States economy. Trends in the costs of different forms of renewable energy, trends in how we use renewables together with fossil fuels, and changes in the types of fossil fuels that dominate the market reduce the depth of my concern.

Most renewable energy sources are intermittent. In order to absorb their production into the electricity grid, we need either the capacity to store the energy when it is produced to release it when it is needed, or we need some backup energy supply that can respond quickly to make up the difference when renewable energy sources are insufficient. When renewables and storage are cheaper than fossil fuels, market pressures will phase out fossil fuels, in spite of any government action (or lack thereof). Some fossil fuels are dirtier than others. Natural gas is on the whole cleaner than coal, even after accounting for leaked methane. Natural gas power plants can also respond far more rapidly than coal power plants to volatility in electricity generation rates from renewables. The cheap natural gas available now due to the fracking boom offsets the market for coal and makes assimilating renewable energy into the grid easier. In fact, some renewable energy firms have used natural gas to allow them to guarantee to grid managers a certain amount of energy production: They provide renewable energy when it is available, and they make up the difference when renewables are insufficient by using fast response natural gas power. Eventually when low cost storage becomes available, the need for electricity from natural gas will diminish.

I am not worried about a dramatic increase in coal production or oil drilling in the Trump presidency, even if he relaxes federal constraints on drilling on federal lands. For now, a glut of oil production has made the price of oil so low that there will be little incentive for oil companies to rapidly expand to new fields. In the meantime, continued investment in private sector battery research for electric cars may lead to the breakthroughs needed to solve the renewable energy storage problem. Thus I think that the best way for government to catalyze transition to a market driven by renewable energy is not to fight fossil fuels, but to invest in development of energy storage technologies. When renewable energy is truly cheaper, the big money will move that way.