The Looming Climate Crisis Under Trump's Comeback

The return of Donald Trump as the president of the United States, with effect from January 20, 2025, has dominated world events this past week. US stocks have rallied, even as Indian and other emerging markets have seen capital flight, as funds redeploy to the US, in search of higher stock prices and higher yields on government bonds. The same Trump promise to lower corporate tax rates has set expectations of higher corporate profitability. This, in combination with Trump’s promise to exempt some kinds of personal income from tax, laid the roadmap for higher fiscal deficits and greater government borrowing, pushing up the yield on US treasuries. The dollar has strengthened against most currencies.

The rupee has dropped to all-time lows against the dollar, and all dollar-denominated imports would go up in price, other things remaining the same. Hopefully, other things will not remain the same. Trump’s campaign promise to end wars around the world – both Israel’s war on Gaza and the Ukraine war go on only because of massive US support for each – would work to ease oil prices, both by shaving off the risk premium and by augmenting supplies through unfettered flow of Russian oil and gas into global markets. The US is already the world’s largest producer of oil and a major exporter of Liquefied Natural Gas, and Trump’s policy is to promote American hydrocarbons further, adding to global supplies.

Another place where a major Trump impact is being felt is in Baku, Azerbaijan, the site of the 29th Conference of Parties to the UN Framework Convention on Climate Change, called COP29. Trump, as the 45th president of the US over 2017-20 had withdrawn from the Paris Accord worked out by 196 countries by COP21 at Paris in 2015. He calls climate change a hoax, and is likely to take the US out of global efforts to combat climate change, once again. The US delegation at Baku has been stripped of the agency to make any new commitments.

President Biden’s Inflation Reduction Act had offered hundreds of billions of dollars worth of direct funding and open-ended tax credits worth anything between $250 billion to $1 trillion up to 2032. Many of these are at risk. However, some large green projects are coming up in strongly Republican states, which would be loath to scratch that investment. Some projects would therefore survive Trump’s disdain for green initiatives. Further, American companies that do business with the EU, which is the most climate-conscious and climate-conscientious part of the world, are likely to go ahead with their emission reduction and harm mitigation projects, in order not to be at a disadvantage in the world’s second-largest market.

India plays along with the emission reduction narrative, even though 75% of its electricity is generated from coal. India is massively adding to its renewable capacity in both wind and solar. Ethanol is another area of so-called renewables, but this is misguided. Producing ethanol from sugarcane, corn or any other crop is resource-intensive, and guzzles subsidies on irrigation water, power for pumping out the water from deep underground, fertilisers, and on financial incentives for farmers. Diverting corn to biofuel could raise the cost of animal feed, and push up food prices.

Where India lags is in two areas of climate action. One is in passively going along with the Western narrative that because climate change is a global problem, everyone should share the burden. Once climate action is identified as reducing additional emissions, this makes perfect sense. However, reducing emissions is ineffectual, as a tool for combating climate change.

The urgent task is to remove a goodly part of the 2,400 Gigatonnes of CO2 equivalent of emission that have accumulated in the atmosphere since the mid-19th century. We need net negative emissions now, not reductions in additional emissions. Just six years of emissions, at the annual rate of 40 odd Gigatonnes of CO2 each year would exhaust the CO2 budget remaining to exceed the Paris target of containing global warming below 1.5 degrees Celsius above pre-industrial times. Only net negative emissions would achieve this.

Once achieving net negative emissions is identified as the only sensible and effective course of climate action, it is clear that the bulk of the responsibility falls on the rich countries that have put the bulk of the atmosphere’s greenhouse gas load in the first place. It is their duty to remove such CO2 out of the atmosphere by millions of tonnes, along with reducing fresh emissions. One of the most positive features of the Biden administration’s Inflation Reduction Act has been that it has given generous funding, for the first time, for Carbon dioxide removal (CDR), both for advancing research in this area and for executing projects based on available technology.

If failure to posit CDR as the climate-saving action the world desperately needs is one major failure for India, as the leader of the Global South, the second failure is in developing and deploying technology to make CDR not just viable but a positive source of new income. Technologies exist to convert atmospheric CO2 into Ammonia and forms of pure carbon, as well as to develop bacteria that would convert CO2 into ethylene and other organic substances.

Imagine a situation in which humanity would mine the atmosphere to take out CO2 and convert it into the entire range of petrochemicals and other organic compounds that we produce from the hydrocarbons pumped out from the earth. We would stop adding fresh emissions, and store some of the captured CO2 into carbon and other products that would store the captured CO2 permanently, creating negative emissions.

Developing a range of technologies to achieve this would be of great service to humanity and immensely profitable. India must fund research into such technologies, instead of merely trying to expand on existing renewable energy production. India has the engineering talent, the scientific manpower and the initial seed funding such research calls for. What is missing is the political will to crystallise this paradigm shift in climate strategy.

The focus of COP29 is on financing mitigation and adoption in developing countries. Let the rich world do this, but India should create CDR tech and products to make fighting climate change a net source of new income, rather than a cost. That would allow India to deploy India-made technology and products around the world, probably with the financing coming from the rich world.