On Wednesday, the United States elected a coal-loving, oil and gas-funded climate denier as President. Here are 10 developments you can count on in the energy and climate world.
1. With its actions, the American electorate guaranteed that global warming will exceed the 2°C threshold that all nations, including the US, agreed would be a disaster to us all. Limiting climate change to 2°C over pre-industrial levels requires herculean efforts as it is; sadly, these aren’t going to be made at the necessary scale without enlightened leadership in the richest country in the world.
2. The global day-to-day fight against the pre-eminent issue of our time, climate change, will experience a major and tragic setback. A few years ago, we could have counted on a strong Europe to counter-balance a US administration practising, potentially, an active form of climate denial. But Europe is probably too weak to do so today. Action (or inaction) by China and India especially become key areas to watch.
3. All may not be lost however: There is not much a President Trump can do to stop US states that so wish to act to combat climate change. California and New York, for example, will continue with their green policies, whatever the administration says.
4. Poorer nations that have done the least to cause climate change will hurt first and most: Since 1996, the 10 countries most affected by warming have been Honduras, Myanmar, Haiti, Nicaragua, the Philippines, Bangladesh, Vietnam, Guatemala, and Thailand, in that order. The fate of their combined population of 700 million was forgotten in an election that trivialised real issues while promoting hate.
5. The news that Trump was going to be the next US President was greeted with hysteria in the energy corner of the financial world. Vestas Wind Systems A/S, the world’s biggest manufacturer of wind turbines, plunged up to 13 per cent, while the shares of major US coal producer Peabody Energy surged 49 per cent. The oil, gas and coal industries evidently won the elections too.
Except it’s not that simple.
In the US, renewable energy will suffer a temporary setback, then recover. Congress is unlikely to repeal the investment tax credit legislation they enacted last year with strong bipartisan support and this should keep US renewables going for two or three more years. During that period, renewable energy and battery costs will keep going down while the clean energy industry keeps creating more jobs.
My guess is that the author of “art of the deal” would be hard-pressed to then move against the industry on nonsensical ideological grounds when business sense would dictate otherwise.
Furthermore, I can’t see how the Trump administration can promise to overhaul and modernise the entire infrastructure of the US, while ignoring clean and renewable energies, energy efficiency, electric vehicles, and rapidly evolving energy-storage technologies. This would guarantee economic supremacy to Europe or China.
6. While uncertainty reigns, however, the stock market is likely to choose to be cautious in valuing US renewable companies. Investors looking for exposure to renewables will shun US stocks in favour of companies contracting and building clean energy projects outside the US.
7. Outside the US, the growth of renewable energy won’t be affected: Not even the US administration can stop the decline in the cost of solar and wind power driven by China, India, and Europe building clean energy infrastructure rapidly and at scale.
If Trump had tried to stop the decline of music CDs caused by online streaming, he would have failed - so if he is really intent on stopping the decline of coal caused by renewables and natural gas, he will fail too.
8. The Green Climate Fund (or GCF), the UN institution intended to mysteriously collect and then spend US$100 billion a year on climate change efforts worldwide, will lose US$2.5 billion of funding committed (but not yet paid) by the US. Other countries are unlikely to step up into the void left by the US, and the GCF will have to scale down its ambition to help poor countries in their efforts to mitigate the impact of climate change on their citizens.
9. Coal will experience a dead-cat bounce. The Trump administration can try to reinvigorate the coal industry all it wants, that won’t work. No one wants a coal plant nearby anymore. Even power companies don’t want them: They prefer cheaper and cleaner natural gas alternatives. Renewable energy creates better, safer jobs than coal (or oil and gas) and this will eventually dawn on the administration.
10. OPEC will get a run for its money from a reinvigorated US oil and gas industry flexing its muscles in the export markets. Meanwhile, however, oil and gas will continue to damage our health and that of the environment: Oklahoma for example had 1,000 oil and gas-induced earthquakes in 2015, up from two in 2008. There will be a point beyond which its people will simply kick the oil and gas industry out of their backyard.
With such an eclectic president, predicting longer term impacts is more difficult. But if Trump had tried to stop the decline of music CDs caused by online streaming, he would have failed - so if he is really intent on stopping the decline of coal caused by renewables and natural gas, he will fail too.
Assaad Razzouk is chief executive officer, Sindicatum Sustainable Resources. This post was originally published on Huffington Post and is republished with permission.
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