The climate stakes of the US election

04 November 2024

Just as Donald Trump’s overall economic strategy is based on nostalgia for a bygone era, his fossil-fuel-centred energy policies would represent an attempt to reverse history.

He would ultimately fail, but not before doing a great deal of damage to US competitiveness and security, and have an enormous impact on the efforts to combat global climate change.

While Donald Trump lacks a coherent platform, he clearly stands far apart from Vice President Kamala Harris on the issue.

Earlier this year, Trump reportedly requested $1 billion in campaign contributions from fossil-fuel industry executives, promising in turn to roll back environmental regulations, hasten permitting and leasing approvals, and preserve or enhance tax benefits that the oil and gas industry enjoys.

Even if Trump is not an outright climate-change denier, he belongs to a broader school of politicians and commentators who do not think that we need to worry about it.

His vision for ‘Making America Great Again’ is to make the United States an even larger polluter, an even larger producer of fossil fuels, and an even bigger laggard behind Europe and much of the rest of the world.

Both science and technology are working against the fossil-fuel industry. The cost of renewables has plummeted, and under normal circumstances, this would have driven down the price of fossil fuels. But because Russia is such a large supplier of petrochemicals, the war in Ukraine has distorted the market.

If elected, Trump would probably sell out Ukraine, or at least arrange a temporary ceasefire, thus facilitating a greater flow of oil and gas. He also wants to reverse the US Inflation Reduction Act and increase hostilities with China, which produces many of the world’s solar panels and other critical inputs for decarbonisation.

A major slowdown of the green transition in the US is thus a real risk, even before considering the possibility that Trump would further increase the already massive US subsidies for fossil fuels.

Trump’s first term already offered a preview of what an overtly fossil fuel-friendly America would mean for the rest of the world. He endorsed climate-change deniers in Brazil and a host of other countries, and the US withdrew from the Paris climate agreement. In the years thereafter, progress on global climate cooperation clearly slowed.

But eight years after he first assumed office, the economic and security implications of climate change have become much clearer. Europe and Japan seem resolute in their commitments to tax imports from major carbon polluters, and though Trump would probably retaliate for these policies, US allies can take some comfort in the fact that he would have imposed tariffs on them in any case.

Ironically, often-vilified multinationals might play a crucial role in sustaining the green transition. The leaders of these companies recognise the realities of climate change, and they know that they must operate in multiple jurisdictions. If they do not join in the broader green transition, they will lose out now, and even more so in the future.

Even within America, the largest and most important states have already passed legislation pushing firms to decarbonise their operations and reduce carbon footprints. That means large companies operating in multiple states are already pursuing and adopting green technologies and business practices – and for the same reasons that multinationals will.

Yes, there will be aggressive attempts by some fossil-fuel companies to roll back these regulations. But there will also be stronger civil-society efforts, including through the courts, to hold companies accountable for the damage they have wrought.

Smart business leaders will recognise the folly of resisting the inevitable. Even in the oil and gas industry, some companies are already changing their business model to phase down fossil fuels and invest in renewable energy.

Thus, global politics, science, technology, sound corporate management, and the climate itself all weigh against Trump’s love of fossil fuels. Four decades ago, many assumed that tropical countries would bear the brunt of the costs, owing to their already high temperatures.

They indeed are affected, with some facing desertification and others poised to become uninhabitable. But they are hardly alone. The US has already suffered enormous damage, and by the end of the century those losses are estimated to be between 1-4% of GDP annually.

It makes far more sense to do what we can now to limit this damage than to make the same kinds of repairs year after year. Four decades ago, we thought the cost of combating climate change would be very high. But low-cost renewables and the emergence of other new technologies have changed everything.

The cost of renewable energy is low and falling, and it would be even lower and falling faster with a greater public commitment to the green transition and the investments it requires.

There will be a green transition, the only questions are how fast it will proceed, and how much damage we will incur if it is delayed. Trump will attempt to throw a wrench in the process. He wants the fossil-fuel industry’s support, and the industry will view its campaign contributions as a high-return investment. A Republican-controlled Congress would, of course, do whatever Trump says.

The resulting pro-fossil-fuel environment would facilitate fossil-fuel investments, but since these have long time horizons, many would become stranded assets. American taxpayers thus may wind up paying thrice for the blunder.

In addition to the direct and hidden subsidies during the Trump administration and the direct and hidden compensation for stranded assets sometime in the future, they also will have to deal with the resulting lack of energy and climate security.

Joseph E. Stiglitz is a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank. He is the author, most recently, of The Road to Freedom: Economics and the Good Society (W. W. Norton & Company, Allen Lane, 2024)