Declining Cost of Renewables Will Challenge Trump’s Promise to Bring Back Jobs Through Coal
America First Energy Plan is replacing the former administration’s Clean Power Plan, whose benefits outweighed costs and would not have been a challenge on growth, says Yale professor Kenneth Gillingham
KIM BROWN: Welcome to The Real News Network. I’m Kim Brown in Baltimore.
Within minutes of Donald Trump’s inauguration as the 45th President of the United States, all mention of the term “climate change” was scrubbed from the whitehouse.gov website. President Obama’s, Clean Power Plan, one of the cornerstones of the Americans sufficient to the Paris Agreement, has been replaced with Trump’s new, America First Energy Plan, which states, “For too long we have been held back by burdensome regulations on our energy industry. President Trump is committed to eliminating harmful and unnecessary policies, such as the Climate Action Plan and the Waters of the U.S. rule.”
With emphasis on removing regulations for coal production and fracking for oil and gas, the new fossil fuel-based, Federal Energy Plan, according to the White House, quote “Will greatly help the American workers by increasing wages by more than $30 billion over the next seven years.” A figure, if correct, would mean less than $20 per American per year. But the basis of this wage gain number comes from a study titled, The Economic Effects of Immediately Opening Federal Lands to Oil Gas and Coal Leasing, written by Dr. Joseph Mason who was a Professor at Louisiana State University, which was commissioned by the oil billionaire, Charles Koch connected, Institute for Energy Research.
And with us to discuss the study and President Trump’s new America First Energy Plan, we’re joined with Kenneth Gillingham. He is an Assistant Professor of Economics at the Yale School of Forestry and Environmental Studies with research focusing on energy economics and policy in 2015 to 2016 he served as a Senior Economist for energy and the environment at the White House Counsel of Economic Advisors. Kenneth, we appreciate you joining us. Thank you.
KENNETH GILLINGHAM: Thank you. It’s a pleasure to speak to you.
KIM BROWN: So Kenneth, let’s discuss the study, the economic effects of immediately opening federal lands to oil, gas and coal leasing, which the White House is citing on their website. They are linking environmental deregulation to wage increase. So, Kenneth is that case clearly being made in the study?
KENNETH GILLINGHAM: Well, I think even before you get to whether the case is being made, I think it’s important to recognize that the study’s been misquoted. That this was source for the $30 billion but the study is not actually about the waters of the U.S. or the Climate Action Plan. The study is actually about opening up all federal lands to leasing for fossil fuel extraction. So to begin with it’s not even about what it says it’s about on the White House website.
KIM BROWN: So talk about the other issues with the study, Kenneth, which is specifically about deregulating drilling, fracking and mining on public lands. So let’s look at some of the key findings. So the GDP, the Gross Domestic Product, would increase by $127 billion annually in the next seven years. A nearly $21 trillion cumulative increase in the economic activity over the next 37 years. Five hundred and fifty-two thousand jobs would be created annually over the next seven years. Thirty-two billion increase in annual wages over the next seven years. In your opinion do these figures even add up?
KENNETH GILLINGHAM: Well, boy those figures look good on the surface, don’t they? So we have to look to see what the study’s actually doing. The short answer is, no. The figures don’t add up. The study is problematic from start to finish. It’s has some major issues and missing some very important caveats. I can get into a list of a few of these caveats, but the big picture, just to begin with, is that the study has very, very serious problems and is a gross over estimate, what you might expect to happen.
KENNETH GILLINHAM: So is the new Trump administration, their America First Energy Plan, is replacing the former administration’s Clean Power Plan with the justification that the new plan will, quote, “stimulate our economy.” So the question is, was the Clean Power Plan a limit to economic growth, in your opinion?
KENNETH GILLINGHAM: So the Clean Power Plan would have done many great things. It would have reduced pollution which would have meant fewer cases of asthma which would actually, studies have shown, that increases productivity. It would have cost something. Now the benefits in the analysis that was done, far, far exceed the costs. And many of those benefits are coming through human health impacts. So when we’re looking at the economy holistically, it’s pretty clear that the benefits of the Clean Power Plant far exceed the cost. It was a great deal for the American people, when you looked at it that way, it would not have been a major challenge on growth.
KIM BROWN: So China has recently made announcements that not only will they be closing over a 100 coal power plants, but that they will be financing huge growth in the development of renewable energy. So is the U.S. going to be left behind on renewable energy or are market forces in the U.S. still going to promote renewable energy growth?
KENNETH GILLINGHAM: Well, I think it’s there’s a real fear that we’re going to be left behind. And that fear is justified. There’s no question that market forces are going to continue increasing the adoption of renewables in the U.S. Renewables are becoming cheap in many cases, they are the cheapest power that you can implement if you’re building new capacity. But China is building renewable capacity at a much, much faster pace than we are. And they’re investing very, very heavily in it. Largely to improve their air quality. And because of this there’s a very serious worry that, when you look at where the investment’s going and where the new innovation’s going to be happening, it’s going to be shifting over to China.
KIM BROWN: So President Trump has talked about bringing jobs back to the coal industry. Is that even possible, given the cost of coal versus the lower costs of solar power and natural gas these days?
KENNETH GILLINGHAM: It’s incredibly unlikely. There’s really not much he can do against very, very strong market forces. Natural gas is incredibly inexpensive and the cost of renewables has been dropping incredibly rapidly. Which basically means that when a utility is thinking about what power to build, if you’re building a new power plant, you’re not going to be looking to coal. It just doesn’t make sense, the pure economics. One thing to know is that most coal power plants are actually quite old. And when you’re looking to retire a plant, are you going to retrofit it and replace it or are you going to put in something more economic? Generally, you put in the more economic thing and more economic choice. So it’s pretty hard to imagine a case where the trends that we’re already seeing away from coal are going to stop.
KIM BROWN: All right. We’ve been speaking with Kenneth Gillingham. He’s an Assistant Professor of Economics at the Yale School of Forestry and Environmental Studies with his research focusing on energy, economics and policy. Kenneth, we appreciate you joining us. Thank you.
KENNETH GILLINGHAM: You’re welcome. It’s great speaking with you.
KIM BROWN: And thanks for watching The Real News Network.