Energy Diplomacy | How a Pollution Tariff Could Deliver Results for the United States

By Amy K. Mitchell

Energy policy discourse, once regarded only for the most wonkish or ideological among us, is mainstream again. After years of debate on green energy and international agreements, conventional energy is back in vogue (and I’m not referring to the popularity of Taylor Sheridan’s Landman). It seems that every day another story is written about a new data center being built—anywhere from South Carolina to Armenia to Mongolia. Almost immediately all of those stories lead to one question: how will these centers be powered?

The AI boom that has truly exploded this year has brought energy security to the fore, as the key limitation is likely to be how we power it. And as AI grows more important, major geopolitical players will leverage any and all advantages to win what could become, in the future, energy wars.

President Trump, as one of his first acts in office, underscored his understanding of this coming battle by establishing the National Energy Dominance Council. The Council’s goal is not merely to secure energy, but to have an abundance of it to meet current and future needs.

The Council’s Chair, Secretary of the Interior Doug Burgum, laid out the stakes vis-à-vis the People’s Republic of China at a recent Foundation for the Defense of Democracies event:

“China has been, again, very strategic while the rest of the world—and they might have signed onto the Paris Accords and said [sic]… ‘even though we’ve signed the agreement, we’re going to ignore everything on there and we’re going to build so much electricity every possible way we can.’”

The Secretary continued that China had recently added 93 gigawatts in coal power in the past year (one gigawatt, for comparison, can power all the homes in Indianapolis). As the Secretary also noted, there is a big difference between U.S. plants and China’s plants. U.S. plants use the latest technology to limit environmental damage. China, on the other hand, continues to pollute the world’s air and water with its emissions from plants that have little to no regulation.

The evidence can be seen in the numerous charts that show that, since 2007, U.S. emissions have decreased. China’s emissions, meanwhile, continue to rise. China’s leader, Xi Jinping, has pledged that the PRC will begin to phase out its dependence on coal—in 2030—just far enough away to wait out the Trump administration and, in the meantime, continue its own strategy of energy dominance—with impunity.

Dubbed “energy diplomacy,” the President and his team are working to increase U.S. energy stores while slowing down China. At Bahrain’s November Manama Dialogue, Burgum argued his case to U.S. partners in the Middle East: “You have to have the energy to sell to your friends and allies so that they do not have to buy from your adversaries. (For example, Russia, Iran, and others ship upwards of 5 billion barrels of oil to China every day.) To have energy dominance is energy abundance, to be able to have affordable, reliable electricity prices for consumers and industry, but also to be able to have the power to be able to win the AI arms race.”

So, what can the administration do to arrest China’s stranglehold on the energy market in the coming years? One of the first steps must be leveling the playing field, which begins with exacting payment—and forcing change—for China’s gross pollution negligence.

The administration has clear legal authority to establish pollution tariffs based on foreign competitors’ environmental abuses that create unfair trade practices. There is also pending legislation in the U.S. Senate that would enact a Foreign Pollution Fee on China.

Such a fee would not only hold the PRC accountable for their pollution-intensive industries, but would also deprive them of much-needed funding to invest in future energy development. Their use of lax environmental standards acts as an inherent subsidy for the rest of their industries—tech, manufacturing, and defense—and taking that away could prove devastating.

As the U.S. Trade Representative has said: “They have actions such as poor environmental regimes or lax labor laws, and they don’t bear the cost of that. We don’t compete on a level playing field.”

Channeling his inner Tommy Norris, Secretary Burgum said the President “understands energy diplomacy—and wielding the power of energy.” To beat China in the AI race, energy is key, and the U.S. needs to take advantage of all levers of that power, starting with a pollution tariff that will pay dividends both economically and politically.

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Amy K. Mitchell, a founding partner at Kilo Alpha Strategies, is a senior fellow at George Mason University’s National Security Institute and a former senior official at the Departments of State and Defense. 

As the Voice of the Veteran Community, The Havok Journal seeks to publish a variety of perspectives on a number of sensitive subjects. Unless specifically noted otherwise, nothing we publish is an official point of view of The Havok Journal or any part of the U.S. government.