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10 May 2019

US Congress quietly passes Bill seeking adherence to Paris accord

So we pointed out a few weeks back that the US Congress was trying to pass a bill that would direct Mr Trump to adhere to the Paris Climate agreement, after all and unsurprisingly last week it passed with very little fuss. It is the first climate change legislation to pass in the Congress for a decade.

In order to become law, it has to be passed by the Republican controlled Senate, which is unlikely to happen. But this is a strategic game of cat and mouse.

The idea of the Bill is to “out” republicans as out of touch climate change deniers, adopting a stance similar to Mr Trump, and to amplify that message all the way to the next election. But it is tough to control the news agenda for a year, and this may well turn out to be fruitless.

Much of the Republican argument has been based on the idea that while they may agree that climate change is happening, and perhaps some of them agree that it is man-made, the Paris agreement offer India and China continued emissions growth until 2030, while the US is supposed to cut emissions from now, and Republicans believe this hamstrings US economic growth.

This is almost funny when you realize that had the US embraced renewable technologies, it might dominate them, but in fact China leads in solar by a considerable margin and Europe in wind power, with US firms nowhere in sight, with the exception of GE, which has some wind market share. Embracing renewables and selling them to India and China could have brought the US the economic growth it is looking for.

The Chinese position on renewables is becoming crystal clear. It Imposes really tough financial targets for renewables which are only really reachable by Chinese wind and solar firms – cutting most European and US businesses out of its considerable renewables marketplace – roughly ten times the size of the US.

Using this strict and aggressive approach and (in the past) being prepared to build even coal fired power plants if they are cheaper, the Chinese government is leading the renewables industry by the nose towards parity with coal and gas. When it arrives at parity or better, China will switch all  energy purchasing to renewables, which by then will be cheaper. This is set to happen more or less now. Remember, parity is an idea – it means that the entire funding process, capex plus opex, over a 25 year timeframe, must be capable of being the same or lower than their equivalents.

This moment of parity varies based on the cost of land (to put solar panels or wind farms or gas plants on) and the cost of labor, because renewables use local labor instead of consumables like coal or gas. Of course the price of oil, coal and gas can vary over time, too. In China, less well paid Chinese workers will make up the bulk of opex cost for renewables once built, whereas coal and gas right now are so cheap they are almost free – to China, as it has until 2030 under the Paris agreement to peak and begin to bring down emissions.

China will smash that target, as it is so expensive to build new coal plants that it has now stopped, and instead it is heading for parity really early. Its lack of existing gas infrastructure means that gas usage is growing, but not that fast.

But as countries like Germany and in the future Australia, ban the use of coal in their country, their mining concerns have spare coal and they will sell it ever more cheaply to someone like China. This means China can continue to use coal power plants for a long time to come, as parity moves somewhat downwards with the price of coal.

This is not true in highly regulated countries like those in Europe, where the shift away from coal is regulated and well under way. So China, India and Indonesia get the price benefit of being on coal and gas at a time when coal and gas are exceptionally cheap.

But by using this strategy China will almost certainly overtake the US in emissions reduction overnight once 2030 arrives, purely because it will have built an indigenous industry around it needs, something the USA has missed out on. Once China begins to curb its emissions, saying that India and China are not doing enough, when the US is no longer in a position to respond at all, it will actually mean that for the first time in its economic life the US will  likely have economic sanctions levied against it. Think about the kind of shock that will be. But come 2030-2032, if the US fails to changes its trajectory, this is precisely what will happen. That can all be avoided if a New Green Deal from a democrat government is launched first.

Part of the reason for this is the great US climate change denial scam, outlined in detailed in this week’s Guardian newspaper, which revealed that the Koch brothers have put millions of dollars (some $145 million at last count) into fake institutes that profess to have found alternative reasons for climate change. These and others, notable ExxonMobil, have spent literally $billions on presidential campaign funding over the years, just so they can call on favors from incumbent presidents they helped to put in the White House.

Virtually all climate change denialism can be traced to a handful of oil funded fake institutes, resulting in a confused public, some of whom believe that climate change was a scam invented by China. So this has not helped align the US with the Paris agreement.

Chances are that this bill will be struck down in the senate, and reminders of this action will feature heavily during the 2020 election, and then it will re-emerge if and when another president is elected.