‘Climate Action’ Flops at the G-7

By Robert Bryce

Monday, August 26, 2019

Despite President Emmanuel Macron’s effort to push climate change to the front of the discussion during the recently concluded G-7 meeting in France, the confab ended without a concrete agreement to take action on the issue.

Some of the blame was laid at the feet of President Donald Trump, who was “a no-show at a crucial session on climate change” today. While blaming Trump for the lack of progress on climate change might make for a good headline, the broader story is more complex. Indeed, a look at the numbers shows that the U.S. has slashed its coal use and cut its total greenhouse emissions more than any country in the G-7. It has also become a major supplier of liquefied natural gas (LNG) — which emits about half as much carbon dioxide as coal during combustion — to other members of the G-7.

Before turning to those issues, it must be noted that international efforts to achieve major reductions in greenhouse gas emissions have largely failed. While it’s true that more than 170 countries signed on to the Paris Agreement, that accord’s CO2 targets are not legally enforceable. (Trump withdrew from the Paris Agreement in 2017.)

Why, despite the urgency of dealing with climate change, aren’t more countries making big cuts to their emissions? The most succinct explanation can be had by understanding what Roger Pielke Jr. has dubbed the Iron Law of Climate Policy: “When policies on emissions reductions collide with policies focused on economic growth, economic growth will win out every time.”

Few countries prove that better than India. On Monday, India’s prime minister, Narendra Modi, was a guest at the G-7 session on climate. While Modi talked up India’s efforts to use more solar energy, the reality is that his country remains heavily reliant on coal and will continue relying on it for decades to come. According to the BP Statistical Review, India’s coal consumption jumped by 74 percent over the past decade. India is now the world’s second-largest coal consumer, and according to a March report by the Brookings Institution, some 50,000 megawatts of new coal-fired electric generation capacity is currently under construction in the country.

To be sure, the growth in global coal consumption is slowing. But for developing countries, particularly in southern Asia, coal remains an essential fuel. Over the past decade, six countries — Vietnam, Philippines, Malaysia, Indonesia, Pakistan, and India — have all seen dramatic increases in coal consumption. Those countries are home to some 2 billion people. As coal consumption in those countries has grown, so too have incomes. For instance, between 2008 and 2018, Vietnam’s coal use tripled and per capita GDP more than doubled.

Although the G-7 members say they want to slash their emissions, several members remain heavily reliant on coal. In the wake of the disaster at the Fukushima Daiichi nuclear plant, Japan closed almost all of its nuclear plants. That, in turn, has forced it to rely more heavily on coal. Between 2016 and 2018, Japan opened eight new coal-fired generation plants, and the country has plans to build about 30 more coal plants with a total capacity of about 17,000 megawatts.

A similar situation is playing out in Germany. After Fukushima, the country’s environmental groups persuaded the government to shutter Germany’s nuclear reactors. That, in turn, has forced Germany to rely more heavily on coal. In 2017, the country’s lignite-fired power plants had the same share in Germany’s electricity mix as they’d had in 2000. Germany’s continuing reliance on coal has meant that the country — which has the largest economy in Europe — has not come close to achieving the emissions cuts targeted under the Energiewende, the name for the country’s plan to overhaul its energy and power systems.

Now let’s look at the U.S., which has cut its greenhouse-gas emissions by a total of 600 million tons since 2008. For comparison, Germany has cut its emissions by about 100 million tons and the United Kingdom has cut its emissions by 169 million tons. To be clear, per capita emissions in the U.S. are far higher than they are in Germany and the U.K.; Americans drive more and live in bigger houses than their European counterparts. Nevertheless, the drop in overall U.S. emissions is nearly as large as what was achieved in all of Europe over the past decade (756 million tons).

Furthermore, the reductions in U.S. emissions were largely due not to government mandates but to the shale revolution. Over the past decade, thanks to hydraulic fracturing and horizontal drilling, domestic natural-gas production has nearly doubled. The surge in production has encouraged U.S. electricity producers to shutter coal plants and replace them with ones fueled by natural gas. The result is that in 2018, U.S. coal consumption was at its lowest level since the 1970s. It appears that domestic coal consumption will continue falling over the next few years as lower-cost gas continues to displace coal.

The other dynamic at play at the G-7 is that the U.S. has become a major supplier of liquefied natural gas to dozens of countries around the world. According to the latest data from the Energy Information Administration, Japan is now the third-largest buyer of U.S. LNG. The U.K., France, and Italy are among more than 30 countries that have purchased LNG cargoes from U.S. suppliers this year. Further, as the U.S. has boosted its LNG exports, the global price for LNG has fallen, making the fuel more competitive against coal in Asia. The result is that American natural gas is helping Japan reduce the amount of coal it burns for electricity production, which is helping cut Japan’s greenhouse-gas emissions. Increasing the use of natural gas around the world, along with more deployment of nuclear energy, should be a key strategy in rich and poor countries alike to help reduce emissions and improve living standards.

Over the weekend, Jean Jouzel, a French climate expert, was quoted in an article the New York Times ran about the G-7 meeting and climate change. Jouzel declared that the “international scene now lacks dynamism in the fight against global warming.” He continued, saying that “to effectively combat global warming, all countries must look in the same direction.”

Therein lies the rub: When it comes to economic growth and energy consumption, the members of the G-7, as well as other countries around the world, aren’t looking in the same direction. Instead, per the Iron Law of Climate Policy, they are looking out for their own economic growth. And there’s little reason to expect that that will change any time soon.