Facing Facts on the PRC’s Environmental Realities and How the U.S. Can Lead in Energy Dominance and Environmental Progress
CERA week, the Super Bowl of energy conferences, kicked off with a blunt assessment of the state of the energy transition. S&P Global vice chairman and conference chairman Daniel Yergin said the transition is “proving to be more difficult, costly, and complicated than expected.” In reality, the energy transition is more of an energy expansion, with the continued use of oil, natural gas, and coal. As Energy Secretary Chris Wright said in the keynote address, “We need more energy. Lots more energy. That much should be obvious.”
Meeting America and the world’s growing energy demand is going to require all forms of cost-competitive energy technologies. Shunning oil and natural gas is misguided, as is shunning opportunities for nuclear, renewables, or geothermal. Policymakers should open access and reduce government-imposed barriers to all energy sources.
An “America First” energy policy should avoid technological and resource biases. America will continue its energy dominance in oil and natural gas, but there are tremendous economic opportunities for emissions-free energy domestically and internationally. Developing a full range of energy sources that can compete in the market and building the necessary pipeline and transmission and distribution infrastructure will lower energy bills, drive deployment of cleaner technologies, and improve America’s energy security and global standing. This is particularly true vis-à-vis China.
In a new report, Robert Eccles (formerly with Harvard Business School and currently a visiting professor at the Said Business School, University of Oxford) and I argue that policymakers must be realistic about China on multiple fronts. China is no green energy darling. The country produces and consumes massive amounts of fossil fuels, particularly coal, without adequately deploying pollution control technologies. It has a terrible environmental record and is by far the world’s largest carbon dioxide emitter.
At the same time, China has strategically positioned itself to dominate clean energy markets by any means possible. Whether in solar photovoltaics, critical minerals processing, or nuclear energy, China has aggressively built out clean energy capabilities and is expanding investments worldwide. The PRC has also done a brilliant job at public relations, notably through its presence at the annual COP meeting, positioning itself as the planet’s green savior.
Increasing energy affordability and security, empowering American-led innovation, and outperforming China require durable policy reforms. These reforms should open markets, reduce barriers to technological progress, modernize regulations, and support private and public innovation pipelines. Unleashing the private sector to meet our energy needs and environmental ambitions will strengthen and expand America’s economic and geopolitical leverage as an energy-dominant country. Reforms outlined in the paper include:
● Maintain competitive corporate tax rates and expand immediate expensing.
● Open access to energy development and deliver on permitting reform.
● Support and strengthen the energy innovation pipeline.
● Ensure a resilient and reliable grid.
● Remove China’s status as a developing economy from the United Nations environmental treaties.
Americans need stable, long-term policies that ensure energy access and security. These policies will unleash global leadership in technological advancements to reduce carbon emissions and ensure we win the race against China. Doing this will require bipartisan efforts among people with different views on the direction of energy growth and the necessary and acceptable tradeoffs involved. Difficult though it will admittedly be, it’s time to take the ideology out of the energy and climate debate, face the facts on our and the world’s energy composition for decades to come, and focus on practical solutions that mitigate climate risks while ensuring that the less advantaged, in both developed and developing countries, have the energy they need to lead decent lives.
You can read the full report here.
The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.
