The Biden Administration recently made headlines by announcing a greenhouse gas emissions reduction target for the U.S. of 50% by 2030 (relative to 2005 levels) when hosting a climate summit with world leaders. Indeed, in an executive order (Jan. 27, 2021), President Biden stated that “[i]t is the policy of my Administration that climate considerations shall be an essential element of United States foreign policy and national security.” China, on the other hand, is not only the world’s largest carbon emitter, but also considered by many to be a geopolitical rival to the U.S. It has gained prestige for committing to reaching net zero emissions by 2060, even while its emissions continue to increase significantly in the present. The teleforum will discuss the respective aspirational goals and current efforts of China and the U.S. with regard to climate change mitigation, as well as the legal frameworks within which each government attempts to implement policy. It will then discuss the impact of this issue upon the broader strategic interactions between the two nations, and consider paths forward for U.S. policy.
- Gabriel Collins, Baker Botts Fellow in Energy & Environmental Regulatory Affairs, Center for Energy Studies, Baker Institute
- Moderator: Dan West, Executive Committee, International and National Security Law Practice Group
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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.
Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.
Nick Marr: Welcome, everyone, to this Federalist Society virtual event as this afternoon, now a federal holiday, and thank you for joining us if you are joining us. We apologize. It was not a federal holiday, in our defense, when we scheduled the event. We decided to go ahead, and thanks to our speakers for joining us at this time. So today, June 18, 2021, we have a discussion on "China, the U.S., and Global Climate Policy: Cooperation, or Competition." I'm Nick Marr, Assistant Director of Practice Groups here at The Federalist Society.
As always, please note that expressions of opinion on our call today are those of our experts.
We're very pleased to be joined by two experts. I'm going to introduce them both. First, I'll start with our moderator, Mr. Dan West. He's Vice President at SCF Partners, and he's also a member of our International and National Security Law Practice Group Executive Committee, the sponsoring group of this program today. We're also joined by Mr. Gabriel Collins. He's the Baker Botts Fellow in Energy & Environmental Regulatory Affairs, the Center for Energy Studies at the Baker Institute. They have longer bios. They have done a lot more things, so you can check out those bios on our website.
Also, to our audience, we'll be looking to you for questions as we go along, so please submit those questions via the chat, and they'll be picked up at that point.
So with that and without further ado, Mr. Daniel West, I'll give the floor to you.
Dan West: Great. Thanks, Nick. Good afternoon, everybody. Thank you for joining us. Today we'll discuss global climate policy and its impacts on international relations with a focus on China and the United States. We'll start by discussing the aspirational roles that these countries have expressed in recent years, along with an assessment of their actions to date toward achievement of those goals. We'll also discuss the legal frameworks through which these countries attempt to implement policies to achieve the goals that their leaders set. And finally, we'll discuss the relative priority that each country places on the climate issue among the various objectives that they seek to achieve in the international arena and what implies for strategic interactions between the U.S. and China. So let's jump in.
China made headlines last year when government leaders announced a target of carbon neutrality by 2060, and that announcement seems to have won China significant praise and credibility from thought leaders and world governments. But, Gabe, as you noted in our recent piece, 65 percent of Chinese electricity comes from coal, a proportion that's much higher than OECD countries, and China continues to grow its coal-fire power supply. In fact, the entire world last year retired a net of 17 gigawatts coal-fire generation capacity, only for China to add 30 gigawatts.
Can you talk a bit about the commitments that China has made both in the near-term and the long-term, and how do China's promises compare to its action so far?
Gabriel Collins: Certainly, and thank you to all of you for being with us here today, and thank you for the question, Dan. So we have this very ironic disjuncture between China and the United States where the United States, at least for much of the past five to six years in rhetorical terms, has been viewed by the rest of the world as being very retrograde on climate. But when you look at what we've actually done versus what some of our government officials have said from time to time is we've actually increased our primary energy uses while reducing emissions. A big part of this is because of the natural gas supply boom we've had, the energy abundance that fracking has brought us. We've seen greater investments in deployment of renewables and so forth.
China, it's been a little bit of the opposite. We've seen some very aspirational climate statements, but as you pointed out in the question you're asking me, they've added a very significant amount of coal capacity. And just to flesh that number out a little bit more for audience is, if we go back to 2014 and look at 2014 through 2020, China has added -- they've constructed about as much coal-fire power capacity as the U.S. has deployed in entirety in our country, and we by ourselves are still one of the world's biggest coal users.
So I think what we're seeing is something where they've realized there are relatively easy diplomatic brownie points to score by saying certain things, but they also realize that to run a modern industrial economy, you need stable and reliable energy supplies. And in most cases, a country will gravitate towards what it has in abundance. For us that happens to be natural gas, first and foremost, and in China that happens to be coal. So we see that's still very pervasive in their energy system. That's likely to be the status -- that's sort of the baseline for many years to come.
Dan West: Yeah. It seems interesting China's not achieving dramatic improvements in its emissions profile today. In fact, it's probably going the direction. What do you think is the biggest reason for that to be the case, Gabe? Is it a question of motives? Is it economics? It is national security? Is it about institutional capacity for governance within the country itself or enforcing the mandates that they'd like to enforce? What's the biggest driver there?
Gabriel Collins: I think it's incentives. We'll sort of quietly and jokingly refer to what I call the VII index when we're looking at human or country behavior. It's values, interests, and incentives, and it's sort of like a big game of paper, rock, scissors. It's great to make normative value statements, but if those start to conflict with your interests, you find that sometimes values get set aside pretty fast. And if certain interests start to conflict with incentives, then the interests get set aside.
The reason why I use this framework here is there is a very legitimate set of interests, and I think it's recognized by a fair amount of the upper echelons of the communist party apparatus in China that the environmental status quo, especially built on the legacy of pollution that we have overhanging from the last 30 years or so, is something that is not fundamentally sustainable in the long term. And it's starting to become a real issue with some of the more affluent urban populations that are getting to a point where you're beyond a subsistence level of living and you actually do want to see blue skies instead of coal haze and so forth.
But I think one of the things that's really challenging is, especially when you go to start trying to pull coal out of the system there, is the economic presence both in terms of employment and in terms of the capital value of assets that exist and are operating today and all the actors that have stakes in those. It's enormous. You imagine some of the pejorative discussion we get in this country about big oil and the influence that people think it has over the political process. If you talk about big coal in China, it's probably an order of magnitude beyond that that. You're talking an employment value chain that has tens of millions of people in it and probably collectively has trillions of dollars of deployed assets.
What I use as my cautionary tale is when you look at how much trouble China's had enforcing fishing restrictions on its own fisherman in its exclusive economic zone and a lot of those implementation problems boil down to local officials not wanting to break people's economic rice bowls. The challenges with the coal sector are so much broader and deeper that I think whatever we've seen in other areas where you have the often locally driven implementation challenges, that's only going to be a magnified when we're talking coal.
I guess to cap my response to it is what I tend to look at when I'm assessing where China's going to go over the next 10 or 20 years on this is not the statements that are made at international diplomatic fora, it's some of the internal discussion. And I refer in particular to an October 2019 speech by Premier Li Keqiang who talked about coal essentially being a foundational energy resource for the country's energy security and industrial development. That's a statement I'd be a lot more willing to hang my hat on than some of the more rose-tinted pronouncements we get at international climate events from the Chinese delegations.
Dan West: That makes sense. That makes sense, and the incentives of the local officials are often suit as well, right, discussed for instance in Yen Cheng Wong's (sp) book about internal politics in China and about how often the local officials will feel big pressure on environmental issues but their metrics, specifically that they're seeking to achieve, is GDP based. And when those to in tension, often, like with many humans, they'll follow the incentives and want to be promoted and want to have a future career path. Can you talk a little bit about how that looks at the ground level in China?
Gabriel Collins: Absolutely. And what we're seeing this in spades is they work to juice economic growth as they start to come out of the lockdown-induced GDP hit we saw last year. In 2020, China smelted a billion tons of steel, which is an all-time high. They had record aluminum output, record cement output. And one of the things that we found in our research—it was really noteworthy—is for years, we've tracked the sales of excavators because basically what we were looking for originally is what is a good lead indicator that is harder for the government to manipulate or lie about. And we figured excavators are great because if you're a local contractor, you're not going to go shell out a six figure amount of money for a bit piece of complex iron unless you think you can actually put that thing to work and make the money back. Excavator sales in 2020 reached an all-time high, and I think are pretty clearly are exceeding levels that you would expect just for fleet recapitalization because there was another big boom about 10 years ago, when lo and behold we had another infrastructure based stimulus package in the wake of the 2008 crisis. But I think when you look at the data now, we've gone way beyond recapitalizing, getting old equipment out of the fleet that's left over from that, and it's really people with their ear to the ground locally thinking hey there's a lot more construction and other projects coming down the road.
Coming back to your point there, I think it's something where economic growth trumps almost everything else. And we're seeing that start to show up in a really big way that we're right back to infrastructure and real estate, which has really been a lot of the Chinese domestic growth, basically for the last 15 years. It's very emissions intense, and it looks like that's going to continue.
Dan West: Let's shift gears to the United States. So in these international fora, China's making certain promises and getting some credit out of it, other nations making promises. What are the promises that our federal government has made to the rest of the world over the past decade or so, including the Paris Climate Agreement and goals that President Biden recently set at the climate summit that he convened. Can you talk about what is the agenda that we've been bringing to the world from the United States perspective?
Gabriel Collins: Exactly. And so I think for this one, what it really centers on the most are probably some of the statements we've seen over the last few months from the Biden administration where we have some very aggressive emissions targets, cut to our reduction targets looking out to 2030 and beyond. We're basically -- I think things that -- they're of the same magnitude as some of the aspirational statements we've seen from China in the past except we're starting from a much tougher baseline because we're already a lot less carbon intensive. If you look at CO2 emissions per million BTU of primary energy consumed economy wide, China, right now, I think last year, was about 73 -- or 2019 was the last year we have data on -- I think it was 73 kilograms of CO2 per million BTU. We're at about 53 here, which is basically what you get burning natural gas, so not surprising seeing how gas centric we are.
And to put that in perspective, I ran the numbers for Norway, which is probably the poster child for something akin to a post-carbon economy, and it's about 20 kilograms. So what we're committing ourselves to is something between where we are now and where Norway is now in terms of emissions intensity. These are goals that are reachable, but not every path is made equally. The sense I get when you look at a lot of the talk, particularly coming out of Washington, is this is something that they want to be very much centered on intermittent renewables.
I think the hard, cold reality is, if we want to remain a premier global industrial power, there's ways we can get good reliable baseload energy that is very low carbon, but that involves doing a lot more in the nuclear space. And I don't see a broad, at least at the highest federal level, political appetite. Now I think ironically, this may be something where some of the states that have historically been denigrated for maybe not being as forward thinking on some of these issues, and I'm thinking of particularly parts of the deep south. We have the TVA. You have the nuclear presence in the Carolina's already, and in Georgia. I think if those licenses were extended and some of those facilities are expanded, we can compensate for policy challenges that are being created in other parts of the country.
But I think basically to kind of sum this up into a nutshell to your original question, the magnitude of the challenge that the Chinese face, if they actually want to act according to their word, is greater than the one we face. But I think the likelihood that we're going to hold ourselves to what we said is a lot higher than them holding themselves to what they said, so that probably, in reality, we're going to really face tough implementation challenges of a somewhat different variety here.
Dan West: And different time horizons, too. Right, Gabe? International relations is driven by bargains, and people have values and interests, and they interact, and folks -- let's make deals. Could you just talk a little bit about the timeframe, the pledges that we're making and the timeframe we're making them versus when China would be expected to deliver on pledges that they're making?
Gabriel Collins: Exactly. I'm glad you asked. That's a huge distinction. They tend to center their discussion, especially for the big, high level targets, around the 2050 to 2060 timeframe. We're centered more around the 2030 timeframe. What you see over and over -- and this isn't just something that falls on the Chinese -- you see this even in climate projections and adaptation and energy sector change in energy transition projections in our own countries. There's this huge tendency to back end things, which, I think if we were to put it bluntly, is I'll make the promises while I'm in office now and then we'll kick it a few times down the line for somebody --
Dan West: - No one would ever do something like that in a corporation or a government.
Gabriel Collins: Exactly. So I think the deal is the back loading dynamic is much more in their favor. I think it's something where—and again, I'll reveal my roots as a Permian Basin and West Texan who maybe speaks a little too bluntly on some of these things—is we may end up inadvertently making ourselves the crash test dummy because we're targeting 2030ish timeframe for hitting targets and they're targeting something that's two to three decades beyond that. We've seen this theme before, them wanting to be in second mover position so they can try to learn from others' mistakes. And I do think we're at a real -- we're starting to see some of those things unfold here.
But I think there's a question though—and I'll cheat a little bit and insert a question of my own here, in part in response to yours—is one thing we have to think about that's a little different here is the population gets a much more direct and very different type of say in how these things go. You can start big state level and even federal level initiatives, but ultimately those have to survive election cycles. And I think if there's too much disruption and too much cost imposed on voters, you see a backlash here, potentially down the road, that could actually really change trajectories. Whereas I think in the Chinese context, it's not just a push a button and things happen. The leadership there tries to be very attuned to what the population is thinking, but the population won't get the same kind of seat at the table and voice in the transition that our American electorate will here.
Dan West: Absolutely. It's a great point. And we've seen it elsewhere, right, in France, the yellow jacket movement, it's largely driven by opposition to high energy prices which tend to impact those in lower income brackets rather than those in higher income brackets. It's a bigger fraction of the paycheck for them.
Gabriel Collins: Exactly.
Dan West: On that point, could you talk a little bit about our government? Obviously we have -- thankfully we have a different form of government here than they do in the People's Republic of China. As you mentioned, our government has to implement these policies as it [inaudible 00:18:06]. What legal power does the Biden administration or any U.S. administration have under current law to implement or to achieve promises that they make in those international fora? And how have President Obama, President Trump, now President Biden, how have they used the practical leverage available to them to impact U.S. emissions?
Gabriel Collins: Certainly, and that's also, I guess given that we're probably all or most of us on this call are lawyers, obviously a very apropos one. I think at the risk, again, of giving a somewhat crude answer to this, there's the legal authorities you have, and then there's the ability to sustain those, especially in the face of a political environment that's probably going to be not only adverse in many instances, but I think when you look at many of the state's that are going to carry weight in this -- obviously California's kind of a special case because you would think at face value, in political terms, a lot of these energy transition efforts would be welcomed and then some. I think we might see that shift over time. I think you'll see some of the elites in California, at least the people at the very top of the socioeconomic ladder, remaining supportive. As far as the rest of the population, if we see more blackouts and brownouts, if we see energy prices rise, I think that's more up for grabs than people think.
I think when you come down to Texas, maybe we illustrate the other extreme. We saw a bill pass in this last legislative session here that basically says if you want to boycott fossil fuels in any sort of financial capital pool that's affiliated with the State of Texas we'll try to not to business with you now. There's obviously a lot of nuances around the edge and how that will be implemented, but I think it broadly reflects the political attitude. So I think it's something where certain areas will be fairly unencumbered. I think in terms of how the administration wants to approach offshore wind resource development. I think in terms of how they want to approach oil and gas leasing and development, certainly in the federal offshore, maybe in some of the bigger federal reserves. You think of ANWR in Alaska and places like that. I think they have a --
Dan West: - New Mexico as well, the enforcement [inaudible 00:20:34] in New Mexico.
Gabriel Collins: In New Mexico, yeah. There they actually just got -- you're already seeing the legal backlash start there because they've just had a federal court step in and say look, you guys still need to continue with the leashing there.
So I think when you're far offshore—I guess and I'll use this on purpose since you're a former marine. If you think about military training areas, especially for arial stuff, you go offshore and the world's your oyster. You can fly supersonic. You can fly low. You can fly loud. You can do whatever you want. Once you get on shore, even if you're nominally in federal areas, if you're in air space over a federal range and you're sonic boom breaks windows on state and private land off those range premises, there's probably going to be some repercussions for it.
I think that analogy holds to some extent in these energy issues although probably in a different way that on one hand, maybe the first group that you'll hear from are the ones whose economic interests are affect, like to use your New Mexico example. If somebody paid $95,000 an acre for lease rights on BLM land there, they're going to be pretty concerned if there's any sort of drilling moratoria or anything like that imposed. Whereas I think the next phase, and this'll be something that will probably unfold more fully over the next two to five years, what happens on the consumer side as certain steps are taken and some of these same things start to percolate deeper into the economy and affect more people. I think that's going to shape some of the legal environment and the legal responses, and ultimately, the level of latitude that the administration has to do things at a federal level on some of these fronts.
Dan West: So there are some levers at the federal level the can be pulled, but also some challenges their authority for decentralize the United States. You mentioned California. You mentioned Black Rock. Talk a little bit more about those state and private actors. Are you concerned from an energy production perspective in the United States about whether the U.S. will be able to ramp up energy production in the way that they might like to given capital constraints, given state regulations, given pipeline infrastructure constraints? Or on the other hand, because you just talked about how that looks and how those different actors at the state and the private level could impact -- it would be -- use its ability a) to reduce emissions, and b) to produce energy?
Gabriel Collins: Exactly. I'll answer what I think is still complicated but maybe an easier part of that question or a more straight forward part first, and that is, we know we have the resource space at the right price level, particularly when you're talking about oil and gas and horizonal drilling and hydraulic fracturing completions and so forth. I think with the capital question there, one of the things that I think we're going to tease out, especially -- we're here at $70 oil, more or less, and if you would have had $70 oil back in 2017, every single highway out in the Permian would be an impassible convoy of trucks heading to the next frack job or the next drill site. Clearly we see a lot more capital discipline now.
What I think is going to be interesting is if we do move up close to $100 a barrel, how long that hold for because I think a lot of the ESG initiatives to date, there's been great success on the tactical front. What I mean by tactical front is, for instance, restrictions on flaring and things like that. I think those are very congruent with what most capital providers want to see anyway. Because I think often a cleanly run company is a well-run company that probably, if you look at a big empirical sample, will tend to deliver better returns to shareholders. So obviously, if you're an investor, you want to see that. I think that we're now getting to a strategic stage where now that we're seeing some of these ESG advocates getting corporate board seats, including in major oil companies, we're seeing them in influential positions at some of the capital providing outfits, Black Rock obviously first and foremost among those, some of the pension funds.
What I think is interesting is if they starting seeing a world where they envision real returns again, will they still want to keep the same kind of brakes on the company's drilling and development plans that they do now? Because I think for the last year or so we've been in this happy period where you can look really green and pro ESG and keep the brakes on the company, and you can talk about it being motivated by environmental reasons, but I think probably, to be blunt, the biggest factor is they don't want to see drilling when they're not --
Dan West: - When the return's returnable.
Gabriel Collins: Yeah, exactly [CROSSTALK].
Yeah, but I think if you start seeing people's models beginning to indicate to them that okay if we let off the brakes a little bit, let's let this train start moving down the hill a lot faster, we can still get our returns. That's going to be the really interesting test. Bringing up back to my favorite values, interest, and incentives index, I think we've been in the V phase for most of the last year, and I think we're going to see interest and incentives start to really collide if oil prices go higher. So I don't know what the answer is going to be, but I have a suspicion that the temptation of returns as we move toward WTI at 90 or 100 a barrel, we're going to start seeing some break the pack, and people like us will write nice eloquent statements that go out publicly that explain how this is congruent will all the values we talked about. But ultimately, you'll see a set of behavior that's probably more returns oriented.
Dan West: Yeah, and as you mentioned previously, right, the incentives and interest change also for the voters if they're paying more than double what the used to be paying at the pump and for their electricity bills. That's an interesting dynamic.
Let's shift back then. We talked about China, talked about the U.S. Now let's talk a bit about the interaction between the two. So the climate issue by definition is a global one, but the level of priority placed on the issue can vary significantly from country to country. How much does a given country care about this issue, and what are they willing to give up for it?
As we've seen, it seems to be high on the list for the United States. President Biden explicitly stated in an executive order that, "It's the policy of my administration that climate consideration shall be an essential element of United States foreign policy and national security." The one particularly salient example that's already in action was the shutdown of the Keystone XL pipeline, which would have resulted in domestic energy jobs, domestic energy production. Concurrently, it was a decision to allow the Nord Stream 2 pipeline to go forward which allowed Russia to export more natural gas to Western Europe. So different priorities there domestic and abroad.
I'd like to ask you where does China rank global emissions reductions among its other political, economic, and security interests? And what about other important actors on the international stage, like Russia or India? How might, to the extent those countries have different priorities than the United States, how might those different priorities on the issue of emissions and climate impact the course of international relations?
Gabriel Collins: Certainly, and this is a great question. If we start with President Biden's statement there and we look at some of the pattern of action subsequently, when you see those kinds of things and you're entering into high stakes diplomatic interactions with the Chinese, it's a little bit scary because you can clearly see the exploitation point or the potential exploitation point if we have made climate a central, founding principle of our foreign and national security policies. Whereas for them, it's a talking point on a list of 25 things where it's a continuum and it varies depending on how you ask the question. If you ask how important are climate and emissions to you just in isolation, the answer you're likely to get is very important. But if you juxtapose that against other concerns like social stability, economic growth, security of energy supplies, China's future industrial competitive ranking and position relative to the United States, Japan and South Korea and other competitors, I think it starts to drop lower down the list.
I think this is something that -- this isn't like a one-time issue and you just recognize it and then you can move on. I think this is going to be a thing that we have to continually deal with where we've made very clear this is a high priority for us. I think those in China who are advising President Xi are well-versed enough in what we do and how we operate here to realize that's not a monolithic opinion.
But nonetheless, if it's coming from the White House, they know it carries weight and that it's something where I think we are going to see -- I mean we've already seen this from foreign ministry spokesman on multiple occasions where they've made very clear if you, the United States, want us to work with you on climate issues, then you need to have a less interference-oriented attitude toward Hong Kong and Xinjiang and Taiwan and some of these other issues that I think are very important to us just from a purely objective security perspective. And so I think this is going to be an ongoing struggle.
I think one dimension also in this that's going to be interesting to see how plays out is to see if and how China goes about trying to cultivate various groups domestically. We call them climate influence operations in a follow on report that we'll probably put out in about two to three weeks from now. We've seen them try this for decades with the business community where you'll have people in the Pentagon and other parts of government that want to take a much harder line. The Chinese will see this, and they'll enlist some of their contacts in the business world here to try to get policies softened a little bit. I think we still don't fully know how that plays out on the climate front because it'd be a very different constit [audio cuts out 00:31:17] having to cultivate and engage with.
But I think we see enough and know enough already to know that these are going to be enduring issues, and I think there's going to be important, concrete information that will come to light over the next couple years as we see this play out. And I think we're very clear about this in our foreign affairs piece is what we don't want is something where we make concrete, upfront concessions, basically sort of proverbially speaking where we pay cash up front, and they make some back ended promise that for various reasons they may never fulfill. It's not a position we want to put ourselves in. We're going to have to be very, very watchful over the next few years here as some of these things are in flux to make sure that we don't compromise major long-term interests in exchange for essentially a definite maybe from their side.
Dan West: Got it. Got it. You mentioned there are disadvantages if you're bargaining with a counterparty who cares less about the outcome on a certain issue. International relations, you don't take them seriatim, right. You have to do this whole bundle all at once, and if you move on one thing, they might move on another thing, and you're juggling these things all at one in diplomacy. So when we're dealing with somebody who might care less about this than we do, how should the United States respond? Do they have to let China win on other issues to gain their cooperation on climate? There's a laundry list: human rights in certain places you mentioned, international trade, intellectual property, cyber security, so many things that we deal with them on that. Do we have to give up success on those other issues, and would that be worth it for a climate debate? Or is there another way? I guess in your writing -- it's a leading question -- you propose competition rather than supplication. So I'd love to hear you talk about what would a strategy like that look like where we don't have to give on one to gain on another?
Gabriel Collins: Exactly. So I think what you're asking is how do we respond when we have an onside kick. Do we want to chase the bouncing ball and get ourselves obliterated, or do we go ahead and send our first line out after their kicking team and then our hands guys in the back can catch the ball? Well, in response to the leading question, I think we've made our views fairly clear in the foreign affairs piece, and I'll just unpack it very briefly for the audience here.
Our view is that we should not be in a cooperation-oriented rush toward China and toward this trap that they're, I think, very clearly trying to set. This is not at all to say that there shouldn't be action on the energy transition front. To the contrary, even if we start work here without having to do everything in lock step with the Chinese, the United States by itself basically more or less one in every five units of primary energy -- not quite that much. I think it's maybe 15 percent of global primary energy use -- is here in our own country, so we can already make a huge dent with things that we've already been engaged with for the better part of 20 years now and that I think are going to gain steam moving forward.
I think part of the reason why the domestic work is so important is we need to make sure we're credible with our allies and partners in Europe, in Japan and South Korea, the other OECD countries. I think also India. Basically between the OECD countries and also this emerging quad alignment we see with the U.S. and India, Japan, and Australia, to balance some of the revisionist behavior we've seen from China, we have to really make sure we're credible with our partners. Putting ourselves in a situation where we look like a supplicant to the Chinese is not going to increase that credibility. Whereas I think taking concrete steps, first and foremost, domestically to improve our emissions profile, while also preserving our industrial competitiveness are critical. I think concurrently with this, we really want to work to build a—we call it loosely—a carbon coalition where when you start to think about among other things carbon taxation and a carbon border adjustment tax. If you can create a coalition that -- we calculated that this grouping of countries, you're talking over 40 percent of global GDP, that is something that's big enough to get Chinese attention. If they realize that okay, to export certain products into these markets, if we don't structurally change how we source our energy, we're going to be at an economic disadvantage and essentially be taxed for this, that's where I think the incentive leverage is generated.
So I think we want to generate the leverage first and then start sitting down at the diplomatic table with them. Sitting down when you don't have the leverage generated yet I think it's not a guarantee of a bad outcome, but the recipe for trouble already has a lot of the ingredients stirred in if that's the approach you take. Better to start with leverage than not.
Dan West: That makes a lot of sense. Just remind everyone in the audience here if you want to submit a question, feel free to do so in the Zoom chat. My last question for you, Gabe, is you mentioned energy transition. That's a phrase that you bat about a lot, especially both of us sit here in Houston and Houston's the energy capitol of the world and it's set to remain so. That phrase, energy transition, gets batted around a lot, and it can mean challenges. And a lot of the climate conversation about how do we cut emissions, and it's an important discussion. But what about opportunities? How do those opportunities laid out for China in terms of their economy, specifically with renewables and solar? What about the United States and even here in Texas, I think particularly, we have a great renewal resource? Can you talk about the economic opportunities in the energy transition?
Gabriel Collins: Exactly, and I'll actually step maybe even another 25,000 feet higher and then answer in a way that hopefully spirals down. And that is one of the things that I think is really critical to think about is -- I know one of the last administration's catch phrases was energy dominance, which, especially if we're sitting out down here in Texas or especially out in the Texas oil fields, there is this fun chest thumping aspect to that. But I think when we really think about what energy does for us strategically, the broad theme of energy abundance is really what we want to focus on, and obviously oil and gas are still central to that. It's two-thirds of our primary energy consumption, even almost to this day, here in our country.
But I think energy abundance is a much more encompassing -- it brings in wind and solar. I think as some of the advanced nuclear technologies mature, I think those come into the equation as well. I think what we have to think about it's not so much about exporting molecules, which I think is some of the focus that we had over the last few years. I think it's really create -- there's really sort of two things. I think on the domestic front it's really about creating opportunity to revitalize our manufacturing sector to make sure that people can afford a level of energy supply and services that ensures a good standard of living and things like that.
Then I think when we're thinking in foreign terms, it's not so much that we gain power by exporting tankers full of oil or full of liquified natural gas or anything like that. Those play very important roles, but I think it's really about gaining strategic room and latitude for maneuver. We know that we're going to be tied into the global energy markets, including oil and gas pricing, probably for decades. Basically as long as we use the stuff, we're exposed to the global market. But I think getting to a point where you're able to disconnect yourself to a certain extent from events in regions that I think are strategically important but maybe not as existentially important to our strategic interests as, for instance, the Indo-Pacific region, attaining that latitude, it's extremely important. I think that's what energy abundance does for us.
I guess when I talk about energy transition, and I think this is probably reflects some degree of Texan bias, is the transition part in my mind, you always have to have that energy abundance part subsumed into it. I think the other side of this is we have to ask ourselves hard questions in terms of there are costs associated with the transition. The way I put it is I can bring my wife a bouquet of full stem roses, and she loves the little red rose bulbs at the tops, but you always have to remember that the stem has some pretty sharp thorns on it. I think the energy transition is the same way.
We have to be prepared, as we embrace the bulb at the top, to also be willing to deal with the thorns on the stem and to be mindful of the fact that even if we were to be sitting in California, New York or Massachusetts, that some of these transitions -- we've already seen it in the Appalachian region with coal. I think we're going to see some of this stuff in fossil fuel producing regions in Texas and the western United States also. There are pain points as these processes unfold that we have to be -- if we want to maintain the broad base of political support to actually execute, we've got to be very cognizant, and we have to be ready to take real concrete action that reflects a reality that a voice somewhere in rural America is just as valued as one in an elite coastal bastion.
I think, to be very blunt, we're not there yet. If we want some of these measures to succeed and deliver the benefits that I think people of all political stripes can see if you present it to them, we've got to really sincerely embrace that situation and be ready to deal with it.
Dan West: Yeah. I like the phrase you use, that energy abundance. It is really important to people to have affordable energy that they can access in their daily life. It just improves human well-being. And it's most important for the Americans and for the others elsewhere in the world who are poorest. It's just the biggest fraction of their annual budget is energy.
Gabriel Collins: In some cases, I'll tell you, we've run some data recently. I took a dataset of 200 countries, basically almost every country that had data in the CIA World Fact Book, just did a simple analysis. I looked at the amount of electricity generated per year or consumed per year in that country, converted that into per capita terms, and then I looked at some World Health Organization data for water related mortality. It's a shockingly high correlation between energy abundance or maybe better put lack of energy and high rates of mortality from illnesses that are totally preventable. And the brunt of this toll is borne by children age five and younger, which hit's pretty close to home for me, given I've got three that are age seven or younger. And you realize given how global markets are connected, our own energy abundance -- obviously it does benefit us here first, but there's profound benefits elsewhere in the world. If we do something that crimps our energy abundance domestically, that's a bad situation for Americans here. It's a really terrible situation if you're in parts of the world that are already severely beset by energy poverty and for whom our energy abundance exported in various ways could actually dramatically improve their standard of living.
Dan West: Absolutely. Well, Gabe Collins, thank you so much for making time to join us today. We really appreciate your thoughts. I would encourage the audience to check out his very thoughtful piece in Foreign Affairs recently on that dynamic that we discussed between the U.S. and China. We're grateful to have you, and audience, thank you for tuning in, and we'll look forward to the next discussion.
Gabriel Collins: I appreciate you guys. Thank you.
Nick Marr: Thanks very much. Just a quick thanks, not to keep anyone from the now long weekend, but just a quick thanks on behalf of The Federalist Society to both our speakers here, well, I guess our moderator and our speaker. We thank you very much for the benefit of your valuable time and expertise in this great discussion. It will be posted as a podcast, and later as a YouTube video. We'll send that around when that gets posted. Thanks to our audience for calling in. Keep an eye on your emails and our website for announcements about upcoming Zoom events like this one, registration information, and the like. With that, thanks very much for being with us. Until next time, we are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s Practice Groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at www.fedsoc.org.