The real American Dynamism

KEEPING COOL WITH

Hi there,

Today we’re spilling some more words about the upcoming U.S. presidential election and its potential impacts on climate work globally. Because yes, we’re a bit masochistic here.

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OPINION

Maybe it’s just my life, but lately, it seems like everyone is so busy, overstimulated, and scattered so as to have lost most of the ability to communicate. Amidst that dynamic, it’s no wonder that we prefer to keep the impending presidential election out of sight, out of mind. It’s simply too much to think about. We have enough to think about.

Having said that, it’s with great pain that I send another email in general into the fray of your frenetic life. It’s with greater pain that I ask you to think about the presidential election with me for 5 minutes.

Of late, there’s also been a decent amount of analysis and discussion in the climate discourse dissecting what a Trump presidency could mean for the U.S. emissions path as well as for its climate goals. This has dovetailed with other discussions around things like rising energy demand in general, which could also threaten the U.S.’s climate goals (roughly to reduce emissions ~50% from 2005 levels by 2030). A Trump presidency would assuredly increase emissions in the U.S. above a Biden baseline. Carbon Brief ran the numbers and estimated that a Trump presidency would lead to ~4 billion more tonnes of CO2e emissions between 2025 and 2030 and more after that.

Here’s the thing. I don’t care that much about the incremental emissions additions a Trump presidency might bring to bear. 4 billion tonnes of CO2e is equivalent to roughly 5 weeks of annual global emissions. I don’t even particularly care about the U.S.’s climate goals. Sorry!

Why? Because the U.S.’s role in writing the energy transition playbook for the world is much more significant than incremental emissions reductions are. Here’s what I mean by that.

The real American Dynamism

Here’s why the presidential election does matter quite a great deal. There’s no other country in the world that is poised to effectively model what a successful, just energy transition looks like at scale in the way the U.S. is. The playbook the U.S. could craft is much higher leverage than any incremental emissions reduction; it’s needed to inform how other countries, whether India and Indonesia or Egypt and Ethiopia, take this work on in coming decades. For reference, all of those other countries referenced above are projected to be among the world’s ten largest by population by 2100. 

I get how this could read as a drastic case of U.S.-centrism. Of course, there are countless idiosyncrasies and differences between countries in different parts of the world and the U.S. But there’s a) a long history of countries looking to the success of various industries in the U.S. for inspiration and b) a real risk that if the U.S. leans off its energy transition work, other countries will opt to punt on it for longer, too. That’s what’s really on the line in November. 

Over the past four years, the U.S. has made miraculous strides in committing to a durable energy transition. It’s worth zooming out sometimes to take stock of what’s changed since 2020. There’s policy like the IRA, which has catalyzed everything from exponential EV sales to a meaningful domestic manufacturing boom. There’s more ‘circumspect’ policy, like the EPA’s new methane fees, which will penalize oil and gas producers over a certain size for their fugitive methane emissions, or the EPA’s (even newer) tailpipe emissions limits that will encourage EV sales (out this week - see here for more).

In 2020, when I started writing this newsletter, the change in administration was one of five or so pillars I hoped would supercharge climate efforts. It’s worked: The supportive policy environment in the U.S. has encouraged countless companies to commercialize new climate and energy technologies. I’m thinking, for instance, Fervo and its progress on enhanced geothermal energy. If this work continues, the U.S. is well set up to serve as a critical climate tech incubator for the rest of the world, spanning both the private sector and technology, the public sector with respect to policy, and capital as it pertains to what innovative financing models ‘work.’ This work should continue, not just because it can cut emissions and drive better outcomes – whether environmental or economic – in the U.S., but to export all the lessons and learnings overseas.

What other options are there?

To run the counterargument, we can also ask ourselves who will lead the charge if the U.S. doesn’t. 

China is often held up as an example of a country making serious strides in energy transition work. In a sense, they are: They’re deploying more new nuclear energy than anyone, more renewable energy than anyone, more transmission lines than anyone, build more EVs than anyone, 40% of the world’s copper processing capacity, rare earth metals, and sell lots of EVs domestically, too.

Still, China isn’t doing any of this with decarbonization as its primary prerogative. They’re building more generation capacity to ensure their industries remain competitive, to supercharge economic output, and to continue to raise the standard of living to justify command economy approaches and relatively tight social controls. They’re building an EV industry to sell more goods to Western countries and sell EVs domestically to curb air pollution (also a worthy, albeit different, goal). They dominate commodity and metals exports to curry favor globally and consolidate power and control (and as a matter of chance, economics, and convenience historically as the West offshored). 

Decarbonization or an energy transition is not China’s express goal with respect to any of these pillars. Perhaps China’s growth in electricity generation by source best visualizes that. Growth itself is the goal here, not decarbonization, as evidenced by the continued persistence of coal in the stack.

If we cast our gaze beyond China and the U.S., we could look to Europe, too. Before the U.S. took up the mantle, Europe was the epicenter of global sustainability work. Many European countries (and the U.K.) have made meaningful strides on their energy transitions. For instance, the U.K. has been successful at reducing emissions and cutting coal out of its generation mix.

That said, European countries and economies pale in comparison to the global importance that they once had. They are smaller, more specialized, and comprise a smaller share of global trade, population, and many other statistics you might choose to care about with every passing year. As a consequence, the size of BRICS economies is surpassing or has surpassed that of the G7 countries. 

It’s all well and good that Europe continues to incubate policy, technology, business models, and financing schemes in service of global energy transition and decarbonization work. Contribute, they will! But their contributions aren’t at the scale or of the relevance needed to help the rest of the world anymore, especially not compared to the U.S. or China. 

The net-net

To reiterate a few things from this newsletter and others:

• The Presidential election in the U.S. is one of the biggest climate stories of the year globally.

• It matters not because of the incremental emissions one administration will avoid versus another.

• It matters because the U.S. is the de facto leader and a bellwether of global decarbonization work and investment at this point.

I’m not here to canvas you to vote or to vote for Biden. Nor am I suggesting the U.S.’s energy transition work is unfolding flawlessly. Take, for instance, U.S. oil exports, which have rocketed to all time highs over the past years.

I do think it’s my job to frame the election for what it is, namely a referendum on whether we want energy transition work to continue in the U.S. and whether the U.S. wants to continue to act as a global leader, at least on climate challenges. Unfortunately, this is not a serious component of the election discourse at present outside our echo chamber. If you think it should be, well, talk about these ideas with other people! Or send them this newsletter if it resonates.

OTHER COOL OPPORTUNITIES

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Byeee,

– Nick