‘The rest of the world is forging ahead on climate action — so far, Donald Trump hasn’t waylaid that’

(Photos: Getty Images & iStock) (S)MILES: Clean energy could reshape car (Photos: Getty Images & iStock) GUNS & SUNFLOWERS: The Ukraine war has a huge influence on energy hotos: Getty Images & iStock) STRIKE A POSE: Mobiles need mining to photograph nature (P hotos: Getty Images & iStock) Catherine Wolfram vividly illustrates the challenges — and satisfaction — of combining academia with policy. Describing her research, she says, ‘I bring new data to help us understand the world and particularly the energy industries. These are absolutely essential to economic growth and development — yet, we don’t have a great understanding of the characteristics of energy, its viability, price, etc., as being so important to development. Second, the way we produce energy now is closely linked to climate change and environmental damage, including particulate matter and its impacts. Third, the energy industries are heavily driven by policy decisions — and there are very real questions policy makers face around how to use and price energy, which types should be incentivised, etc. Fourth, energy is deeply intertwined with the geopolitical layout — countries like Russia, Saudi Arabia and increasingly, the United States, are huge energy exporters. Economies like India and Japan are big importers — these facts really influence how these countries figure in geopolitical discussions.’Many nations are attempting to transition to clean energy — how would the uncertainty over US tariffs impact that? Wolfram considers the question carefully before answering. ‘There are two parts to this. The first is, how will these impact the clean energy transition in the US? As an example, most nations import lithium ion batteries from China. If the US puts tariffs on those, their prices will rise — this makes the transition more expensive. The other risk is the permanence of the subsidies passed earlier — right now, those are potentially on the table as something the Republicans would use to pay for tax cuts they want to extend. So, there is great uncertainty facing clean energy developers in the US.’She then adds, ‘On the flipside, the rest of the world is forging ahead on climate developments — so far, that hasn’t been waylaid by President Trump . China just decided to expand its carbon pricing scheme to cover additional industries — many countries, including India, are discussing emissions trading schemes while Brazil passed legislation. So, hopefully, there will be strength in numbers around climate action. In the long run, that might even nudge the US to join.’Speaking of such strategies, TE asks Wolfram to explain the difference between the tariffs applied by the US and the Carbon Border Adjustment Mechanism (CBAM) the European Union (EU) is applying on imports? The economist answers energetically, ‘For one, the CBAM is applying a carbon price to imports which the Europeans are applying domestically — this is like a VAT. If you’re a consumer in Europe, whether you buy something made domestically or an imported product, you pay the VAT. Similarly, with the CBAM, no matter what consumers buy, this must reflect the carbon emissions used to make it. Second, the EU will reflect a carbon price that’s already been paid domestically — so, countries like Turkey, for instance, where a lot of goods are exported to the EU, have put on their own carbon price. That means they get to keep the revenue domestically and the EU will recognise that.’ Wolfram adds with enthusiasm, ‘In the economic model, the optimum border adjustment is one you never have to apply because it encourages every country to adopt some form of carbon pricing.’(PYet, in this new economic landscape, full of uncertainties, is it realistic for countries to keep aligning environmental goals while pursuing growth? Wolfram replies pointedly now, ‘It is extremely important to recognise that not trying to mitigate climate change is harmful to growth — we are all seeing storms decimate towns, extremely high temperatures impacting people, crops, etc. The mistake is framing this as an either/or.’ Wolfram then offers an intriguing insight. ‘In fact, the actions Donald Trump is now taking make it easier for countries outside the US to band together and confront climate change — taking the US out might make it easier to develop coordination. Second, Trump would like to have individual negotiations with countries — that gives the US more power. However, if the others band together and say something like, ‘We are uniformly imposing a carbon price, with a concession for lower-income countries in our coalition, and if you want to export to us, you’ll have to pay this’, that could be very advantageous. There are ways by which combining forces increases the pay-offs to other nations.’Wolfram knows strategy, given how she was America’s Deputy Assistant Secretary for Climate and Energy Economics and part of the White House team in 2021 which set a price cap on Russian oil after the Ukraine crisis began. TE asked her what the key objectives were then — and how those have worked out? Wolfram says, ‘One objective was to take revenue away from the Kremlin and make it harder for them to continue their war in Ukraine. The second was to keep global oil markets well-supplied — the conventional tool on a bad-actor oil producer would have been an outright embargo, like the US currently imposes on Iran. However, in 2022 — when the world was recovering from the pandemic and supply chain disruptions had begun, pushing up inflation — taking Russian oil right off the market would have been hugely detrimental. It might have sent the world into a global recession. So, we had to create a new tool. We also knew China and India were major buyers of Russian oil — so, we had to craft this in a way that made it in China and India’s best interests to participate. This is how the price cap emerged.’ Wolfram adds a somewhat economical assessment here, ‘It could have worked better if it had been enforced more stringently.’TE concludes by asking the economist about her research on air conditioning and its link to human development — as ACs proliferate worldwide, how will energy demand change? Wolfram laughs somewhat wryly and replies, ‘It’s true that while energy production is driving climate change, people are addressing high temperatures by using even more energy. Air conditioning access reflects income disparities and many worrying differences between the rich and poor. In terms of the climatic feedback cycle itself, if we can make electricity clean, we won’t have this. Then, we can rely more and more on electricity to navigate climate change — and use this power for multiple purposes, from cooling homes to making steel.’