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Saving Coal: Most Foolish Reason to Support Paris Agreement

A gaggle of coal-industry interests is aggressively lobbying the Trump administration to stay in the Paris Agreement, which they claim President Trump could modify to safeguard and even subsidize their industry. This post examines their rationales, but the big picture should be already be clear. No concessions negotiated by the President can secure the future of U.S. energy producers as well as exiting from an Agreement designed to bankrupt them.

President Trump campaigned on a platform to drain the swamp. Among other things, that meant reclaiming the people’s government from those who lobby for special tax breaks, subsidies, or preferential mandates, always in the name of some higher purpose, but usually to enrich narrow interests at the expense of consumers, taxpayers, or economic rivals.

From today’s Climatewire:

Some coal advocates argue that domestic policies to promote carbon capture, utilization and storage (CCUS) are crucial to the industry's survival in the 21st century—and supporting the global climate accord, they believe, may be the best route to ensuring such policies. . . .

“For us to have what we want, we have to take the long view,” said Wyoming Gov. Matt Mead (R). “The brightest future is continued use of coal, not only in the United States but in foreign markets,” he added. “And if country A and country B have strong feelings about climate change and how carbon dioxide affects that, we have to, in order to market coal, not only provide them with the coal, we need to provide them a solution that’s acceptable to them as relates to CO2.”

That explanation has two main problems. First, CCUS is “crucial” to the industry’s survival only if the Paris Agreement directs the evolution of global energy markets over the next several decades. U.S. withdrawal from the Paris Agreement is the best way to ensure the pact does not become a controlling legal authority for global energy development. Without the United States leading and bankrolling the Agreement, as President Obama planned, the wheels will likely fall off the bus. The last thing coal interests should want—if they care about their future rather than about next year’s subsidy—is to prop up a global, multi-decade, political framework designed to drive them into bankruptcy.

Second, if coal companies really believe CCUS is the future of their industry, they already have every incentive to develop and commercialize the technology. To date, however, the results have been dismal. Despite decades of private and public R&D, there is still no utility-scale CCUS plant operating anywhere in the world without ratepayer and taxpayer subsidies.

Consider the pride of the American CCUS fleet, Southern Company’s Kemper Project in Mississippi. Initially budgeted at $2.2 billion, Kemper is now almost three years behind schedule with a price tag exceeding $7 billion. Ratepayers are on the hook for most of the cost overruns. As the New York Times reported, some local businesses have had to lay off workers to pay for higher electric bills, and the University of Southern Mississippi “raised annual tuition $236 per student, partly to offset its additional $1 million in higher electrical costs.” Subsidizing uneconomic energy to the detriment of consumers and taxpayers is no way to drain the swamp.

Climatewire continues:

Trump pledged to withdraw from the Paris accord during the presidential campaign, but now some White House advisers argue that staying in would provide the United States with needed leverage on the international stage. White House advocates for staying with the deal have huddled with fossil fuel companies and have cast continued membership in Paris as an opportunity to press for more carbon capture and storage (CCS) funding internationally.

Incredible. Obama persuaded developing countries to make sympathetic noises about emission limitations in the distant future by promising upwards of a trillion dollars in climate aid during the next decade, with the United States leading the donor nations. Now, coal lobbyists argue with a straight face that with a little “art of the deal” from Trump, the Paris Agreement could make the U.S. coal sector a major recipient of climate aid. This is all the sillier because donor countries are already backing away from their Paris Agreement climate finance commitments.

Climatewire further reports:

Coal advocates who are embracing that move argue that Trump’s gutting of President Obama's industry regulations like the Clean Power Plan curbs on power sector emissions is not enough. Those rollbacks, they warn, are only a short-term reprieve from the demands of climate action.

That is exactly backwards. Yes, domestic rollbacks are not enough. But that’s why ending the domestic war on coal must be complemented by disengaging from a pact designed to confer treaty-like status on Obama’s anti-coal policies, and organize pressure at home and abroad to “keep it in the ground.”

Obama negotiated the Paris Agreement to shield the Clean Power Plan and other anti-coal regulations from political and legal challenge by redefining those policies as promises America made to the world. Moreover, the Agreement is engineered to be self-renewing and become more “ambitious” every five years, in perpetuity. One of Obama’s key objectives was to create an international regime under which U.S. coal could not recover regardless of future changes in the relative prices of coal and natural gas, and regardless of which party controlled the White House and Congress. The Paris Agreement’s not-so-subtle message to the coal industry: “Resistance is futile, you will be assimilated.”

So what Trump must do to turn the “short-term reprieve” into a durable future is pull the plug on an Agreement designed to prohibit America from pursuing pro-growth energy policies. Moreover, whatever concessions Trump might be able to negotiate for coal would likely last only as long as he is president. If America stays in the Paris Agreement, the next progressive in the White House can simply pick up where Obama left off.

Indeed, Trump should withdraw from Paris by withdrawing from the parent treaty, the UN Framework Convention on Climate Change (UNFCCC). That would get us out of the Paris pressure box within one year instead of four. Better still, withdrawing from the UNFCCC would require “two thirds of the Senators present” to approve the Paris Agreement before a future progressive president could rejoin it.

There is virtually no chance of that happening, which is why Obama pretended the Paris Agreement, despite being “the most ambitious climate change agreement in history,” is not a treaty. He knew that even when Democrats were the majority party in Congress, there was no chance the Senate would approve new international climate commitments.

Not special-interest carve outs but the U.S. Constitution is the coal industry’s best insurance policy in a hostile world. The coal industry’s most valuable contribution to this debate would be to help Trump explain to the American people that Obama’s “commitments” under the Paris Agreement—his negotiated promises to steer U.S. economic development and set U.S. domestic policy priorities for decades to come—are unconstitutional absent the Senate’s advice and consent.

A final snippet from Climatewire:

“Those concerns [about carbon dioxide emissions] aren't going to go away just because the Clean Power Plan gets rolled back,” said Richard Reavey, vice president for public affairs at Cloud Peak Energy Inc., in a recent interview with E&E News. “In fact, clearly, with no Clean Power Plan, those concerns are going to grow. It is a political and social reality that we have to deal with, and I think the way to do it is by creating that long-term regulatory framework.”

On the contrary, climate alarm is largely a product of political pressure campaigns, which the Paris Agreement is wired to institutionalize and amplify. The coal industry should do now what it did when opposing the Clean Power Plan—explain that the Plan would have no discernible impacts on climate change while imposing substantial costs on the economy.

The smart way to deal with the “political and social reality” that well-organized and well-funded interests want to bankrupt coal is not tinker with regulatory frameworks that are already the product of anti-coal ideology. The prudent course, rather, is to make the moral high ground argument that the Paris Agreement is either a costly exercise in futility or a cure worse than the alleged disease.

As Bjorn Lomborg shows, the Agreement will produce no detectable climate benefits over many decades, if ever, yet will divert trillions of dollars from productive investments that would do far more to advance global welfare. Worse, as Stephen Eule of the U.S. Chamber Institute for 21st Century Energy shows, the Agreement’s mid-century emission-reduction goals cannot be achieved without drastically reducing energy-poor countries’ current access to affordable energy from fossil fuels.