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China Watches as America Greens

GREEN POLITICS - The color green has long been associated with envy, but increasingly it’s becoming a pigment of mass delusion.

Amid near-hysterical reporting about the climate, the U.S., and much of the West, is embracing willy-nilly policies likely to weaken our economy and boost China’s ascendancy at the expense of democracy and market economies.

In essence, China is adopting a version of the great Muhammad Ali’s “rope-a-dope” boxing strategy, which had the opponent wear himself out by launching harmless punches as Ali lounged on the ropes. Then, as the rival began to weaken, Ali would seize the moment and pummel him.

Much the same is happening with the emerging climate agenda. Under Paris and other accords, China, as well as India and other developing countries, essentially have been given a pass not to achieve “carbon neutrality” until 2060. The argument is largely (at least formally) that the West is responsible for the heavily hyped climate “apocalypse” because of its longer history of industrial growth, although neither China nor India seems eager to de-industrialize, cut itself off from medical advances, or otherwise halt its progress toward Western levels of prosperity.

Western countries, notably the United States but also the EU, have reduced their emissions significantly over recent decades. They have assumed considerable costs in making their economies more “green” and, in some cases, have sought to eliminate or constrict whole industries, such as oil and gas, while imposing enormous costs on their farmers, manufacturers, small-business owners, and, directly or indirectly, consumers.

In contrast, despite its penchant for tantalizing Western greens with demonstration projects suggesting a turn toward a “net zero” policy at some point in the future, China has made a recent decision to slow its greenhouse-gas reduction. Amid a global energy crisis, China continues to expand its use of coal and other fossil-fuel plants. This allows the likes of Apple’s Tim Cook to pose as a progressive green visionary here, while basing his company’s production in a country that emits more greenhouse gases than the United States and the EU combined.

Nor is China alone. India is doing the same, and we can imagine that over time other developing countries, notably in Africa, will want access to power. Today, one in ten people globally have no access to electricity and over 3.5 billion lack reliable access to it. Many of these countries now look to China, not the West, to meet this demand with new fossil-fuel projects.

Ironically, green policies tend to push production out of places with strong environmental controls and into dirtier places with lower energy and regulatory costs. According to one study, California’s draconian laws have pushed so many industries and people out of the state that the net impact of emissions — this is global after all — has been negligible at best. Green policies have already accelerated the de-industrialization of countries such as the United Kingdomand could undermine recent efforts to bring factories back from China.

Chinese dictator Xi Jinping’s commissioning of new fossil-fuel plants likely reflects pragmatic concerns about inequality and economic costs for the country’s masses. As someone with an analytical, longer-term view of politics, and more importantly as an already-significant figure in Chinese history, Xi knows that a weak economy could demolish both his imperial “mandate of heaven” and undermine the legitimacy of the Communist Party. The cadres may well address climate issues over time, notably by massively ramping up nuclear power, but they will continue to maintain a wary eye on how policy affects a potentially restless citizenry.

Xi is an awful, even genocidal dictator, but he is focused on his subjects, if only out of political calculation. In the West, an odd coalition of the upper-end gentry in Silicon Valley and climate activists on Wall Streetimpose increasingly draconian “net zero” policies. As the U.S. faces a growing energy shortage, President Biden and most of his party still seem determined to reduce energy investment, with new regulations making it harder to build new fossil-fuel plants, a factor that is contributing to soaring energy prices. Earlier this month, the Biden administration canceled a lease sale for some large oil and gas projects.

In some ways, the embrace by many of the most powerful Western companies of environmental, social, and governance (ESG) goals and the notion of “the Great Reset” represents nothing less than a modern equivalent of class war. The potential profits for Wall Street and tech firms to be made by capitalizing on an enforced jihad against fossil fuels may be profitable, but for most people in the West the prospects are less rosy.

Eric Heymann, a senior economist at Deutsche Bank Research, may be an advocate of the “Great Reset” or something akin to it, but he still warns that Europe’s Green Deal and its goal of climate neutrality by 2050 threatens a European mega-crisis, leading to “noticeable loss of welfare and jobs.” Overall, it is the industrial areas and the countryside that suffer, not the favored cities of Western elites — even though the unfavored geographies are “on a par” with big cities in terms of greenhouse-gas production. Already as many as one-quarter of Germans and three-fourths of Greeks have had to cut other spending to pay their electricity bills, which is the economic definition of “energy poverty.”

Much the same has happened in America, most notably in the center of green virtue: California. Because of strict climate rules, California electricity prices have increased five times as fast as the national average over the past decade. In 2017 alone, they increased at three times the national rate, devastating poorer Californians, particularly in the less temperate interior where “energy poverty” has grown rapidly. Last year, residential energy prices grew 2.7 times the rate of the rest of the country. California’s environmental policies, as a new Breakthrough Institute Report suggests, are creating a “Green Jim Crow,” whereby housing, jobs, and upward mobility vanish for the state’s largely minority working class.

California’s high energy prices have had a particularly harsh impact on blue-collar sectors, too. Indeed, an analysis by the Chapman Center for Demographics and Policy details how California’s anti-climate-change regime has exacerbated economic, geographic, and racial inequality by depressing historically well-paying jobs in manufacturing, energy, and home-building, all key employers for working and middle-class Californians. Even without adjusting for costs, no California metro ranks in the U.S. top ten in terms of well-paying blue-collar jobs. But four — Ventura, Los Angeles, San Jose, and San Diego — sit among the bottom ten.

The green future, as it is unfolding, will be a distinctly inegalitarian one. It’s hard to imagine a future Houston, with its vast middle-class economy, being built around “renewable” energy. Of course the media and their environmental allies hail the promise of “green jobs,” but even the climate-obsessed New York Times admits that these jobs — which tend to be temporary and non-unionized — pay for less than those in fossil-fuel energy and manufacturing.

Nowhere is the danger posed by green delusions clearer than in the race to electric cars. Even as gas-powered cars are getting cleaner and new workable technologies, such as hybrid cars, are emerging, the green elite has decided that only one kind of car — an electric one — can be permitted over time. As states such as California seek to ban gas-powered cars, something the Biden administration has also proposed, we could be undermining our own transport sector, ceding a large part of our economy into the hands of China.

The ever-quickening pace of mandates for electric cars, with little in the way of new electric capacity, seems likely to serve Chinese interests more than ours. Beijing maintains almost total domination of the solar-panel industry — its battery capacity is now roughly four times ours, a gap projected to expand by 2030. They also have effective control of the requisite rare-earth minerals and the technology for processing them.

Indeed, given China’s growing dominance in computer production (and its drive to control semiconductors as well), the future of American automobile production could very well consist of slapping a Chinese computer to a Chinese battery with some bent metal, arguably also sourced there, around it. The much celebrated big reductions in solar prices, it turned out, came with government subsidies, and now that China has removed these, prices for the materials for solar panels have surged to the point that many planned projects are being delayed.

Like many other current green policies, the shift to electric cars will also threaten the living standards of working- and middle-class households. As the prices of rare metals and computer chips surge, the prices of EVs have grown. Electric-truck maker Rivian recently raised the price of its pickups by $12,000 to nearly $80,000, not normally what working- or middle-class Americans can afford to pay for a pickup. The enormous demand for both rare earths, such as lithium, as well as such basic commodities as copper and aluminum — critical for EVs — has sparked a mounting inflationary wave in EV costs and could lead to more environmentally challenging mining projects.

When California’s governor Gavin Newsom announced an accelerated schedule to ban gasoline-car sales by 2035, Assemblyman Jim Cooper, an African American from Sacramento, denounced the proposal, pointing out that the low- and middle-income drivers he represents can’t afford vehicles that “cost more than $50k each.” “How will my constituents afford an EV? They can’t,” he tweeted. Besides denouncing this move as “environmental racism,” he also pointed out that Newsom’s move doesn’t “take into account the strain an all-electric vehicle fleet will have on our state electric grid.”

Emboldened by its mission to “save the planet,” the climate–industrial complex is not focused on such things as looming power shortages, national security, or conditions for the masses. Instead, it chants doggedly about the most extreme projections while ignoring that there is considerable debate — even within the ranks of the IPCC — about the extent of the threat, its timing, and best solutions. This embrace of apocalypse, now deeply entrenched in the mass media, allows it to ignore both class and national-security concerns.

China’s reluctance to adopt a quick “net zero” agenda for the near future, however, suggests a critical flaw in the policy of an ever-accelerated climate-change regulation. After all, the Chinese see the same data and will know what the implications of its greenhouse-gas emissions are meant to be, and yet Beijing still seems unworried enough to recognize that climate policies also involve a trade-off, not something that suggests that it believes that a planetary catastrophe lies ahead. Certainly, the reluctance among American greens to allow for natural gas or nuclear power (a view that may be losing its edge in Europe, if the EU Commission’s green taxonomy goes through) means that our industries will remain underpowered relative to China’s, whose firms can access a broader mix of alternatives. Even Elon Musk, whose fortune depends on electric cars, has slammed “green hucksters” making U.S. energy policy.

In the future, we must confront the reality that our energy policies are playing into the hands of a Chinese-led authoritarian bloc, fueled increasingly by Russian oil and gas, including one new gas pipeline (and there may well be more). Rather than use our domestic production to secure our economy, and middle-class jobs here, the administration has sought out supplies from such enlightened places as Saudi Arabia, Venezuela, and, perhaps soon, Iran’s forward-thinking mullahs. This seems fine with our virtue signalers such as Blackrock’s Larry Fink, an enthusiastic ESG advocate, who told investors last fall to triple their exposure to China.

There may be some stirrings in our corner of the ring. As noted above, Russia’s war in Ukraine has spurred the EU to change its energy policies to accommodate natural gas — including from the United States — and, in some places (notably, France), to return to nuclear power. Many Europeans now openly admit that wind and solar cannot solve the continent’s short- or medium-term needs without an expansion of both gas and nuclear energy. In the private market, realities concerning energy are devastating the sky-high prospects for green-energy firms and may lift the fossil-fuel investments so despised by the enlightened classes.

Reality may be dawning, if slowly, on this side of the Atlantic as well. Faced with the prospect of widespread power shortages, President Biden, no doubt to the horror of many greens, has decided to send federal money for nuclear plants. Even in California’s green dreamland, Governor Newsom has reversed his position on shutting down natural gas and the state’s last nuclear plant in order to avoid massive shortages this summer. This reflects a reality that California, with enormous fossil-fuel deposits, has become hopelessly dependent on imports of energy, largely from less regulated states and abroad.

We need to find better ways to deal with climate issues besides undermining our economy for the benefit of autocrats and the unelected bureaucracy that enforces their will. Less intrusive methods, such as promoting home-based work, energy efficiency, and even carbon taxes, would be less damaging than the current, often ineffective regulations. Also necessary may be a growing focus on climate adaptation, as the Dutch have done for centuries, that could allow for economic growth even as emissions drop. But first we have to recognize the consequences of our current trajectory: a weaker middle class, mass immiseration, and growing global dominance by China. If this is what we are being told we must do for the “Great Reset,” it’s time to unset it.

 

(JOEL KOTKIN — Mr. Kotkin is the presidential fellow in Urban Futures at Chapman University in Orange, Calif., Washington Fellow at the Claremont Institute’s Center for the American Way of Life, and the executive director of the Urban Reform Institute. His new book is The Coming of Neo-Feudalism. @joelkotkin)