By the Democratic Staff of the Joint Economic Committee
Republicans like to talk about the importance of policy certainty and the risks associated with uncertainty. President Trump apparently forgot that yesterday when he walked into the White House Rose Garden and declared that the United States was pulling out of the Paris Climate Agreement.
President Trump’s announcement creates unprecedented uncertainty about the U.S. role in combatting climate change and, at a more basic level, whether it can be counted on to live up to its commitments. In withdrawing from the climate agreement, President Trump also dealt a lasting blow to U.S. credibility around the globe.
Less remarked upon is the withdrawal’s potential impact on the clean energy economy in the United States, a key source of recent economic growth.
It’s no secret that the global economy is in the midst of a major energy transition: governments, businesses, and consumers around the world are shifting to clean renewable energy generation, such as wind and solar.
The United States is an important leader in this transition, but it’s still in the early stages and those countries that move aggressively will reap the biggest rewards in jobs and exports.
Last year, U.S. wind capacity grew by 16 percent, and solar capacity nearly doubled.
Employment in wind electricity increased by 32 percent 2015 to 2016 and employment in solar electricity increased by 18 percent compared with an increase in overall employment of 1.6 percent over the same period.
And the jobs aren’t limited to renewables. More than 2 million Americans work in energy efficiency related positions, producing energy-efficient products or providing services that reduce energy usage. Energy efficiency accounts for one in five construction jobs.
Altogether, 3.3 million Americans worked in the clean energy economy in 2016.
As alarming as yesterday’s announcement was, it was far from surprising.
Many have seen this coming for a while. Last fall, 377 members of the National Academy of Sciences, including 30 Nobel laureates, signed an open letter warning of the consequences to the climate and U.S. credibility of pulling out of the Paris Climate accord.
In December 2015, more than 190 countries committed to take actions to address climate change in an historic agreement. The United States was a key leader – until it wasn’t. It is now one of just three countries not part of the agreement, joining Syria and Nicaragua.
As we look at clean energy opportunities ahead, the United States has a running start. But investments in clean energy technologies can take decades to pay off and so investors have to factor in what market conditions will look like in the future. Signals from political leaders and changes in policy inform those market forecasts and expectations.
This week, investors received a very clear signal that at the highest levels of the U.S. government there is very little appetite for clean energy.
Yesterday’s action reinforces earlier signals from the Trump administration, which proposed cutting the Department of Energy’s renewable and energy efficiency program by nearly 70 percent.
Even so, the opportunity to drive clean energy innovation remains great in the United States and American companies will continue to work to seize it.
Many of the jobs created will necessarily be domestic, as wind and solar energy cannot be imported in the same way that fossil fuels can.
But parts essential to making a wind turbine, the photovoltaic cells that convert sunlight into electricity, and the batteries that store energy can all be produced anywhere on the globe.
Countries around the world recognize this opportunity and are investing billions of dollars into advancing clean energy production, storage, and distribution technologies in the hopes that their countries will become the global leaders producing the technologies and jobs of the future. Companies are savvy to these efforts, no matter where they are based.
Prior to the presidential election, Ernst & Young rated the United States as the most attractive country in the world for private-sector renewable energy investment.
It would be interesting to see how we stack up today.