Friday, November 25, 2016


Modified policies on climate issues might have some surprising benefits for a declining US coal industry, and for the future of carbon capture.

President-elect Trump is having second thoughts about climate change, previously dismissed as a Chinese-inspired hoax. There are many reasons that might make this a perfectly rational response to the impending responsibilities of office.

First he is almost certainly now getting briefings from scientific and other experts both on the reality of climate science, and on the potential impacts of climate change.

Second the USA is now suffering major drought conditions in the South West. There are indications of a possible link with climate change and strong indications of possibly much worse “megadroughts” in the future. Most people in the US now accept the reality of climate risks, and for some people the potential costs are becoming apparent.

Third, and of more immediate political significance, it seems unlikely that a US withdrawal from the Paris agreement would be followed by any significant US allies or trading partners. Even more significantly, and as I have observed in earlier blog comments, climate policy will become increasingly tied in with trade. China’s Vice Foreign Minister Liu Zhenmin, for example, has made it clear that China will take other countries’ positions on climate change and the low-carbon economy into account when negotiating trade deals.

This is hardly surprising. No-one is going to put up with trading partners who free-ride on cheap but destructive energy sources with unabated emissions, undercutting competitors who adopt environmentally responsible policies. [The UK incidentally will have to recognise the same realities as it navigates a path to those sunlit uplands of new trade agreements. This will be a bitter medicine for ardent climate sceptics and Leave campaigners such as Lawson, Redwood and Rees-Mogg.]

But acceptance of the compelling arguments for action on greenhouse gas emissions could, in principle at least, also provide a lifeline for US coal communities, in the “rustbelt” that provided an important contribution to Trump’s election victory. The connection is carbon capture and storage (CCS) applied to coal. This is not currently a frontrunner as a least cost solution for US energy policy, and a substantial unknown is the extent to which Trump will be willing or able to fulfil his campaign promises to these neglected communities.

Coal has almost certainly suffered more from fracking and the resulting cheap gas than it has from federal environmental policies, so the connection may seem an improbable one. Proposed policies to spend on infrastructure, similar to those advanced by Obama but blocked by a Republican Congress, may provide a “Keynesian” stimulus to the economy. But directing them to benefit deprived areas may be much more difficult, particularly as the allocation of infrastructure spend is far from being in the gift of the President. 

There are in consequence some potential merits in CCS that at least make this an avenue worth exploring. A programme to develop carbon capture and storage has several potential advantages, and these include benefits to economically depressed regions with high dependency on coal.  It requires a very substantial infrastructure spend which is likely to be close to those regions. It may provide a more promising future for coal. And in terms of wider benefits, CCS is still seen by many policy analysts as an important or even essential ingredient of real progress to a low carbon economy, and could reduce the large number of coal fired stations that otherwise threaten to become stranded assets.

These are complex questions, and continued coal fired generation with CCS could still face many barriers, not least on cost. But the idea does provide at least a small element of hope for a fading industry.

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