The Trump administration must invest in innovation to reassert energy dominance

The Trump administration will be freed from its predecessor’s fixation on climate change and obsession with the quixotic, painful and ultimately fruitless task of trying to swiftly end reliance on fossil fuels. President Trump plans to use America’s vast energy reserves to reassert the country’s dominance, and to massively expand baseload power to make electricity cheaper. The one ingredient his energy policy lacks is investment in innovation.

Asserting energy dominance will strengthen the security of the United States and its allies, especially given that energy exports are the main source of income for strategic rivals Russia and Iran. Russia remains the third-largest source of Europe’s gas imports, despite being locked in war over Ukraine. By increasing its own LNG exports, America can make money while supporting its allies with reliable and affordable energy.  

The policy should not stop there. Poor countries are mired in energy poverty while middle-income countries are often reliant on outdated, inefficient and polluting energy technology. As Trump’s incoming Energy Secretary Chris Wright has said, "More energy, and better energy, is the path to bettering human lives." Development organizations like the World Bank and African Development Bank refuse to invest in oil and gas projects for destitute countries, despite the obvious need to end energy poverty and create jobs. The United States could assert its shareholding to change both Banks’ policy — or it could help 18 African countries with their proposal to set up a new "energy bank" before China steps up.  

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Working with American firms, the administration should direct development funds to invest in energy infrastructure and technology to counter the soft-power financial influence of China. Investment and export of US oil and gas technology can unlock markets for American firms, help poor countries drive growth through energy access and improve environmental outcomes and lower air pollution through introducing more efficient technology. In the long run, a richer and more energetic world means more stability and security.

While it’s healthy that the next administration won’t be fettered by a climate obsession, climate change remains a real problem that needs to be tackled smartly. Fortunately, there are much more efficient policies than the Biden administration’s expensive and slow approach of green energy subsidies — and that will be attractive even to climate skeptics.

First, the US needs to keep existing nuclear power plants running — especially given the Trump administration’s pledge to expand baseload power and lower energy costs. The United States has seen a slow decline in nuclear capacity, and 21 plants — a quarter of total capacity — are at risk of closing.

Despite promises that nuclear will be replaced with more renewable energy, the reality is that less nuclear typically means more fossil fuel use. The 2021 shutdown of the Indian Point nuclear power plant was cheered on by environmentalists, but led to downstate New York being nearly completely dependent on fossil fuel.

Running plants for another decade or two means very low operating costs for essentially zero-emission, baseload power. Moreover, nuclear reactors provide a stable, consistent energy source, unlike solar or wind energy, which are intermittent and dependent on favorable weather conditions, require vast expanses of land, and suffer major storage challenges.

Second, the new administration should invest more in clean energy research and development to help unlock American innovation. Long-term innovation is great for society but often suffers from severe underinvestment from private corporations since it is hard to recoup all the benefits — patents might run out before the big breakthrough. The United States invested big in energy innovation in the 1980s, but it has since halved in percent of GDP.

Climate economists have shown that green energy R&D is the most efficient way to respond to climate change. Partly, this is because green innovation costs a tiny fraction of current climate policy costs. Partly, this is because innovations can leverage everyone — innovating green energy to eventually be cheaper than fossil fuels means all countries switch.

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And even without the climate concern, such a policy has much going for it: investment in green research and development will drive breakthroughs that can be translated into other parts of our lives. Developing better batteries for renewable electricity storage, for example, could mean better batteries for our cell phones and for industry.

One obvious area for innovation would be the so-called "fourth generation" nuclear that promises to deliver very safe, very cheap, CO₂-free energy. Currently, China is significantly outspending the US, but the US should win this race along with many others.

Such a green innovation drive would show US partners — many of whom are very climate concerned — that the US cares about climate change, but wants to address it efficiently. The policy would contrast with Europe’s failed approach of stifling regulations that push up the price of energy, demonstrating that it is possible to respond to climate change without crippling the economy.

Achieving energy dominance should mean that the US not only shares its vast energy reserves with the world and leads in production, but that it also sets a path of innovation that will shape the future.

Bjorn Lomborg is President of the Copenhagen Consensus, Visiting Fellow at Stanford University's Hoover Institution, and author of "False Alarm" and "Best Things First".