Trump can’t stop corporate America from fighting climate change.

Trump Can’t Stop Corporate America From Fighting Climate Change

Trump Can’t Stop Corporate America From Fighting Climate Change

A Closer Look at the New Energy Economy
May 31 2017 5:57 PM

Trump Can’t Stop Corporate America From Fighting Climate Change

Sustainability is good for business. Pulling out of the Paris Agreement won’t change that.

90299552
Then–Secretary of State John Kerry speaks at the United Nations signing ceremony for the Paris Agreement on April 22, 2016 in New York City.

Spencer Platt/Getty Images

Here are a few items that have been in the news.

At their annual meeting, ExxonMobil Corp. shareholders, led by giant financial firms, approved a resolution against management’s wishes that would force the company to report on the impact of climate change.

Advertisement

S.C. Johnson & Son, the family-controlled consumer goods powerhouse, announced its factory in Bay City, Michigan, is now powered entirely by wind power generated nearby. The factory joins two others—in the Netherlands and Poland—that run on zero-emissions wind power.

In Tallahassee, Florida, workers broke ground on the construction of a solar plant with a capacity of 20 megawatts that, upon completion, will provide enough power for 3,400 homes.

The city of Porterville, California, announced an event on Friday to mark an order for 10 zero-emission all-electric buses, which a nearby factory will produce.

Two large coal plants operated by utility PSEG in Jersey City, New Jersey are officially being disconnected from the grid and will be retired, leaving only a single coal-burning plant in the Garden State.

Advertisement

Wednesday afternoon, I picked up the new all-electric Chevrolet Bolt that I’m leasing. Made in the U.S., the car runs entirely on battery power and provides mobility without combustion.

Oh, and news reports indicated that President Donald Trump may announce as early as this week that he is pulling the U.S. out of the Paris Agreement on climate change.

Yes, one of these things is not like the other.

From renewable energy to energy efficiency to new modes of transportation and mobility, sustainability has become a very large global business. Lots of companies make money in these sectors, and many more governments, institutions, and individuals consciously commit resources to these efforts. And while it’s important to have federal policy working in favor of these new technologies and the ongoing energy revolution, Trump’s decision won’t alter the structural forces that are propelling the daily progress of green investments and the ongoing revolution in electricity production. The planet doesn’t need the United States’ official buy-in to confront climate change.

Advertisement

Here’s why.

Trump’s move would only affect the U.S. And while America’s largest companies may be domiciled in the United States, they have to worry about meeting standards across the globe. The U.S. has about 4 percent of the world’s population and accounts for about 25 percent (and falling) of global economic output. That’s huge. But with every passing year, our economic influence wanes as a global customer and a global producer. Trump may want to give U.S. companies a license to pollute more or tell U.S. automakers that they don’t have to bother meeting aggressive mileage standards. And they may take him up on it. But if a U.S. automaker wants to sell cars in Europe (whose economy is roughly the size of the ours) or China (which is getting there), it will likely have to develop vehicles that can run farther on batteries and guzzle less gas. (General Motors already sells fewer cars in the U.S. than it does in China.) The global case for ironing emissions out of transportation is growing in urgency, not declining. India, population 1.3 billion, is making noises about banning gasoline-fueled vehicles from its roads by 2030.

The same dynamic holds on the consumer side. Coca-Cola, McDonald’s, and many other consumer-facing brands get the lion’s share of their revenues, and virtually all their growth, from overseas. For the sake of their brands, and simply to maintain their social license to operate around the globe, they have to remain committed to sustainability. Regardless of what Trump does, they’ll have to figure out how to comply with stringent carbon or emissions limits in overseas markets. They’ll start doing it because it is necessary for their brand, and they’ll keep doing it because it turns out that many of these initiatives are good for their bottom line. And Trump’s action won’t change that.

Even in the absence of aggressive national targets, the case for cleaner (or cleaner-burning) fuels remains intact. For the last several years, utilities have been planning—and executing those plans—to lessen their reliance on coal and increase their reliance on natural gas and renewables. Utilities make investment decisions for 20, 30, and 40 years, not for the four or eight years of a Trump presidency. States, whether it is California acting on its own or the northeastern members of the Regional Greenhouse Gas Initiative, are placing significant pressure on the power industry to reduce emissions. Trump’s move won’t cause utilities to rewrite their Integrated Resource Plans. Nor will it stop them from canceling plans to shutter coal-fired plants. This week’s coal-plant closures in New Jersey will certainly not be the last.

Advertisement

And that’s because of another structural issue that Trump can’t reverse: cleaner forms of electricity are cheaper. As Trump adviser Gary Cohn recently said, “Coal doesn’t even make that much sense anymore as a feedstock.” The U.S. has abundant (read: cheap) supplies of natural gas. And the renewables sector, a cottage industry only a decade ago, has blossomed into an industrial powerhouse—one now possessing an enormous lobbying punch. Again, on a pure cost basis, even with the modest subsidies renewables enjoy wind and solar is often cheaper than coal. Should Trump pull the U.S. out of the Paris Agreement, companies, utilities, and universities will continue to invest in wind and solar.

Finally, there’s the power of the American consumer. Polls show that Americans, by large margins, believe that climate change is real and want the government to do something about it. They’re less likely than companies to put their money where their mouths are, in part because it’s money and in part because options just haven’t existed. But that may be changing. There are more than 1 million solar installations in the United States, many on the roofs of people’s homes. Sales of the Bolt have been modest, but overall sales of plug-ins and plug-in hybrids have been growing rapidly. And if Tesla gets its act together, it could easily sell a couple of hundred thousand Model 3s this year.

So, yes, it would be problematic and depressing if the U.S. were to join Nicaragua and Syria in not being part of the climate accord. And if this withdrawal were to be followed by seven years of federal policymaking that is hostile to sustainability and renewables, it would be an even bigger problem.

But it’s too soon to write an epitaph for the big business of sustainability.