Why People Hate Energy Taxes (and why Politicians prefer Trading Schemes)

The French uproar happened because direct taxation of fuels was announced, and the wallet impact was obvious. USC professor Matthew Kahn is a leading microeconomist, meaning he studies behavior of buyers and sellers in market economies. His recent post on the French uprising is The Substitution and Income Effects Induced by Introducing Carbon Taxes. Excerpts in italics with my bolds.

The protests in France over raising gasoline taxes there highlights that middle class people understand that higher carbon taxes have income effects. If you drive 15,000 miles a year and if your vehicle achieves 30 miles per gallon and if the price of gasoline increases from $4 to $4.40 due to a 10% increase in the gas tax, then your disposable income declines each year by (15000/30)*.4 = $200.

Economists celebrate the substitution effects induced by the carbon tax — that people who drive will demand more fuel efficient vehicles and drive them less. On the supply side, the tax will nudge firms such as Tesla to engage in induced innovation to create even more fuel efficient vehicles.

Since voters are smart and do not want to be poorer (as their purchasing power declines due to the tax), economists have pondered how to offset the income effect through policies such as “tax and dividend” or by lowering income taxes and raising carbon taxes (see Gib Metcalf’s 2007 Hamilton Project paper).

A deep issue arises here. Who has the property rights to pollute? If the incumbent polluters have this right, then the designed policy must fully offset the negative income effect I sketched above. Recall that in the 1990 Clean Air Amendments that created the so2 sulfur dioxide market that utilities received free allotments of permits. This meant that they had the property right to pollute and this must have angered some environmental groups. But, the tight cap on total emissions and the incentive effect of being able to sell unused permits created an incentive for these polluters to reduce their emissions.

In my work with Jonathan Eyer, (see our 2017 paper) , we explore how states and local governments have tried to protect their coal interests in the face of increased federal government regulation and market conditions favoring using natural gas for generating electricity. On some level, this is a battle over property rights.

Do fossil fuel consumers and producers have the property rights to engage in this activity? If they do, then those who seek to mitigate the challenge of climate change must compensate them for their income loss associated with carbon pricing. Are progressives willing to identify themselves and pay for this property? If these polluters do not have this property right, then they will suffer an income loss from this new well intended policy and they will use their full arsenal of strategies (including protests) to oppose a change from the status quo.

Given that every American differs with respect to her current production/consumption of fossil fuels, how does a smart public finance economist design a carbon tax and refund policy that induces the substitution effect of carbon pricing without the income effect?

The political economy of climate change mitigation and adaptation has not been fully explored by academic environmental economists who in recent years have focused on creating computable general equilibrium IAM models (see Nordhaus) or on reduced form empirical studies examining the “cause and effect” relationship between climate effects and economic outcomes. Such reduced form “cause and effect” studies should play a key role in determining which voters support carbon taxes. For example, if my home will be flooded because of climate change then I have strong asset protection incentives to vote in favor of a carbon tax. The role of self interest (beyond ideology) in spurring support for carbon taxes should be explored more in new research.

What else do we know about the political support for carbon pricing? Riley Dunlap has been the leader in environmental sociology studying long run trends in support among republicans and democrats.
Michael Greenstone released an optimistic contingent valuation study a few years ago. I tend to be skeptical about such survey evidence. I wish that his survey is right. My results in my 2013 paper on the voting on the Waxman-Markey Carbon Tax bill in Congress and my 2015 paper on California’s voting on introducing carbon pricing tell a different story. High carbon area voters oppose such taxes. This dovetails with this blog post’s main theme.

Soren Anderson has new research on this subject; Here is his preliminary paper. Read the abstract and you will see that his paper’s findings are consistent with this blog post’s main themes and with my past research findings. In studying recent voting on Washington state’s proposed carbon tax he finds;

” Support (for carbon taxes) is weaker in precincts with larger shares of car commuters, bigger homes, and workers in carbon-intensive industries and stronger in precincts with larger shares of young people, racial and ethnic minorities, college educated adults, and voters that are ideologically aligned with the left’s broader policy agenda.”

This is the challenge that we environmental economists face as we try to implement incentives to combat climate change. Let the competition to design a proposal that induces substitution effects without negative income effects begin!

UPDATE; A fundamental question in microeconomics asks; “who is at the margin?” In the case of supporting carbon pricing a given person will support the policy if her expected present discounted value of benefits from the policy exceeds the expected present discounted value of the costs she will incur from the policy.

In an economy where people differ on many attributes such as location, asset ownership, industry, education — it is difficult to quantify these factors and include them in a voting regression. After all, we do not observe how individuals vote on election day; instead we rely on precinct level data and face the ecological regression fallacy.

This is a long winded way of saying that if the costs faced by suburbanites for voting in favor carbon taxes decline then more suburbanites will vote for carbon taxes and support Representatives who vote in favor of these policies. Our 2017 paper explored how the private choice of buying solar panels bundled with electric vehicles could flip some suburban voters toward supporting carbon pricing because the income effect they would face would shrink to zero.

My Comment:

French PM Macron wanted to virtue-signal his leadership regarding the Climate file. But France is powered mostly by emission-free nuclear electricity. So to up the emission reduction ante, Macron went after the transportation sector, i.e. taxes on gasoline and diesel. For everyone outside of the La métropole (Parisians enjoy public transit), this was effectively a tax on personal mobility. And as we are seeing, totally unacceptable in a modern society. Prof. Kahn explains how suburbanites and exurban folks recognize immediately how this policy diminishes them and their lifestyle.  As an environmental economist, Kahn does not question the claim that fossil fuels cause global warming, unfortunately.  So he and his colleagues face the task of convincing the public that raising carbon prices is in their personal interests.

It is why politicians like the EU and Gov. Brown (and Schwarzenegger before him) preferred carbon trading schemes. Such schemes are stealth pricing programs, since they force companies to pay more for energy, who then pass on the cost to consumers when they buy goods or services. But the government’s hand in your pocket is hidden, and the cost of living inflation is spread out by price increases on everything, not just fuel purchases. So the public grumbles about how expensive life is becoming, while the policymakers are shielded by skimming on top of all commercial transactions. And politicians still get money coming into “green funds”, which can be distributed to their friends and supporters in the form of grants and subsidies.

 

 

2018: Trump Winning, IPCC Losing

Trump vs IPCC
Don’t take it from me, this is the state of affairs according to IPCC insiders. This report comes from a carbon alarmist who is dismayed by recent developments in the battle against global warming.

The Paris Climate Agreement versus the Trump Effect: Countervailing Forces for Decarbonisation  by Joseph Curtin, Senior Fellow, Institute of International and European Affairs.  Excerpts below in italics with my bolds.

In this publication, IIEA Senior Fellow Joseph Curtin argues that the “Trump Effect” has created a powerful countervailing force acting against the momentum which the Paris Agreement on climate change hoped to generate.

At the heart of the Agreement is an “ambition mechanism”, under which Parties are required to make progressively more ambitious pledges to reduce emissions following global “stocktakes” every five years. This mechanism was designed to catalyse greater efforts over the coming decades, but the Trump Effect has applied a brake via three distinct channels:

  • US Federal rollbacks have increased the attractiveness of fossil fuel investments globally;
  • The US decision to withdraw from the Agreement has created moral and political cover for others to follow suit; and
  • Goodwill at international negotiations has been damaged.

Domestic regulatory rollbacks are increasing the cost of ambition

The widespread rollback of Federal regulations is reducing risk premiums associated with investing in dirty technologies. It is true that market fundamentals and sub-Federal initiatives will ameliorate some of the damage. However, at the very least years of stasis, litigation and uncertainty can be anticipated. We can already see an impact. Following Paris, there was a plunge in investment in the dirtiest fossil fuel investments (coal and tar sands) in 2016, but the Trump Effect reversed the trend in 2017, while investment in renewables has declined. Given the size of the US economy, slower deployment of green technologies flattens learning curves globally, making it harder for other Parties to take on more ambitious pledges in the future.

In the first case, withdrawal from the Paris Agreement, and the concurrent roll-back of domestic regulation, is slowing the rate of investment in green technologies at a time when rapid scaling up is required. According to the International Energy Agency (IEA), meeting agreed global targets will require an estimated $3.5 trillion in energy-sector investments each year until 2050, about double the current level of investment. US withdrawal has the potential to undermine the “ambition mechanism” over time.

The first steps have been taken to repeal the Clean Power Plan, and to freeze fuel efficiency standards for vehicles at 2020 levels, among many other environmental policy roll-backs. Some have argued that these reversals have not yet taken effect, and, in any case, that their impact will be marginal if they ever do, because many clean investments are underpinned by market fundamentals, such as cheap natural gas prices and the falling costs of renewable energy. This view is supported by others who have argued that the Trump Effect will be ameliorated by the sub-Federal responses amalgamated under the “We Are Still In” initiative. Former Mayor of New York, Michael Bloomberg, and the Governor of California, Jerry Brown, have even argued that these efforts would “put the country within striking distance of the 26% reduction in greenhouse gases, by 2025, that the United States promised to hit in Paris”. 

However, these noble efforts and associated pronouncements not only put the brightest possible spin on city, state and business initiatives, they also understate the impact of Federal reversals. At the very least,years of stasis, regulatory process and subsequent litigation await, creating considerable uncertainty and affecting the risk perceptions. This in turn feeds into the cost of capital—a central determinant of the pace of technology deployment in the marketplace.

By creating uncertainty, the Trump Effect has already changed the calculus facing investors. Following Paris, in 2016 there was a plunge in investment in dirty assets like coal and tar sands, reflecting their increasing risk profiles as investors sought to determine if political leaders were serious about their stated intentions. This is because fossil fuels investments face “stranding” risk in a carbon-constrained world, potentially inducing very significant financial losses, and this is particularly the case for the most emissions-intensive sources of energy. However, the Trump Effect has reduced the risk premium associated with these investments by creating the impression that the era of fossil fuels may not be drawing to a close, or at least not as rapidly as the Agreement in Paris had suggested. Analysis has found that a sharp flight from the dirtiest fossil fuels investments was reversed in 2017, and that American banks led a race back into unconventional energy. For example, JPMorgan Chase quadrupled its tar sands investments. In the coal sector, among 36 banks surveyed in the same study, investment increased by 6% in 2017 after a 38% drop in 2016. The other side of the same coin is that, according to the IEA, investment in renewables declined by 7% in 2017. Its Executive Director, Dr Fatih Birol, ascribed this to the uncertainties created by politics.

In the long-run, the Trump Effect may not fundamentally challenge the underlying logic or the economic case for decarbonisation, but in the short-run its impact is already evident. Given the size of the US economy, slower deployment of green technologies not only affects the pace of decarbonisation in the US, but it also somewhat flattens “learning curves” for green technology globally. This in turn could damage the “ambition mechanism” of the Paris Agreement, although the importance and magnitude of these impacts remains speculative.

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US withdrawal creates political and moral cover for further defections

While major players including the EU, India and China remain committed to the Paris Agreement, and are on track to achieve their pledges, the Trump Effect has emboldened others to shirk their commitments. The Russian Federation and Turkey have abandoned plans to ratify, while Australia abandoned measures to comply with the Agreement, all citing President Trump. Most significantly, the newly elected President of Brazil, Jair Bolsonaro, has promised to withdraw from the Paris Agreement, following in footsteps of President Trump.

Social psychologists like Jonathan Haidt have suggested that evolutionary dynamics hardwire a sense of fairness and reciprocity into the human psyche.  Research has uncovered a tendency for parties to step away from negotiations when commonly held principles of fairness are perceived to have been transgressed,  and this applies even for beneficial deals.  Needless to add, the moral authority of the US to punish defection from the Paris consensus has also been sacrificed. Withdrawal therefore creates political space for other wealthy countries to follow suit—if the wealthiest and most powerful of all is not playing ball, they may well ask, then why should they?

The Trump Effect therefore leaves a moral vacuum at the heart of the Agreement, which makes building new global norms around decarbonisation more challenging. . . It has been reported by several media (not least the New York Times and Washington Post) that most national governments are falling far short on promises to curb GHGs, creating the impression of an Agreement in crisis.

COP Where's my money

Goodwill at international negotiations is being damaged

At ongoing international climate negotiations, the Trump Effect is slowing progress. The Trump Administration has reneged on a pledge to the Green Climate Fund, leaving an outstanding liability of $2 billion, and has opposed stringent rules for reporting on efforts to scale up financial commitments from rich countries. These decisions have aggravated distrust between developed and developing countries, which is a necessary ingredient for progress. Meanwhile, the EU, China and India, which have room to take on more ambitious commitments in 2020, are unlikely to play their cards in the absence of a similar commitment from the US. In this manner, the Trump Effect could grind the Paris “ambition mechanism” to a halt.

Following withdrawal, US officials have continued to attend, and have even played a constructive role at times. Negotiations have moved on to considering the rulebook to monitor pledge implementation. Key differences remain over the accounting rules to be used; the information to be included; and the extent to which the same rules should be universally applied. China and other emerging economies proposed that some elements of these updates should only be compulsory for developed countries. The Umbrella Group (led by the US, and supported by the EU) opposes any differentiation, and the US delegation remains resolutely opposed to providing funding for “loss and damage” associated with climate impacts. But these positions are holdovers from the Obama Administration.

However, when it comes to climate finance there has been a Trump Effect. Pledges of hard grant-aid have always lubricated the wheels of international agreements between wealthy and poorer countries. While the Obama Administration promised $3 billion to the Green Climate Fund, which was established in 2009 as a conduit for funds, the Trump Administration has reversed this decision, leaving an outstanding liability of $2 billion.

Controversy has surrounded the workings of the Green Climate Fund, and while the funding gap created by the Trump administration has been a key problem, it has faced other unrelated governance and administrative challenges. . . Developed countries, including the US, are opposed to reporting on climate finance as part of their pledge updates. They oppose stringent rules and want more private capital to meet their commitments, whereas developing countries are calling for more grant-aid. Observers to negotiations are concerned that the Trump administration’s uncompromising position on finance may be influencing other developed countries, which in turn may be feeding into a broader divide and sour negotiations.

At the time of writing, it is unclear if this process will yield any increases in pledge ambition in 2020. In previous cases “horse-trading” of increased ambition took place. For example, the US and China jointly agreed their pledges and prior to that the EU promised to increase its ambition (for 2020) if similar pledges were forthcoming from other parties. The EU Commissioner for Climate Action, Miguel Arias Cañete, has indicated a willingness to increasing the EU’s Paris pledge to a 45% GHGs cut by 2030,51 although Germany and Poland are opposed to any increased ambition on competitiveness grounds. There also appears to be technical scope for India and China to increase pledges based, but in both cases there would also be domestic opposition to pledge increases to be overcome. We therefore see these Parties as unlikely to play their cards in the absence of a similar move from the US. On this basis, it is unlikely that more ambitious pledges will be forthcoming before the end of 2020.

Conclusion

In this analysis, we uncover considerable evidence of a distinct Trump Effect, which is counteracting the momentum created by the Paris Agreement. The US economy is large enough to affect global technology learning curves, and the uncertainty created by the withdrawal has already altered the risk profiles associated with green versus fossil fuel technologies. Furthermore, withdrawal appears to violate commonly held perceptions of fairness, and there are reduced reputational, political and economic risks for turning one’s back on the Agreement, as already evidenced by the decisions of Turkey and Australia; and the EU, China and India are perhaps less likely to play their hands and increase ambition before the end of 2020, given the posture of the US. Finally, there has been a Trump Effect at international negotiations, particularly in the area of climate finance, which has diminished goodwill between developing and developed country Parties – an intangible commodity, but nonetheless a vital ingredient for progress.

“The Paris Accord is not dead, it is just resting.”

And there is more evidence that the Paris Accord is a dead parrot.  Lawrence Solomon of Energy Probe writes in the Financial Post: Paris is dead. The global warming deniers have won. Excerpts below with my bolds.

As Solomon sees it, events are unfolding in a way that proves Trump’s wisdom in withdrawing the US from the failing Paris Accord.

Huge Expansion of Coal-fired Power Plants

The Global Coal Plant Tracker portal confirmed that coal is on a tear, with 1600 plants planned or under construction in 62 countries. The champion of this coal-building binge is China, which boasts 11 of the world’s 20 largest coal-plant developers, and which is building 700 of the 1600 new plants, many in foreign countries, including high-population countries such as Egypt and Pakistan that until now have burned little or no coal.

China builds UHV projects across regions allowing coal-fired power stations to be built near coal reserves, away from population centers

All told, the plants underway represent a phenomenal 43 per cent increase in coal-fired power capacity, making Trump’s case that China and other Third World countries are eating the West’s lunch, using climate change as a club to kneecap us with expensive power while enriching themselves.

Sagging Investment in Renewables

As reported by Bloomberg New Energy Finance, renewables investment fell in 2016 by 18 per cent over the peak year of 2015, and nine per cent over 2014. In the first two quarters of 2017, the trend continued downward, with double-digit year-over-year declines in each of the first two quarters. Even that paints a falsely rosy picture, since the numbers were propped up by vanity projects, such as the showy solar plants built in Abu Dhabi and Dubai. In the U.K., renewable investment declined by 90 per cent.

None of the Bloomberg data represents hard economic data, however, since virtually all renewables facilities are built with funny money — government subsidies of various kinds. As those subsidies come off, a process that has begun, new investment will approach zero per cent, and the renewables industry will collapse. Even with Obama-sized subsidies, the clean-energy industry has seen massive bankruptcies, the largest among them in recent months being Europe’s largest solar panel producer, SolarWorld, in May, and America’s Suniva, in April.

Renewables are Environmental Hazards

As reported in July in Daily Caller, solar panels create 300 times more toxic waste per kilowatt-hour than nuclear reactors — they are laden with lead, chromium, cadmium and other heavy metals damned by environmentalists; employ hazardous materials such as sulfuric acid and phosphine gas in their manufacture; and emit nitrogen trifluoride, a powerful greenhouse gas that is 17,200 times more potent than CO2 as a greenhouse gas over a 100-year time period.

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Climate Doom and Gloom Predictions Prove Unreliable

One recent admission comes from Oxford’s Myles Allen, an author of a recent study in Nature Geoscience: “We haven’t seen that rapid acceleration in warming after 2000 that we see in the models,” he stated, saying that erroneous models produced results that “were on the hot side,” leading to forecasts of warming and inundations of Pacific islands that aren’t happening. Other eye-openers came in the discovery that the Pacific Ocean is cooling, the Arctic ice is expanding, the polar bears are thriving and temperatures did indeed stop climbing over 15 years.

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Public Opinion Manipulated by Fake Evidence

As the Daily Caller and the Wall Street Journal both reported in April, Obama administration officials are admitting they faked scientific evidence to manipulate public opinion. “What you saw coming out of the press releases about climate data, climate analysis, was, I’d say, misleading, sometimes just wrong,” former Energy Department Undersecretary Steven Koonin told the Journal, in explaining how spin was used, for example, to mislead the public into thinking hurricanes have become more frequent.

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The evidence against Paris continues to mount. Paris remains dead.  

Brazil’s Brave Eco-Realism

Ricardo de Aquino Salles, former São Paulo’s Secretary of Environment, has been appointed by Jair Bolsonaro to head the Ministry of Environment Divulgação

Climate Change Is a Secondary Issue, Says Future Minister Of Environment is published at Folha de S.Paulo, December 8 2018. Excerpts in italics with my bolds.

Ricardo Salles says that until now, Brazilian environment policy decisions have been based on “guesswork”

Appointed on Sunday (9th) by president-elect Jair Bolsonaro (PSL), the future Minister of Environment Ricardo Salles classifies the debate around climate change as “pointless” at the moment.

Salles, a lawyer, told Folha that his goal is to “develop Brazil. We will preserve the environment with no ideology and in a very reasonable matter.”

“We will respect all those who work and bring Brazil forth, not only in farming but also in all industries, including infrastructure,” he said.

The future minister also said that there are practical issues to be addressed at the beginning of the administration, such as the preservation of soil and water, and recovering areas affected by deforestation. However, he declined to talk about climate change. “Right now this debate is pointless.”

Salles ran for House Representative for right-wing party Partido Novo in the 2018 elections but didn’t gain a seat. He is one of the founders of the conservative movement “Endireita Brasil” (Straighten Up, Brazil). When asked about how his relationship with environmentalists, Salles said: “Everyone will be respected and heard.”

Bolsonaro’s ideas for the Ministry of the Environment have been the target of controversy even before the election. During the campaign, he promised to merge the department with the Ministry of Agriculture but eventually backed out of the idea after pressure from environmentalists and ruralists.

Salles appointment comes in the wake of negative repercussions generated by the Brazilian government’s withdrawal from hosting the UN Climate Conference COP25 in 2019. Although the Ministry of Foreign Affairs has declared that the reason was lack of budget, Folha reported that those issues had already been resolved.

Footnote from Climate Home:

Salles served as secretary of environment in Sao Paulo state government, when centrist Geraldo Alckmin was governor and had ample support from Brazilian industry and agriculture groups to become minister. He leads a business-friendly organisation in Brazil called Movimento Endireita Brasil, that backs less bureaucracy and lower taxes.

The ministry of environment oversees hundreds of protected areas, which encompass almost 10% of Brazil’s territory. Most of them are in the Amazon. It also controls Ibama, an environmental agency which acts as a police force and is also in charge of the licensing process for oil wells, federal highways and hydroelectric plants.

Asked if Bolsonaro’s government would abandon the Paris Agreement, Salles said: “Let’s examine carefully the most sensitive points and, once the analysis is over [we will make the decision], remembering that national sovereignty over territory is non-negotiable”.

Salles ministry does not directly oversee Brazil’s participation in the Paris Agreement, but it works closely with the foreign office on the issue.

The appointed minister Salles said defending the environment was of “unquestionable value”. But said protections must comply with the rule of law and due legal process, echoing Bolsonaro’s view that the ministry of environment is controlled by a “militant ideology” that persecutes agribusiness.

Postscript:

This reminds of the uproar after Scott Pruitt was appointed to lead the US EPA.  In his hearings he rejected the false dichotomy:  If you are for the environment, you are against development; and if you are for development, you are against the environment.  Eventually Pruitt was forced out, partly due to his own missteps, but mostly due to his ideological enemies.  Let’s see how Salles fares against the same unbending opposition.

 

Fighting Carbon Taxes

 

Memo To Congress: French Riots Show Why U.S. Carbon Tax Should Be A Non-Starter
is an Editorial at Investor’s Business Daily Excerpts in italics with my bolds.

French Riots: They call themselves the “Gilets Jaunes,” or yellow vests, in French. They’re mostly young, male and extremely angry, and they’ve been marching in the streets and rioting in Paris and elsewhere, protesting yet another bunch of taxes on gasoline in the government’s never-ending battle against global warming. Who says no one cares about climate change?

If you think of the French as people who will suffer any indignity in the name of more government, think again. Many young French, watching their standards of living decline under a socialist president’s high taxes, are fed up. This latest round of taxes on already outrageous fuel prices was the proverbial straw breaking a dromedary’s back.

“A protest against rising taxes and the high cost of living turned into a riot in the French capital, as activists wearing yellow jackets torched cars, smashed windows, looted stores and tagged the Arc de Triomphe with multi-colored graffiti,” the AP reported of Saturday’s riots.

Some 263 people were injured, including dozens of police, and the government made hundreds of arrests, after an estimated 36,000 people took to the streets on Saturday. Even unions are upset, seeing possible damage to the economy from the demonstrations. They’ve asked the socialist regime to reverse course.

No such luck.

French Riots: A Tax Revolt

Socialist President Emannuel Macron was booed when he showed up to quell the demonstrations. His spokesman, meanwhile, threatened that “all options” are on the table to stop the French riots.

Macron’s prime minister Edouard Philippe even canceled his trip to a global warming conference in Poland. That’s something, given that France’s leaders constantly claim global warming is humankind’s most serious threat. Apparently, French riots rank higher.

No, we’re not happy people are rioting. But governments must understand they can’t just jam things down people’s throats, and expect them to like it. No one asked Macron to raise energy taxes. Macron and his government did it because, to them, globalism is more important than satisfying the demands of their own citizens. It’s that simple.

Today, among all OECD nations, France has the second-highest rates of taxation. Only Denmark ranks higher. So people are fed up.

Nor is it just a “French thing.” Macron is among a growing number of European leftist leaders who want to foist the anti-climate change agenda on their citizens as part of this new globalism. But this isn’t kumbaya, feel-good globalism; it’s one that will feature few if any individual rights, lots of taxes, shrinking standards of living, no real freedom, and little joy.

EU Über Alles

Across the border in Germany, soon-to-be-former German Chancellor Angela Merkel recently said that, on behalf of climate change and migration, “Countries must give up their sovereignty … in an orderly fashion of course.”  “Orderly,” by the way, is a German euphemism for “by force, if needed.”

For those who don’t know, Macron and Merkel are the two strongest leaders in the EU. Their goal, stated outright, is to use the threat of global warming and unbridled migration to wrest control of their nations from their own people — whom they demonize as “populists” — and give it instead to the European Union.  The EU’s record of economic incompetence, absurd regulation, excessive taxation, preening corruption and, increasingly, totalitarian behavior, are troubling to say the least.

Not everyone’s buying in to this mandatory globalism. Both Switzerland and Italy have announced they’ll not attend an EU meeting next month to adopt the U.N.’s new legal guidelines on migration. One big reason: The U.N. has now declared criticism of its pro-immigration policies “hate speech.” Yes, that’s how far we’ve come.

Carbon Tax, Coming Our Way.  Should we care?

Yes, because leftists here have the same things in mind for all of us. The scientific holes in the climate change religion are enormous. Literally thousands of engineers, scientists, academics and Nobel Prize winners have criticized the flawed science behind the theory that we inevitably face disastrous over-heating of the planet.

Yet, some in Congress — including some Republicans — are eager to saddle Americans with a massive new “carbon tax.” It’s the modern equivalent of the medieval church granting indulgences for sins. For a fee, of course. Pay us, and your sins will be remitted.

The idea is that Americans will accept a high tax on energy if it’s “rebated” on an equal basis to everyone. That way, we get less global warming gas emitted into our atmosphere, while reducing the scourge of unequal income. Win-win!

Except, as we’ve noted repeatedly in the past, that’s not how it works.

“The superficial purpose, of course, is to make carbon-based fossil fuels more expensive to use,” we wrote back in April. “But fossil fuels are a blessing, not a curse. They are in large part responsible for the record growth in the global economy in the past two centuries and especially over the last 18 years, helping to pull literally hundreds of millions of once-destitute people out of poverty.

We wouldn’t change a word of that. And the idea of “rebates” is absurd. The U.S. would always be one election away from “rebates” turning into just another tax-grab by Congress for badly needed “climate remediation” or some other hokey purpose. Meanwhile, businesses affected by carbon taxes would hire fewer workers and invest less. It’s a recipe for French-style stagnation.

Climate Change, Climate Yawn

Our just-released IBD/TIPP Poll shows what Americans think about all this. Just 17% ranked climate change as No. 1 or No. 2 on their list of priorities for the new Congress. Even so, some in Congress seek literally trillions of dollars in new taxes that will distort energy markets and hand rebates to those who don’t even pay the taxes.

If no one likes the idea, why would Congress push it so hard? It’s called “redistribution,” and it’s yet another socialist idea that will make people miserable. Ask France.

The U.S. shouldn’t travel down France’s road. Americans aren’t stupid. They won’t accept a massive new tax to prevent a threat they don’t really believe in. We wonder: What will our Congress do if faced with mass demonstrations?

Like many politicians, Macron suffers from impaired vision, and perhaps brain rot from disinformation.  Corrections are needed and are available to the willing.  See Impaired Climate Vision

Another Canadian Province Turning Right

Michael MacDonald of The Canadian Press provides the story following the current Liberal New Brunswick government losing a confidence motion in parliament. New Brunswick’s next premier is a fiscal hawk and former Irving Oil executive  Excerpts in italics with my bolds.

The man poised to become New Brunswick’s next premier has a well-earned reputation as a tight-fisted fiscal manager whose resume includes 33 years as a senior executive working for one of Canada’s richest families: the Irving clan.

Progressive Conservative Leader Blaine Higgs, a 64-year-old engineer and former finance minister, was hired by Irving Oil a week after he graduated from the University of New Brunswick. He was eventually promoted to director of distribution, overseeing oil transportation across eastern Canada and New England.

His extensive big business experience has informed his approach to politics. Higgs refers to citizens as customers, and his campaign for the Sept. 24 election was replete with references to getting results.

“I came from a company where you had to deliver results in order to survive,” Higgs said when he released the Progressive Conservative platform.

“(New Brunswickers) are paying the bills but they’re not getting the service to reflect the amount of money being spent.”

Higgs had promised to cut government waste and balance the province’s budget in two years — a year earlier than his outgoing rival, Liberal Premier Brian Gallant.

And like other right-of-centre politicians, he also promised not to raise taxes, while offering a modest spending plan.

On the national stage, Higgs isn’t expected to ruffle too many feathers. Unlike Ontario Premier Doug Ford, Higgs is no populist.

“His message isn’t that different from previous premiers,” said J.P. Lewis, a political scientist at the University of New Brunswick in Saint John. “He’s more like a traditional Progressive Conservative. He’s like a Harper-era cabinet minister.”

Still, Higgs and Prime Minister Justin Trudeau are expected to clash over how to deal with climate change.

Higgs has said he will join with his counterparts in Ontario and Saskatchewan in rejecting Ottawa’s bid to get the provinces to impose a carbon tax on their citizens.

Last month, Manitoba Premier Brian Pallister said his province would also scrap plans for a carbon tax. As well, Jason Kenney, leader of Alberta’s Opposition, has promised to repeal the province’s carbon tax if his party wins the 2019 spring election.

“Based on (Higgs’) rhetoric, he could become another thorn in the side of Trudeau, especially when it comes to natural resources,” Lewis said.

Higgs also faces a daunting task in turning around the province’s economy, which some economists have said is headed for a “fiscal cliff.” Carrying a $14 billion debt, it could be pushed over the edge if there’s a sharp rise in interest rates or a credit-rating downgrade.

The province has the nation’s lowest median household income, and was the only province that recorded a population decline between 2011 and 2016. As well, its tax base is shrinking and the province has suffered through consecutive deficit budgets.

Economic growth — forecasted by the Conference Board to be about 1.3 per cent this year — is expected to remain sluggish as the province struggles to increase its population.

“We can fix this,” Higgs said before the election campaign. “We have to be straight with each other and talk about real issues, not pretend all is well.”

canada-survey-mostly-human

Results from survey The distribution of climate change public opinion in Canada
Mildenberger et al. 2015

Background at Uncensored: Canadians View Global Warming

Five States to Vote on Futile Climate Proposals

 

Investor’s Business Daily has published this editorial Midterm Elections: 5 States Could Wreck Their Economies In Futile Fight Against ‘Climate Change’  Excerpts in italics with my bolds and titles.

Election 2018: Next week, voters in five states will decide whether they want to raise their own taxes, kill jobs and lower their standards of living. All in a fanciful effort to stop “global warming.” They’d be better off letting the free market do the work.

Washington, Arizona, Nevada and Colorado all have global-warming ballot initiatives, each heavily financed by environmental activists. New Mexico voters will decide whether to elect a powerful land commissioner who promises stiff curbs on emissions.

None of these will make any difference in the global climate. But they will cost their residents dearly.

How Much do We Love the Climate? Let us count the ways.

How about a carbon tax on everything?

In Washington, voters will decide whether to be the first state to impose a carbon tax. Initiative 1631 would slap a $15 tax on each ton of CO2 emissions starting in 2020. That would climb by $2 every year after that.

This tax will hit everything, from gasoline prices (up by as much as 59 cents a gallon) to electricity bills to everyday household goods. That translates into hundreds of dollars a year for a typical household right out of the gate, with costs climbing to nearly $1,000 a year by 2035.

An analysis by the National Economic Research Associates also found that the tax would cut the state’s growth by 0.4% in the first two years.

Even more absurd than the tax hit, however, is the fact that the initiative includes numerous exemptions — such as on aluminum production and fuel bought by government.

Talk about pointless. The U.N. says that the entire world would have to slap carbon taxes of up to $5,500 per ton to avoid a supposed climate-change catastrophe. Washington state’s action will only hurt Washington residents.

In other words, Washington’s tax amounts to nothing more than very expensive virtue-signaling.

How about imposing Costly Renewable Mandates?

Voters in both Arizona and Nevada, meanwhile, will decide whether to boost their mandates on renewable energy. Both initiatives would force utilities to get half of their electricity from renewables like wind and solar by 2030 — less than 12 years from now.

As Stephen Moore explained in these pages recently, these renewable mandates are a punitive tax on the poor and middle class. Why? Because these mandates raise the cost of energy.

Moore notes that a Manhattan Institute study found that eight of the 10 states with the highest electric bills had renewable-energy mandates. “We are talking about hundreds and sometimes thousands of dollars of higher costs every year to homeowners,” he says.

And because energy costs represent a bigger share of the budgets of lower-income families, these hikes end up being regressive taxes. The impact on global warming? Less than negligible.

How about putting severe Limits On Fracking?

Over in Colorado, voters will have the chance to severely limit the ability of oil and gas companies to extract energy in the state using the state-of-the-art drilling technology known as fracking.

Initiative 97 would ban oil and gas wells within 2,500 feet of homes, businesses and protected lands. That would effectively ban drilling in about 85% of the state.

This is a particularly ludicrous effort since fracking is responsible for a significant decrease in CO2 emissions over the past decade.

The fracking revolution opened vast supplies of natural gas to drillers, which sharply lowered natural gas prices. That, in turn, made natural gas (which emits less CO2) more competitive than coal (which emits more). As utilities switched, CO2 emissions dropped.

Banning or limiting fracking will make such gains more difficult.

How about Cutting Methane Emissions?

Meanwhile, New Mexico voters will be picking the next powerful public lands commissioner. As the New York Times notes, “at stake is a job with the authority to regulate the emissions of methane.”

The Democrat running for this job, Stephanie Garcia Richard, has promised to cut down on methane emissions. Since the state owns nine million acres of land, a crackdown on methane leaks from oil and gas operations there has the potential to severely hamper the industry, along with the well-paying jobs that go with it.

But methane emissions in the state have been dropping on their own. That’s thanks to industry-driven advances in the technology. In 2017 alone, emissions dropped by more than 50%.

Forcing still deeper cuts in methane emissions will likely cost the industry — and the state’s economy — plenty, but will do nothing to change the global climate.

Give Elsie a break on this methane madness.

How about continuing with market-driven efficiencies? (In other words, “No” to the above.)

Voters in these states should know that while they’re deciding whether to impose these costs on themselves, the free market has been making huge inroads in cutting CO2 emissions, without any carbon taxes, mandates or Paris climate accords.

The Energy Information Administration reports that CO2 emissions from electric utilities has dropped so much in recent years that they’re now lower than they’ve been in more than 30 years.

EIA data show that the decline is due not only to fracking. It also the result of increased economic efficiency.

This increased efficiency, mind you, has little or nothing to do with federal regulations or mandates. It is the result of the relentless pressure a competitive free market puts on companies to wring out every ounce of waste and inefficiency.

Next week, voters in these five states will have a unique opportunity to send a loud message to the rest of the country. Namely, that they aren’t buying the global-warming hysteria.

We can only hope they do so.

Wavering Public Belief in Global Warming

Canadian Prime Minister Justin Trudeau is announcing his national carbon tax even while the Canadian public is having second and third thoughts about global warming and human causation. An Angus Reid poll this summer shows how belief in the need for such a policy is wavering. The report is Carbon conflict: two-thirds of Canadians say provinces should have the final say on pricing

Before getting into the federal/provincial tug of war, let’s consider the basic belief. Angus Reid has been asking Canadians the same question since 2009, with these responses.

Open image in new tab to enlarge.

Note in 2009 63% believed that “global warming is a fact and mostly caused by humans”. That dropped down to 52%, then came back to 62% in 2014 when the Obama administration was beating the climate change drum for all it was worth. In Canada Trudeau’s Liberal party led in the polls on the way to winning power in October 2015.

Now let’s consider the polling in July of 2018.
Belief in man-made global warming is back down to 56% in the context of Trump’s skepticism and the Paris Accord proving ineffectual. This first 2018 chart includes regional and age distributions showing that younger people (<35 yrs old) are much more often believers, becoming more skeptical (50/50) with age. Ironically, that young cohort has not witnessed any actual warming in their adult lives.

The three largest cities in Canada are Vancouver, Toronto and Montreal.  Not surprisingly, belief is strongest in the provinces of B.C., Ontario and Quebec, along with Atlantic region. The prairie provinces are definitely not on side.
Another table shows that income level is not a driver, except for the more wealthy being somewhat surer of their opinions. However, global warming belief is strongly associated with university education, and with voting for left-wing parties (in Canada Liberal and NDP). It seems the educational system is aligned with left wing views on many things, including the climate.

Angus Reid asked the same questions of Canadian, British and American citizens in 2010, with these results in the context of Obama mania and the Copenhagen COP drama.
In 2010 the majority of Americans and Brits were not global warming believers, compared to Canadians.  Note that Americans and Brits are more likely to say global warming is either natural or an unproven theory. More recent polls in those two countries continue to show the same pattern.

Political Implications

As the article title suggested, the landscape is not favorable for the Liberal’s tax plan.  For example
Moreover, both Ontario and Quebec have recently elected business-oriented provincial premiers, with Alberta likely to follow suit in the next election on or before May 31, 2019.  That may explain this result. Angus Reid observed that those who want no tax at all opted for provincial jurisdiction.

Putting Down Climate Virtue Signaling

This exchange occurred yesterday in the debate between Arizona Senatorial candidates:

Democrat Kyrsten Sinema: “I do believe that climate change is real.”

Republican Martha McSally: “I can’t believe this is the last question.”

MARIA POLLETTA: Congresswoman Sinema, this comes from one of our readers, viewers. With climate change, number one: Do you believe it is a manmade problem, caused by humans? Number two: What are your plans in terms of combating climate change, particularly with regard to water and possible water shortages?

KYRSTEN SINEMA: Why, I do believe that climate change is real. And I think it doesn’t make a lot of sense for us to spend time debating how we got to the place that we are today. What does make sense is for individuals who have the ability to make a difference moving forward to work together to make that difference. And here in Arizona, water is of grave concern to our state. As a United States senator, I’ll hope to work with Sen. Jon Kyl, who’s been a leader on the issue of water during his time in the United States Senate. It’s our duty to not only preserve our own water supply for the next 100 years, but to partner with states in the region — Colorado, New Mexico, Nevada, and California — to ensure that we have a regional strategy to move forward and protect our state in future years. It’s working together — Republicans and Democrats from these states across the region — that’s how we’ll find the solution to these challenges.

But I firmly believe that as Arizonans, as Americans, we have the resources, we have the tools, we have the skills, and we have the knowledge. We can address issues of climate change together, and do so without harming our business prospects and without harming what makes Arizona so amazing. You know, folks know this about me, but I’m an outdoor enthusiast. So, every morning, I get up and I go outside to either run, hike, bike, swim, every day. And I want to make sure that we can protect that beauty, why we all love Arizona so much, for our future generations.

MARTHA McSALLY (R): Ted and Maria, I can’t believe this is the last question. I mean, we do have to address the issues of climate, and water is so important for Arizona; it’s our lifeline. But I worked for Sen. Jon Kyl when I was a legislative fellow as a major, and it’s so important that we follow his lead — and he is my mentor — to be able to move forward to address these really important issues. But we have to talk about the military. We have to talk about our veterans.

TED SIMONS (MODERATOR): Quickly, please.

McSALLY: We haven’t had any opportunity.

SIMONS: You have it right now.

McSALLY: That’s what brought me to Arizona, like 500,000 of our veterans, for our national security treasures that are here. I fought for to make sure that the A-10 was preserved, that we fight for Luke Air Force Base. My opponent advocated to shut down Luke Air Force Base. While we were in harm’s way, she was protesting our troops in a pink tutu. And I’ll tell you what, if these are not disqualifying enough, Kyrsten, what came out last week, CNN reported that in 2003, when she was on the radio, you said it was OK for Americans to join the Taliban to fight against us. You said you had no problem with that. Kyrsten, I want to ask right now whether you’re going to apologize to the veterans and me for saying it’s OK to commit treason, Kyrsten?

Ontario has to Launder $1B in cap-and-trade money

CBC has the story: Ford government sitting on $1B in cap-and-trade money
Excerpts in italics with my bolds.

Environmental commissioner says by law it can only be spent on reducing greenhouse gases

Context: No one is talking about the reason Ford canceled cap and trade the first day on the job. It was to eliminate the 4.3 cents/liter gasoline tax. At the same time, spending on schemes to “fight climate change” was stopped.  By skimming a few cents off every liter sold, pretty soon you have billions of dollars in the pot. The law ending cap and trade did not reimburse gasoline retailers who had bought carbon allowances in the past, because they already passed on the cost to customers. Those who bought in advance to avoid higher carbon prices later are now caught and want the government to reimburse them, since they lost the opportunity to stick it to their customers. What a great idea is cap and trade: A market to sell a non-good at arbitrary prices paid by other people’s money. What could go wrong?

As much as $1 billion in Ontario’s cap-and-trade fund is sitting unspent, and questions are swirling about what Premier Doug Ford’s government will do with it.

The money was brought into provincial coffers under a law that says it can only be spent on measures that reduce greenhouse gas emissions. However, Ford has dismissed the money as a “slush fund,” and his government is pushing forward legislation to use some of it to cover the costs of cancelling the cap-and-trade program.

The dedicated fund for reducing greenhouse gases had a balance of $553 million at the end of March, when the last fiscal year ended, according to the province’s newly released public accounts. Another $476 million was added in May from the final cap-and-trade auction of carbon allowances, before Ford’s PCs won the election and quickly scrapped the Liberals’ climate-change plan.

That would put the account at more than $1 billion. What remains unclear is how much of that has been spent in the past six months, and how much will be used to wind up cap-and-trade.

CBC News asked the Environment Ministry for the current balance of the greenhouse gas fund, but officials did not provide an answer.

Ontario’s environmental commissioner Dianne Saxe believes there’s still $1 billion in the account because she has seen no evidence that money has been dispersed since the end of March.

Saxe — an independent officer of the Legislature like the auditor general and ombudsman — says the costs of winding up cap-and-trade ought to be small enough that the bulk of the $1 billion will remain.

“They will have quite a bit of money left,” said Saxe in an interview. “That can be money they can use to invest in [climate-change] solutions.”

She is warning the government that it cannot spend the money however it wishes, but only on initiatives to reduce carbon emissions. “That was the legal basis on which the money was collected, and that remains the law,” she said.

Liberal MPP Nathalie Des Rosiers said Monday she fears the government will not spend the money on cutting greenhouse gases but on lawsuits arising from cancelling cap-and-trade.

That fear is unfounded, said Environment Minister Rod Phillips.

“The money will be used for the purpose it was collected,” said Phillips in an interview Monday at Queen’s Park.

He declined to estimate how much of the $1 billion will remain in the fund once the cap-and-trade program is wound up. Nor did he agree that the figure will be in the hundreds of millions of dollars.

“I don’t think it would be fair to speculate at this point,” said Phillips. “We will make it clear how much money was spent and where it was spent.”

Ford made cancelling the cap-and-trade program a central election promise, calling it the “cap-and-trade carbon tax” during and after the campaign. Within days of taking power, his government shut down rebates to homeowners for making energy efficiency improvements, such as installing new windows, and ended rebates for buying electric cars. Those rebates came from the greenhouse gas reduction fund.

The government won’t be able to say how much remains in the greenhouse gas fund until all the programs wind up, said Phillips. He also said the government is allocating $5 million to compensate companies that bought cap-and-trade allowances, which are now worthless.

Phillips is promising a plan to tackle climate change this fall, including an “emissions-reductions fund” but says it will not come from a carbon-tax model.

The province is challenging Ottawa in court over the Trudeau government’s plan to impose a carbon tax on Ontario in the absence of a provincial carbon-pricing program.

Meanwhile, environmental groups led by Greenpeace are suing the province over cancelling cap-and-trade, alleging that the Ford government broke the law by failing to consult Ontarians on the move.

Breaking the Climate Spell

 

Rupert Darwall is one of the more knowledgeable people concerning how the world came under the spell of global warming/climate change. This post features his recent article regarding how the worldwide delusion may be losing its power. Breaking the Climate Spell. appeared today in the Weekly Standard.  Excerpts below in italics with my bolds.

Getting out of the Paris Agreement was just the first step on the road to a realist global energy policyThirteen years ago, a Republican president who had pulled the United States out of an onerous climate treaty faced isolation at the annual gathering of Western leaders. “Tony Blair is contemplating an unprecedented rift with the U.S. over climate change at the G8 summit next week, which will lead to a final communiqué agreed by seven countries with President George Bush left out on a limb,” the Guardian reported of the meeting at Glen­eagles, Scotland. France and Germany preferred an unprecedented split communiqué to a weak one, the article said.

George W. Bush, who had pulled the country out of the Kyoto Protocol in 2003, blinked and agreed to an official document that affirmed global warming was occurring and that “we know enough to act now.” The 2005 G8 put the United States back on the path that ultimately led through the Copenhagen climate summit—when China and India thwarted U.S.-led attempts at a global climate treaty—to the Paris Agreement 11 years later.

There was a very different American president this June at the Charlevoix G7 (as it has been since Russia’s suspension in 2014). Had it not been for the row with Justin Trudeau, when the Canadian prime minister responded to President Trump’s steel and aluminum tariffs with retaliatory tariffs of his own, the big story would have been the climate split. Where 15 years ago the mere possibility of isolation pushed Bush to compromise, Trump embraced the isolation and inserted an America-only paragraph into the summit communiqué outlining a position fundamentally contradicting the rest of the group’s.

Donald Trump with G7 leaders in Charlevoix, Canada, June 9. Credit: Jesco Denzel / Bundesregierung / Getty

“The United States believes sustainable economic growth and development depends on universal access to affordable and reliable energy resources,” it reads, going on to offer a manifesto for global energy realism. That single paragraph is more definitive than the president’s announcement last August that the United States would be withdrawing from the Paris treaty. After all, George W. Bush nixed the Kyoto Protocol that Bill Clinton signed. And Trump, when announcing the Paris withdrawal, left the door open to U.S. participation in a renegotiated climate deal. At Charlevoix, he closed it. Unlike in 2005, it’s very hard now to see any way back.

This is about far more than process. Trump is breaking the spell of inevitability of the transition to renewable energy. The impression of irresistible momentum has been one of the most potent tools in enforcing compliance with the climate catechism. Like socialism, the clean-energy transition will fail because it doesn’t work. But it requires strong leadership to avoid the ruin that will disprove the false promise of cost-free decarbonization.

That reality is already hurting those countries that are farther down the renewable-energy path of ruin than the United States—and, when offered the chance, voters are taking it out on politicians. In March, a fanatically pro-wind and solar energy Labor government in South Australia, one of the eight states and territories that make up the country, decided to make the state elections a referendum on renewable energy. With some of the world’s most expensive electricity and a serious blackout in 2016, South Australia voters kicked out Labor and voted in a government vowing to repeal the state’s renewable-energy target.

Days before Justin Trudeau took the center of the global stage as host of the G7 summit, his Liberal party was trounced in provincial elections in Ontario. The province’s party had won four consecutive terms in office and had pressed virtually every pro-renewable, anti-hydrocarbon policy imaginable. In the June 7 elections, they took just seven seats in the 124-seat legislature. “I made a promise to the people that we would take immediate action to scrap the cap-and-trade carbon tax and bring their gas prices down,” newly elected premier Doug Ford announced.

 

Nowhere has confrontation with the physical and economic realities of renewable energy been more painful than Germany, the birthplace of renewable-energy ideology. As party leaders negotiated a new coalition agreement after the September 2017 elections, they acknowledged for the first time that Germany was going to miss the sacrosanct 2020 target to cut greenhouse gas emissions by 40 percent from 1990 levels. This had been set in 2007, and the first 20 percent had been easy. Thanks to German reunification, the former East Germany had seen its industries collapse, and there were plenty of inefficient power stations to close. It had always been clear, Angela Merkel declared three weeks after the September federal elections, that it was not going to be easy to cut the other 20 percent “at a time of relatively strong economic growth.” Note: Stronger growth equals higher emissions.

Launching the German renewables transition in 2004, energy minister Jürgen Trittin promised that it would put no more than the cost of an ice cream on monthly electricity bills. Nine years later, his successor, Peter Alt­maier, admitted that the costs could amount to $1.34 trillion by the end of the 2030s. At a meeting in June of E.U. energy ministers, Germany ran up the white flag. Altmaier shocked fellow E.U. energy ministers by rejecting higher renewable-energy targets. “We’re not going to manage that,” he told them. “Nowhere in Europe is going to manage that. Even if we did manage to get enough electric cars, we wouldn’t have enough renewable energy to keep them on the road.”

No country has a greater abundance of hydrocarbon energy than the United States. The corollary is that no country was as big a loser from participating in the Paris Agreement and its intention to progressively decarbonize the world’s hydrocarbon superpower. On July 10, the Energy Information Administration forecast that next year, the United States will produce 12 million barrels of oil a day and overtake Saudi Arabia to be the world’s number-one producer. When it comes to the politics of energy, the interests of the United States and European green ideology are irreconcilable.

Donald Trump understands this. “Our country is blessed with extraordinary energy abundance, which we didn’t know of even 5 years ago and certainly 10 years ago,” the president said in 2017. Those remarks were not only a paean to America’s energy resources, they were a full-dress rejection of the policies of his predecessor and of the Democrats’ goal of Europeanizing American energy policy.

“We have nearly 100 years’ worth of natural gas and more than 250 years’ worth of clean, beautiful coal. We are a top producer of petroleum and the number-one producer of natural gas. We have so much more than we ever thought possible. We are really in the driving seat. And you know what? We don’t want to let other countries take away our sovereignty and tell us what to do and how to do it. That’s not going to happen. With these incredible resources, my administration will seek not only American energy independence that we’ve been looking for for so long, but American energy dominance. And we’re going to be an exporter—exporter. We will be dominant. We will export American energy all over the world, all around the globe. These energy exports will create countless jobs for our people, and provide true energy security to our friends, partners, and allies all across the globe.”

For the first time since 1992, when George H.W. Bush went to the Rio Earth Summit, an American president was outlining a global energy strategy diametrically opposed to the tenets underlying the U.N. climate process. Trump was establishing a rival pole based on energy realism and energy abundance.

The Rio Summit was the brainchild of Canadian ­Maurice Strong, and he understood that what most motivates political leaders, bureaucrats, and corporate CEOs is the fear of being left out. “The process is the policy,” Strong said, and the annual climate conferences that have been held since the U.N. Framework Convention on Climate Change was adopted in Rio created a sense of irresistible momentum. It’s that spell Trump is now breaking. Countries around the world are being damaged by the anti-hydrocarbon policies encouraged by the U.N., but leaving the Paris Agreement was a step only the United States was strong enough to take. Now it is up to the Trump administration to help other countries act in their economic interests.

Energy secretary Rick Perry has talked of U.S. willingness to lead a global alliance of countries wanting to make fossil fuels cleaner rather than abandoning them. Of the G7, Japan has traditionally been most leery of decarbonization, and after the 2011 Fukushima accident Japan decided to expand its coal-fired generating capacity by half, building 45 new coal power stations.

Poland is another coal-based economy that has no intention of phasing out coal. Of all energy-realist nations, Poland is the one that sees eye to eye with the Trump administration. During the Brezhnev years, Poland—alone of the Eastern Bloc nations—refused to sign up to sulphur-emission cuts designed to isolate the U.K. and the United States at the height of the acid rain scare. As host of the next round of U.N. climate talks, at Katowice in December, Poland is more than usually important as a U.S. energy ally. Australia, the world’s largest coal exporter, is another obvious U.S. partner.

Where the United States can make the biggest difference, though, is with the developing nations who depend on overseas finance to build out their electrical grids and need the cheap, reliable energy only coal can supply. Last September, Southeast Asian energy ministers, noting the rising use of coal in the region, called for greater promotion of clean coal. In June, India struck a strategic energy partnership with the United States, described by Perry as an “amazing opportunity for U.S. energy” to sell clean coal, nuclear technology, oil, and gas.

In October 2016, Nigeria’s finance minister, Kemi Adeosun, railed against the West’s energy imperialism and the hypocrisy of using coal to industrialize and then denying it to Africans. “By telling us not to use coal they are pushing us into the destructive cycle of underdevelopment; while you have the competitive advantages, you tie our hands behind us,” she said.

Denying the world’s poor cheap electricity is the official policy of the World Bank. In 2012, Barack Obama agreed to the appointment of Jim Yong Kim as president of the World Bank, and the next year, the bank stopped the financing of coal-fired generation. Although the Trump administration publicly opposes the coal ban and the United States has the largest number of votes at the World Bank, the institution is doubling down on its anti-fossil-fuel agenda. At Emmanuel Macron’s climate summit in December 2017, Kim announced the bank was extending the financing ban to upstream oil and gas. Here is the first order of business for a global energy alliance—to pressure the World Bank to lift its hydrocarbon financing bans and serve the world’s poor rather than sacrifice them to a regressive climate agenda.

As it is, China is the biggest winner from the World Bank’s energy policies. A June 2017 World Bank report notes China’s “global dominance” in the supply of materials needed by renewable energy technologies. In addition to China’s control over the supply of base and rare-earth metals, last year 7 of the top 10 global suppliers of solar panels were headquartered in China. An eighth is in Hong Kong and a ninth in Canada, but with Chinese links. For as long as the World Bank’s hydrocarbon-financing bans remain, American taxpayers will be funding a war on American coal and subsidizing China’s solar industry. If this seems an unappealing prospect, the Trump administration should move fast to assemble the necessary votes ahead of the World Bank meeting in October.

Domestically, the climate caravan keeps rolling. At the beginning of June, 13 Republican senators wrote to the president urging him to submit the Kigali Amendment to the Montreal Protocol, described by the U.N. as “another global commitment to stop climate change,” for the Senate’s advice and consent. Two weeks later, the New York Times carried a report and associated op-ed by former senators Trent Lott and John Breaux on a new group, Americans for Carbon Dividends, which has hired the bipartisan pair to lobby for a carbon tax. “We must put a meaningful price on carbon,” they wrote, arguing for a $40 per ton tax “high enough to encourage a turn to cleaner energy sources.”

Former Fed chair Janet Yellen, another member of the group, told the Times that taxing carbon emissions is “absolutely standard textbook economics.” The textbook actually teaches that a carbon tax would be efficient if it replaced all the tax credits, subsidies, portfolio standards, and regulations supporting the expansion of uneconomic wind and solar energy. Their inherent defect is that the amount of energy they produce depends on the weather, not on demand. Because of the way the electrical grid works, they dump their intermittency costs on other generators, particularly the reliable coal and nuclear plants. It is not surprising that the backers of Americans for Carbon Dividends and its seven-figure annual budget include First Solar, Inc. and the American Wind Energy Association.

Only a small portion of the putative climate benefits of a carbon tax would ever flow back to the United States in the form of avoided climate impacts. Insofar as cutting greenhouse gas emissions creates environmental benefits, it’s a vast foreign aid program in which costs are incurred domestically and most of the benefits go abroad. Worse still, federal government estimates of the social costs of carbon still rely on climate models using computer-simulated data. These produce higher values than estimates based on actual climate data. According to a 2017 paper by the economists Kevin Dayaratna, Ross McKitrick, and David Kreutzer, a $37 per ton carbon tax using model-based estimates for the climate sensitivity of carbon dioxide would be halved if based on empirical data. Dayaratna, a fellow at the Heritage Foundation, has also noted that one of the impact assessment models used by the Obama administration even produces a negative estimate for the social cost of carbon under “very reasonable assumptions.” A negative carbon tax—subsidizing carbon emissions—is hardly what First Solar and the American Wind Energy Association are funding some of Washington’s most expensive lobbyists for.

For all the energy revolution so far, the Trump administration’s energy agenda remains incomplete. The Clean Power Plan is being rolled back, but the EPA’s 2009 greenhouse-gas endangerment finding on which it stood remains in place. There has been talk from the administration of creating red and blue opposing teams of climate scientists to give politicians and the public a more balanced view of our understanding of climate. On energy policy, Rick Perry’s grid-security study can be extended to examine how wind and solar subsidies distort the costs of electricity. That way, Americans will begin to see the true price of renewables and the extra they’ll have to pay to keep the lights on thanks to the intermittency problem of generating energy from the winds and the sun.

Exiting Paris was the first step. The president has also ended his predecessor’s war on coal. Globally, the administration’s continued advocacy for energy realism can win friends among the world’s poor and make allies of some of the world’s most dynamic economies. The geostrategic potential of American energy is already being felt. American gas is being shipped to Poland and American coal to Ukraine—reducing the region’s dependence on Russian gas. As the president pointed out at the NATO summit in early July, Germany’s pipeline will see it paying “billions of dollars” a year to Russia, although he subsequently undercut the strategic logic of his argument at the disastrous press conference with Vladimir Putin in Helsinki on July 16. The Trump administration should now formalize its ties with other energy-realistic nations and show the world the benefits of America’s energy exceptionalism—jobs at home, booming exports, and an escape from dismal energy policies predicated on bogus resource shortages. Having broken the spell, America and its friends around the world can reap the benefits.

Rupert Darwall is the author of Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex.