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Trump’s Excellent Asian Adventure

Donald Trump returns from a most pleasant vacation. He’s talked tough about North Korea. Blamed previous administrations for trade deficits with China. Told the Japanese they should start making cars in America. He stayed mostly on script. He took credit for $250 billion in new China trade. He was given head-of-state visit plus veneration in Japan, Korea and China. Vladimir Putin assured him again that Russia did not hack Hillary. In other words, Donald’s excellent Asian adventure was the way things should be.

At home, he’s back in the political cauldron. He must help elect Roy Moore, accused pedophile, to the Senate or endanger his opportunity to slash the corporate tax rate. Worse, the walls are closing in as the Muller investigation gets closer and closer to home. Stephen Miller, faithful scribe, grilled on drafting the Comey firing memo. Fake news reports that the Turks promised Mike Flynn millions for renditioning some refugee Imam from Pennsylvania, a state, after all, he won hands down and was crucial to his great election victory.

Behind the curtain, what Donald took credit for and what he didn’t is very enlightening. Announcements of trade deals are not accompanied by Trump declarations of agreements on new trade policies. It’s startling, and telling, that China’s major announcement during Donald’s trip that foreign financial firms will be able to have majority ownership of Chinese financial institutions was not mentioned by the Donald as opening China for trillions of dollars in American capital investment. An infusion of foreign capital is precisely what the bad debt heavy, and property bubble swollen Chinese banking system needs. It would have been embarrassing for Trump to announce that Wall St. will be pouring rivers of capital not into Main St. and U.S manufacturing , but into more profitable Chinese opportunities.

In Danang, after Trump’s departure, trade ministers from 11 Pacific Rim countries moved ahead with a preliminary agreement on a renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership without the U.S, and without U.S.demands on intellectual property. Toshimitsu Motegi, Japanese economy minister commenting on the new deal noted, “This will send a very strong message to the U.S. and the other countries in the region.”

The U.S.Commerce Department China order book from Donald Trump’s visit provides a good view of the shape of things to come. The Unites States is a desirable supplier of raw materials, of natural gas and soybeans and beef to help meet China’s needs, and of specific technologies like passenger planes and micro-processors that China does not yet dominate.

A new Chinese order for 300 planes, 267 of which were venerable bread and butter 737’s, would be very significant for Boeing which averages around 60 new plane orders a month. But the Seattle Times, reports, “According to a person familiar with Boeing’s orders… most of the jets included in Thursday’s announcement…are not newly ordered.”

Big Winners: LNG and Nukes

Liquified natural gas, and nukes were the big winners in Beijing. Cheniere Energy signed an MOU with China National Petroleum Corp. to develop long-term LNG purchases produced from Texas fracked gas at their Sabine River LNG facility on the Louisiana Texas border, and from a soon to be opened Corpus Cristi LNG facility. There’s more. Delfin Midstream owner of first floating LNG facility 50 miles off the Louisiana coast, signed a 15 year MOU with city gas distributor China Gas Holdings to supply 3 million tons of LNG from deep water Gulf natural gas drilling.

China Energy Investment Corp, the world’s largest power company, signed an MOU to invest $83.7 billion in shale gas, power and chemical projects in West Virginia to control future LNG supply and profit from the U.S. Marcellus shale production. $83.7 billion is more than than the current West Virginia GDP, and will help guarantee the collapse of the West Virginia coal industry. Unfortunately, soaring fracked gas production in West Virginia has led only to modest increases in employment with many of those jobs filled by highly skilled out-of-state technicians, not retrained coal miners.

And to make Senator Lisa Murkowski smile, China Investment Corporation and the Bank of China  signed an LNG Joint Development Agreement with The State of Alaska, Alaska Gasoline Development Corporation (AGDC) with China Petrochemical Corp (Sinopec), China Investment Corporation (CIC), and Bank of China (BOC). This will mean an estimated 12,000 construction jobs and $10 billion in annual LNG sales. The rapid growth of LNG production from plants in Louisiana, at Cove Point in Chesapeake Bay, and at Elba Island, Georgia takes advantage of the production of huge amounts of fracked natural gas and beckoning markets in China, Japan and Europe.

The China trade order book also provided a life line to the bankrupt, now Japanese owned, nuclear developer Westinghouse through the announced purchase of six AP1000 Westinghouse reactors by China. It’s also murky if these are new or often discussed old orders. The AP1000 is the same reactor design whose spectacular cost overruns, poor management and delays in southern U.S. nuke projects forced Westinghouse to declare bankrupcy in 2017. China had been rumored as potential purchaser of the bankrupt company, setting off alarm bells in Washington and Tokyo. The China deal is perfect. Westinghouse may find its way out of bankrupcy, stay in Japanese-American hands, and might eventually make the AP1000 a marketable nuke product for US and Japan. In any case, China will learn valuable lessons to inform it’s Hualong One reactor construction program.

Big Losers: Putin, Coal, and the Ecosphere

Putin is the big loser from U.S. LNG exports to a Europe anxious to replace Russian imports, a drive down the price of Russian gas and weaken the potential leverage over Europe by Russian power to slow or close down pipelines. After Crimea.U.S. Sanctions not only still remain but are now increasing. Sanctions, combined with major U.S. LNG exports to Europe, make the investment in Donald Trump and his improbable rise to power not exactly what the Russian kleptocracy had in mind as they drank Champaign toasts last November. The Russians find themselves in the situation of a man who has grabbed a wolf by the ears and is afraid to let go.

Another big loser, of course, is the coal industry, and the coal miners that are unable to compete with fracked natural gas and renewable energy. But Donald tried, and is still trying by having the Federal Energy Regulatory Commission (FERC) listen to DOEs Rick Perry’s demand to subsidize existing coal and nuclear plants and keep them running in the name of grid reliability. Prospects there seems dim. They will probably get something.

There was almost nothing from Donald’s excellent Asian adventure about seizing the opportunity to work together with China, Japan, and Korea on the trillions of dollars of investments being made to transform global energy system to efficient renewables. At best, LNG,  if the fuel cycle is done carefully, could displace dirtier coal as a transition fuel. Leaking methane from drilling, pipelines, liquefaction is by itself a much more potent active greenhouse gas than carbon dioxide.

LNG could be greened, produced entirely by biogas sources such as sewage sludge, organic waste of many kinds with bacteria in digesters producing natural gas. French transnational ENGIE, one of the owners of the Cove Point LNG facility is currently selling a green LNG product in Europe. They proclaim, that LNG from bio-methane could be 100% renewably produced by 2050 . ENGIE’s Mon Gaz Vert (My Green Gas) offer in France guarantees customers that the 10% of the gas they consume will be from renewable sources. European city buses already run on bio methane, in Barcelona 36% of buses, Bologna 30%,, and Stockholm 25% . Truck fleets operated by superstore operators Monoprix and Carrefour run on green natural gas.

The potential for green LNG and green compressed natural gas in U.S.and China is enormous. Sewer sludge, animal manure, and food waste can become a significant part of a renewable energy mixture. In an ecological turn, it is likely, but not certain, that wind, solar, tidal, geothermal and other zero-fuel cost sources will soon rule competitively.

One thing is clear from Donald Trump’s excellent Asian adventure. For his administration, the future remains all about fossil fuel and nukes, and rewarding Trump’s supporters. Meanwhile, ecological necessity and economic opportunity lies in sustainable renewables. The United States is now the only nation that intends to withdraw from Paris Climate Agreements. Trump’s America First trade rhetoric has meant abandoning trade agreements, not favorable renegotiation, and closing one-off deals. Diplomatically the United States increasingly stands alone as the nations of the world pursue, with varying enthusiasm, a sustainable future and their mutual self-interest.

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