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WSJ: Growth & Innovation Are Better Forms Of Climate Insurance

Editorial, The Wall Street Journal

President Trump announced the U.S. will withdraw from the Paris climate agreement on Thursday, to the horror of green elites world-wide.

If the decision shows he is more mindful of American economic interests than they are, the other virtue of pulling out is to expose the fraudulence of this Potemkin village.

In a Rose Garden ceremony, Mr. Trump broke with the 2015 agreement, starting the formal four-year withdrawal process: “We’re getting out. And we will start to renegotiate and we’ll see if there’s a better deal. If we can, great. If we can’t, that’s fine.”

This nonchalance inspired a predictable political meltdown, with the anticarbon lobby invoking death, planetary disaster and a permanent historical stain. Billionaire Democratic donor Tom Steyer called it “a traitorous act of war against the American people,” while Barack Obama accused his successor of joining “a small handful of nations that reject the future,” whatever that means. Get ready for another march on the White House.

But amid the outrage, the aggrieved still haven’t gotten around to resolving the central Paris contradiction, which is that it promises to be Earth-saving but fails on its own terms. It is a pledge of phony progress.

The 195 signatory nations volunteered their own carbon emission-reduction pledges, known as “intended nationally determined contributions,” or INDCs. China and the other developing nations account for 63% of annual global CO 2 emissions, and their share is rising. They submitted INDCs that pledged to peak the carbon status quo “around” 2030, and maybe later, or never, since Paris included no enforcement mechanisms to prevent cheating.

Meanwhile, the developed OECD nations—responsible for 55% of world CO 2 as recently as 2000—made unrealistic assurances that even they knew they could not achieve. As central-planning prone as the Obama Administration was, it never identified a tax-and-regulation program that came close to meeting its own emissions pledge of 26% to 28% reductions from 2005 levels by 2025.

Paris is thus an exercise in moral and social signaling that is likely to exert little if any influence on atmospheric CO 2 , much less on global temperatures. The Paris target was to limit the surface temperature increase to “well below” two degrees Celsius from the pre-industrial level by 2100. Researchers at the Massachusetts Institute of Technology’s Joint Program conclude that even if every INDC is fulfilled to the letter, the temperature increase will be in the range of 1.9–2.6 degrees Celsius by 2050, and 3.1–5.2 degrees Celsius by 2100.

Such forecasts are highly uncertain, which is inherent when scientists attempt to predict the future behavior of a system as complex as global climate. The best form of climate-change insurance is a large and growing economy so that future generations can afford to adapt to whatever they may confront.

A more prosperous society a century or more from now is a more important goal than asking the world to accept a lower standard of living today in exchange for symbolic benefits. Poorer nations in a world where 1.35 billion live without electricity will never accept such a trade in any case, while Mr. Trump is right to decline to lock in U.S. promises that make U.S. industries less competitive.

The surest way to “reject the future” is to burden the economy with new political controls today, because economic growth underwrites technological progress and human ingenuity. These are the major drivers of energy transitions that allow people to generate more wealth with fewer resources. Energy intensity—the amount of energy necessary to create a dollar of GDP—has plunged 58% in the U.S. since 1990, according to the U.S. Energy Information Administration.

Over the same period, intensity declined merely 37% in OECD Europe, 20% in Japan, 22% in Mexico and 7% in Korea. China dropped by 133%, but working off a far more wasteful initial base. Superior efficiency helps explain why U.S. carbon emissions fell by 145 million tons in 2016 compared to 2015, more than any other country. Russia was second, at minus 64 million tons. Over the past five years U.S. emissions have fallen by 270 million tons, while China—the No. 1 CO 2 emitter—added 1.1 billion tons.

All of which make the claims that the U.S. is abdicating global leadership so overwrought. Leadership is not defined as the U.S. endorsing whatever other world leaders have already decided they want to do, and the U.S. is providing a better model in any case. Private economies that can innovate and provide cost-effective energy alternatives will always beat meaningless international agreements.

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