Trump says energy regulations are hurting economic growth. The evidence says otherwise.

Source: By Vivek Wadhwa and Mark Muro, Washington Post • Posted: Tuesday, January 3, 2017

“I will cancel job-killing restrictions on the production of American energy, including shale energy and clean coal, creating many millions of high-paying jobs,” says President-elect Donald Trump. For his part, his nominee to head the Environmental Protection Agency, Scott Pruitt, has argued that growth and regulation are fundamentally at odds. “The American people are tired of seeing billions of dollars drained from our economy due to unnecessary EPA regulations,” he said.

The assumption they are making is that economic growth depends upon increasing carbon emissions. Trump and Pruitt seem to believe that because energy is essential for economic development, increasing its production by any means will boost the economy, and that limiting it in any way—as through emission controls—will hurt it.

The two are wrong on both counts.

Thanks to decades of innovation, smart regulation, and technology investment, the nation can grow and decarbonize at once. The key is to accelerate the move to low-carbon technology by strengthening—not eliminating—the rules and technology investments that are driving it.

Far from being a prohibitive drag on economic growth, decarbonization, or making the way that we get energy less dependent on burning fossil fuels that release carbon emissions, has gone hand-in-hand with output growth in most of the United States, according to research by the Brookings Institution. From 2000 to 2015, U.S. GDP grew by 30 percent though emissions declined by 10 percent.

Skeptics will argue that the nation’s economic growth would have been even faster if there had been less focus on low-carbon technology and carbon regulation, such as restrictions on emissions from coal-fired power plants. But the Brookings state-by-state interactive shows that, even in a period of what Pruitt deems regulatory “overreach,” the pace of economic growth has accelerated.

As of 2007, only 14 states had decoupled their economic growth from their emissions. This number increased to 34 by 2014, with states such as California, Georgia, New Hampshire, South Carolina, and Virginia joining the mix. These states expanded their economies by 22 percent even as they reduced emissions by nearly 12 percent.

And get this: 22 of the 34 newly decoupled states have been growing faster in the recent 2000–2014 period than they were in the previous 14 years. In short, decarbonization—prompted in part by federal and state regulations—has been accompanied by faster growth in many states. That is, economic growth has been accelerating not in spite of the changes leading to emissions reduction, but along with them. So much for the assumed growth–emissions tradeoff.

Once one looks at what is driving these developments, meanwhile, it turns out that the bulk of the progress to date has more to do with innovation-driven technology change, market forces, and industry restructuring. Regulations to date have been neither a major deterrent nor the major driver of decarbonization, though if anything clean air regulations and sourcing rules like renewable portfolio standards or auto emissions standards have helped the cause. In this connection, the Brookings study affirms the findings of a recent EIA analysis that concludes that more than two-thirds of the country’s and individual states’ emissions reductions between 2005 and 2015 were due to fuel-use changes in the power sector—changes that reflect decades of government research and commercialization focus on low-carbon technologies.

Most notably, the nation’s recent “decoupling” owes heavily, as is well known, to the advent of cheap natural gas, as well as to the plummeting prices of renewables. In each case, extraordinary price gains and market-driven replacement of coal plants have been made possible by federal innovation policies that have expanded low-carbon energy options, pushed wholesale electricity prices to record lows, and accelerated the retirement of America’s aging coal plants. Altogether, the Brookings analysis shows that—thanks to technology change—coal plants’ share of state electricity generation declined in no fewer than 43 states.

All of this makes obvious the best way forward: Having enjoyed an incredible windfall from past federal investment in low-carbon innovation, the Trump administration should invest in more of it to generate the next era of windfalls.

Currently, the nation’s innovation-created glut of cheap natural gas is allowing sizable one-time carbon gains through the retirement of coal plants. Obviously, though, those gains won’t continue forever; and gas brings its own emissions problems. So this unique opportunity to increase low-carbon research and development, and accelerate the development of new technologies that can allow further growth, is one we would be foolish to overlook.

Where should the Trump administration invest? Many potential technologies are on the horizon and could be palatable to the Trump team. As the Columbia University scholar Jason Bordoff has noted, renewables are ripe for breakthroughs. “Solar paint on windows and buildings could soak up the energy of the sun. And new grid-scale energy-storage technologies could enable intermittent renewable energy sources like wind and solar to take a greater share in the power generation mix by delivering their electricity to the grid even when the sun is not shining and the wind is not blowing.” We could well be heading for an era of abundant and inexpensive clean energy.

The point here, in any event, isn’t to set a particular technology roadmap; rather, it is to observe that what has served the nation well in recent decades should be continued. Clean-energy innovation has finally broken the dependency of economic growth upon technologies causing emissions growth.  Now it holds out the opportunity to allow for a deep decarbonization compatible with increasing prosperity. That vision is an essential element of any quest to “make America great again.”

Vivek Wadhwa is professor at Carnegie Mellon University Engineering at Silicon Valley and a director of research at Center for Entrepreneurship and Research Commercialization at Duke. Mark Muro is a senior fellow at the Brookings Institution.