What would energy policy look like under a Donald Trump presidency? It’s a question worth considering. While the race to pick a Republican presidential nominee remains undecided, the prospect of a Trump victory obviously can’t simply be dismissed out of hand.
Trump has said very little about energy or climate change on the campaign trail, and neither issue is mentioned on his campaign website. What little Trump has said on the subject suggests that he is a strong skeptic of human-caused climate change. He has repeatedly referred to global warming as a “hoax” and has tweeted that the concept of global warming was “created by the Chinese” to hurt U.S. manufacturing.
Trump has since claimed he was joking, but his subsequent statements likewise suggest a skeptical stance. Based on these statements, the most likely course of action for a Trump administration would be to roll back existing regulations on greenhouse gases imposed by the Environmental Protection Agency and to withdraw from any international commitments on the subject.
On the other hand, given Trump’s ideological flexibility, and his openness to making “great deals,” it’s not impossible that Trump could update an old Vulcan proverb by being the one person who can actually get a climate deal done. Paradoxical as it might seem, reaching a deal on climate would not require Trump to give up his belief that climate change is a hoax.
Instead, the key to a deal would be policies that would advance some of Trump’s non-climate related goals, in additional to cutting emissions. As R Street President Eli Lehrer often has noted, liberal proposals to deal with climate change largely consist of things the left wants to do anyway. There’s no reason why conservative or Trumpist policy responses shouldn’t follow the same strategy.
When it comes to climate change, the grandest of all grand bargains is, of course, the revenue-neutral carbon tax. Under this plan, all carbon emissions in the United States would be subject to a tax, with revenues from the tax being used to offset cuts in existing taxes. For example, carbon-tax revenue could be paired with cuts to America’s corporate taxes (which are high, by international standards) or with cuts to payroll taxes or simply by returning the revenues to taxpayers via a rebate system.
R Street has written extensively on the subject of a revenue-neutral carbon tax. It has the potential to be a great deal – so good it will make your head spin! Trump might find particularly appealing a feature of the proposal that involves international trade. As typically proposed, a revenue-neutral carbon tax would involve what are known as “border adjustments”: imports from countries without their own carbon-tax system have the tax imposed on them at the border, while American exports have the tax refunded.
These adjustments are designed to ensure that U.S. manufacturing would not be unfairly disadvantaged by the carbon tax. Given that the most rapid growth in carbon emissions comes from countries like China, it’s possible Trump would find a revenue-neutral carbon tax a means by which America can win again.
On the other hand, there are fundamental differences between border adjustments and the kind of tariffs Trump has proposed. On the campaign trail, Trump typically invokes tariffs as a discretionary weapon to be used against recalcitrant countries or companies. By contrast, the border adjustments included as part of a carbon tax would be applied neutrally and would not serve either a retaliatory or a protectionist purpose.
If Trump were going to come up with an actual climate plan, the more likely option would be something with a big emphasis on nuclear power. Nuclear power is something of an oddity, ideologically speaking. It provides zero-carbon energy, yet it tends to be viewed negatively by environmentalists, including many who are concerned about climate change. Conservatives, by contrast, tend to have positive views of nuclear power, even though building nuclear plants typically involves large government loan guarantees, subsidized insurance and other subsidies.
A big push to build nuclear plants would tie in with Trump’s themes of restoring national greatness (nuclear plants are nothing if not “yooge”), and he is probably better suited to make the case for nuclear to the general public than either a Democrat or a standard-issue Republican.
Of course, all of this is just speculation. But given how unpredictable American politics has proven to be this season, speculation may be the best we can hope for.