Trump’s trade war poses threat to global support for Paris Agreement


The MacArthur Foundation’s weekly global climate news summary: The European Union and China have become the main bulwark against U.S. President Donald Trump’s effort to erode the world’s commitment to the Paris Agreement. Unfortunately, both appear to be shaken by Trump’s trade war, which could diminish their tenacity where the global climate pact is concerned.

“The European Commission abandoned its customary climate hard talk in a bid to defuse trade tensions with the U.S,” Climate Home News reported after European Commission President Jean-Claude Juncker met Trump in the White House on July 25. “There was no mention of upholding the Paris climate deal or environmental protections.” Juncker’s apparent acquiescence came in spite of the E.U. trade commissioner stating in February that fealty to the Paris Agreement would be “needed in all E.U. trade agreements” going forward.

This week brought reports of fallout in China. “With stocks slumping and the currency dropping 9 percent against the dollar since mid-April, censors have been deleting a torrent of criticism online, some of it directed at President Xi Jinping’s leadership,” The New York Times reported on Tuesday. “Some analysts have argued that the trade war could have been avoided if Beijing had refrained from triumphalist rhetoric about China’s rise as a global power”—rhetoric that invariably included China’s ascension to world leadership in fighting climate change. “There’s a lot of second-guessing about whether the great leader played his cards right,” Jerome Cohen, a China expert at the New York University School of Law, told the Times.

Nevertheless, China’s Ministry of Commerce maintained a defiant tone this week in filing a complaint with the World Trade Organization against Trump’s 30-percent tariff on imports of Chinese solar panels. “As the U.S. violations have severely distorted the global market for products like photovoltaics and seriously damaged China’s trade interests, China’s use of the WTO dispute settlement mechanism is a necessary measure to safeguard its legitimate rights and interests, and maintain multilateral trade rules,” the ministry said. The situation is “a microcosm of the big trade spat,” said Peng Peng, director of policy research at Beijing’s Chinese Renewable Energy Industries Association. “Solar is only a piece on the big trade chessboard,” an unnamed “Chinese solar executive” told Hong Kong’s South China Morning Post.

As anyone who has ever been involved in implementation of a U.N. agreement knows, the top geopolitical wrangling of the day bleeds into everything, no matter how seemingly unrelated. For example, the U.S. backed away from sanctions against China for trading rhino horn and tiger bone in violation of the U.N. Convention on International Trade in Endangered Species of Wild Fauna and Flora during the 1990s after a parade of major American corporations lobbied President Bill Clinton to prioritize their need to sell products in China’s untapped market.

Given this geopolitical reality, the Sino-European bulwark of global commitment to the Paris Agreement could soften by the time the U.N. climate summit opens just over three months from now. “It will make the entire system for environment, for peace and for development—every issue—much more difficult if we were to see a major trade war,” Erik Solheim, head of the U.N. Environment Programme, toldClimate Home News in late June.

Meanwhile, right-wing presidential candidate Jair Bolsonaro—who has been called the “Brazilian Trump” and is polling just behind jailed frontrunner Luiz Inácio Lula da Silva—has threatened to take Brazil out of the Paris Agreement if he wins the October election. Bolsonaro’s son announced this week that his father’s new campaign adviser is none other than Trump’s former chief strategist Steve Bannon.

Climate context

The world has logged its four warmest years on record in the past four years, and new research published Tuesday in Nature Communications predicts an “anomalously warm” five years to come. “The coming warm period is associated with an increased likelihood of intense to extreme temperatures,” the authors wrote.

Global warming also will make tsunamis more intense, posing an existential threat to the world’s coastal cities, according to a study published Wednesday in Science Advances. Even a moderate rise in sea levels would trigger larger waves from smaller earthquakes to “dramatically increase the frequency of tsunami-induced flooding incidences,” the authors concluded. “Our study shows that tsunamis… will likely inundate low-lying coastal communities more frequently and more destructively as sea level rises. … Although the vulnerability of coastal communities to rising seas is well known, the capacity for a single tsunami event to devastate coastal areas is rarely considered in coastal planning.”

Between 1982 and 2016, the number of ocean heat waves doubled, and a study published Wednesday in Naturepredicts they will “further increase on average by a factor of 16” once the world warms 1.5°C above pre-industrial times and “by a factor of 23” at 2°C. “Today, 87 percent of MHWs [marine heat waves] are attributable to human-induced warming, with this ratio increasing to nearly 100 percent under any global warming scenario exceeding 2 degrees Celsius,” the authors wrote. “Our results suggest that MHWs will become very frequent and extreme under global warming, probably pushing marine organisms and ecosystems to the limits of their resilience and even beyond, which could cause irreversible changes.”

Surprises

In a surprise revelation, Business Insider published a copy of a New Zealand newspaper story from 1912—106 years ago—with a headline that read, “Coal consumption affecting climate.” The story in The Rodney and Otamatea Times goes to offer this prediction: “The furnaces of the world are now burning about 2,000,000,000 tons of coal a year. When this is burned, uniting with oxygen, it adds about 7,000,000,000 tons of carbon dioxide to the atmosphere yearly. This tends to make the air a more effective blanket for the earth and to raise its temperature. The effect may be considerable in a few centuries.”

In a surprise admonition, Luke Popovich, former spokesman for the National Mining Association, told last week’s Coal Market Strategies Conference in New Mexico that the coal industry must acknowledge climate change. “Coal’s single biggest liability is the perception that it is a bygone industry, not a future one,” he said. “The picturesque miner with a dented lunchbox and blackened face may glorify the industry’s industrial past, but it reinforces the perception that coal is dangerous and dirty and that it has no role to play in a digital age, driving a clean knowledge-based economy. … It’s too late for denial when your customers, the ratepayers, the banks and regulators already believe climate change is real.” That advice may be even more important after Climate Home News published an analysis of government data on Monday that “identified roughly 300 active and 200 abandoned coal mines as the source of almost one-tenth of U.S. methane pollution.”

In another instance of unusual candor, Florida Realtors published an article Monday about whether homebuyers are expressing concern about sea level rise yet. “Realistically, I don’t think people are going to be taking this seriously until water is up around their ankles,” it quoted Larry Bartlett, a realtor in the Daytona Beach area, as saying. “Right now, no one wants to think about it. Times are booming and values are up and [realtors are saying], ‘Let’s not come up with negative vibes about sea level rise because it’s a total downer.’ But I’m not the one thinking this up out of thin air. I’m reading scientific journals and I pay attention to what the Army Corps [of Engineers] is saying. What we’re facing is losing our most valuable properties.”

While homebuyers in Florida may be in denial, the CEO of Switzerland-based Chubb Limited, one of the world’s largest providers of property insurance, is not. “The evidence of climate change is immediately apparent, profound and disturbing,” Evan Greenberg told shareholders in his annual letter. In an interview with The Wall Street Journal published Monday, he said the U.S. National Flood Insurance Program “charges an inadequate rate in most instances,” which “incents people to live in places they otherwise wouldn’t.” Greenberg advocates a science-based, private sector flood insurance system that fully prices the costs of risks. “The private sector would charge an actuarially sound rate,” he said. “That’s to everyone’s advantage because it brings stability to the system.”

In a related surprise, the California Coastal Commission voted unanimously last week to order owners of a Laguna Beach mansion to pay $1 million in fines and destroy a protective wall that’s accelerating the rising sea’s erosion of the surrounding beach. “The sea wall needs to come down immediately,” said Commissioner Donne Brownsey. “This case is important in and of itself, but it’s also important as a harbinger of the issues that we’re going to have to face because of sea level rise… .”

United States

The National Interagency Fire Center recorded 18,000 wildfires that burned around 1 million acres in 1983. Annual totals climbed year after year to reach the current yearly burn rate of around 10 million acres. Wildfires are now more frequent, more numerous, larger and more expensive.

Scientists attribute the escalation to heat and drought brought by climate change, combined with forest management practices and the encroachment of residential developments into forested areas. U.S. Secretary of Interior Ryan Zinke last Saturday blamed “environmental terrorist groups” that he says prevented logging of national forests. “I’ve heard the climate change argument back and forth. This has nothing to do with climate change,” Zinke said on Sunday. But when questioned by CBS News midweek, Zinke acknowledged that climate change was at least a factor.

Internal documents released Tuesday show staff at the U.S. Environmental Protection Agency (EPA) challenged the Trump administration’s justification for reducing Obama-era fuel efficiency standards for cars, SUVs and light trucks. The Trump team’s “proposed standards are detrimental to safety, rather than beneficial,” William Charmley, director of the Assessment and Standards Division in the EPA’s Office of Transportation and Air Quality, wrote in an email on June 18, contradicting the agency’s chief rationale. A former EPA senior staffer, Jeff Alson, said the documents released Tuesday show “EPA career staff were totally ignored.” A U.S. Department of Transportation spokesperson insisted the correspondence was typical of the back-and-forth process involved in federal rulemaking. Senator Tom Carper, a Delaware Democrat, said the emails further document the “bogus science and fundamentally flawed assumptions” used to justify the rollback.

While California officials continued to insist they will stop the Trump administration’s attempts to take away their right to set stricter tailpipe emissions for the state, Bloomberg News reported Tuesday that they are looking at alternative means of achieving the same end if that should become necessary. “We’re looking at other ways to reduce pollution by regulating either the purchase or use of cars and light trucks that don’t involve setting standards on the vehicles themselves,” Mary Nichols, chair of the California Air Resources Board, said in an interview. “That could be a whole bunch of things. Limits on registrations. Fees and taxes.”

The EPA is expected to release its proposed replacement for the Obama administration’s centerpiece regulation on climate change—the Clean Power Plan (CPP)—”late next week,” Reuters reported Thursday, citing “an agency source.” The Trump redo of the CPP will likely “downplay the money that people and businesses would save from using less electricity, a key feature of the Obama-era greenhouse rule for power plants,” POLITICO reported. “People tracking the issue also expect that the agency will count only a fraction of the improvements in public health from reduced smog and soot pollution, and won’t consider any benefits from slowing climate change outside the U.S.”

With or without the CPP, market analysts at New York-based Rhodium Group see America’s fleet of coal-fired power plants shrinking by as much as half of the remaining 249 gigawatts without “market interventions at a grand scale,” such as the Trump administration’s proposed bailout. While “the Department of Energy contemplates action to prop up ailing coal and nuclear plants, low natural gas prices and cheap renewables have the potential to drive far more coal off the grid,” their analysis concludes.

In news from the lead-up to November’s midterm elections, the Democratic National Committee (DNC) raised eyebrows, and the ire of climate hawks, last Friday night when it voted in favor of accepting donations from fossil fuel industry workers and their employers’ political action committees. “We have to draw the line that we are indeed a party of a big tent where all working people are welcome. We’re not a party that punishes workers simply based on how they make ends meet,” said DNC Chairman Tom Perez. “At the same time, we remain committed to the Democratic Party platform, which states unequivocally our support for combating climate change.”

The increase in wildfires has become a campaign issue in California’s congressional races, whereas Florida’s U.S. Senate race may be determined, in part, by the candidates’ positions on offshore oil and gas drilling. The red tide that now stretches across a growing length of Florida’s Gulf Coast south of Tampa Bay could also become a factor. “Tons of dead fish. A smell so awful you gag with one inhale. Empty beaches, empty roads, empty restaurants,” said the Associated Press in describing the situation. All that, in addition to a spate of dead manatees, dolphins and sea turtles, could sway a meaningful number of voters.

In the courts, a federal judge in Montana on Wednesday ordered the U.S. State Department to conduct a comprehensive environmental assessment of a revised route for the controversial Keystone XL oil pipeline, presenting yet another challenge to the ultimate fate of the TransCanada Corporation project. On Tuesday, a different federal judge denied ExxonMobil’s request to dismiss a class-action lawsuit in which the Greater Pennsylvania Carpenters Pension Fund accuses the oil giant of securities fraud for failing to adequately account for the detrimental effects of climate change on the value of its oil and gas reserves. Also on Tuesday, a county judge in Seattle dismissed a climate change lawsuit brought by 13 young people against the state of Washington, although a lawyer for Our Children’s Trust toldReuters they would appeal. Since the Trump administration has repeatedly failed to quash the climate case brought by 21 Oregon youth against the federal government set for trial in October, the U.S. Department of Justice said Thursday that it would go forward with deposing the plaintiffs.

China

The plot is thickening with regard to China’s crude oil supplies. While retaliatory tariffs on imports from the United States are currently off the table, that could change if China decides to buy more oil from Russia and Iran.

In an analysis on Sunday, Global Risks Insights described an “emerging China-Russia-Iran axis” that could have significant geopolitical implications. Russia is already China’s single largest supplier of crude oil and wants to supply China with more natural gas, which could challenge Trump’s promise of U.S. “global energy dominance.”

In the meantime, China has invested more than $12 billion in building out wind power capacity in Europe and Australia, the Institute for Energy Economics and Financial Analysis (IEEFA) reported on Thursday. “China is now a driver of the European energy transformation, and its international leadership in low-emissions sectors of the future are entirely aligned with efforts to increase China’s global economic influence,” said Simon Nicholas, a Sydney-based IEEFA analyst. “While Chinese foreign renewable energy investments were boosted by the launch five years ago of its Belt and Road Initiative, its foreign renewable energy investment now extends well beyond that framework. This is a superpower taking its energy policy global.”

Back home, China’s solar industry is suffering a rough patch after the central government suddenly ended subsidies on May 31. “We were expecting subsidies to be cut back, but this was too sudden and too sweeping, with no buffer period,” an unnamed source at the Guangdong Solar Energy Association told ChinaDialogue. This year is likely to see a 43-percent drop in new capacity compared with last year, said Wang Bohua, secretary general of the China Photovoltaic Industry Association. However, Meng Xiangan, deputy director of the China Renewable Energy Society, seems to view the matter as tough love for a fledgling industry that grew too fast and had to be pushed out of the nest. It now needs to “find its place in the overall market,” he said.

India

India’s Ministry of Finance announced Monday that it was suspending the 25-percent safeguard duty on solar components imported from China and Malaysia it had imposed less than three weeks earlier. The notice indicated the suspension would be temporary but gave no further details.

Sanjeev Aggarwal, CEO of commercial solar developer Amplus Energy Solutions, complained that uncertainty around the tariff was hurting his industry and not helping India’s solar equipment makers. “Indian solar manufacturing has been plagued by lack of scale, outdated machinery and lack of depth in [supply chain management],” he said. He suggested that incentives for Indian manufacturers to up their game would have been more effective than penalizing developers who are now forced to depend on imported equipment.

India will not reach Prime Minister Narendra Modi’s target of 100 gigawatts of solar power capacity by 2022, according to CRISIL, the Mumbai-based ratings agency whose majority shareholder is Standard & Poor’s. The country could see today’s nearly 22 gigawatts grow to as much as 80 gigawatts by 2022, CRISIL analysts concluded. They flagged the 2022 goal for 40 gigawatts of rooftop solar as particularly problematic, predicting only 8 gigawatts of capacity by 2023 because subsidized power from the grid is so much cheaper.

In anticipation of intermittent solar and wind energy providing a much larger portion of India’s future power supply, the Central Electricity Authority will begin testing use of the country’s underutilized natural gas-fired power plants to kick in when the sun doesn’t shine and winds don’t blow. The plants currently run at about a fifth of their total 25 gigawatts of capacity because of a shortage in domestic gas supplies. “Using gas power plants for peaking power and allowing them to recover operational and financial costs is a sensible move by the government,” said Ashish Sethia, head of Asia Pacific research for Bloomberg New Energy Finance. “It can deliver multiple benefits like reducing stress on power plant owners and banks, raising utilization of gas pipelines and providing a relatively low-cost solution for power grid balancing.”

Starting in October, the government will require private vehicles in the greater New Delhi region to display color-coded hologram stickers showing what fuel they use and the year they were manufactured. “After introduction of colored stickers, the use of more polluting vehicles can be restricted in a congested or a polluted zone temporarily or permanently depending on the pollution level,” the Ministry of Road Transport and Highways said in affidavit submitted to the Supreme Court. The system would later be introduced across India.

Looking forward

Leaders from 51 Asian and European countries will attend a summit in Brussels October 18 and 19 to discuss trade and climate change vis-à-vis their responses to U.S. President Donald Trump’s trade war. The outcomes could prove pivotal to global climate negotiations in December.

Meanwhile, six countries are gearing up for what would be the first international carbon trading under the Paris Agreement via the Transformative Carbon Asset Facility, supervised by the World Bank. “If successful, the facility could provide far better bang for the buck than previous project-based U.N. markets because it’ll help countries start to self-govern large scale emissions reductions,” said Jahn Olsen, an analyst with Bloomberg New Energy Finance in London.

Come November, voters in Washington state will once again be asked to approve a carbon tax on industrial emitters. Although they voted down a similar ask in 2016, the smoke from wildfires blanketing the state this summer could catalyze more support. “I’m looking across Puget Sound. I can’t see Seattle through the smoke right now,” Governor Jay Inslee told The Atlantic. “Climate change is no longer a chart and a graph. It’s smoke that people are choking on.”