US president-elect’s policies set to trump efforts on climate change
IF YOU want a snapshot of what the global energy map will look like under President Donald Trump, look no farther than the stock market.
Glencore surged more than 7 percent on Wednesday. Vestas Wind Systems plunged as much as 13percent. The swing foretells a story of the most carbon-intensive fossil fuel making a comeback, while the fight against climate change – and investment in wind and solar power – languishes.
“De-carbonisation, which has been the organising principle of Obama’s energy policy, came to a screeching halt,” said Bob McNally, the president of Rapidan Group and a former senior energy official at the White House under Republican President George W Bush.
In his only major energy policy speech before the elections, Trump said he would rescind “job-destroying” environmental regulations within 100 days of taking office and cancel the climate deal reached in Paris.
“A Trump administration will focus on real environmental challenges, not the phony ones we’ve been looking at,” Trump told supporters.
If the president-elect delivers on his campaign promises, he could roll back eight years of US energy policy, with consequences to industry giants.
Few clues To be sure, Trump has offered few clues on how he plans to implement his plans. Energy and climate policy has taken a back-seat to immigration, the economy and debate about the candidate’s fitness for office. And his proposals are contradictory, such as his pledge to boost natural gas and coal.
“The result is… a blow for the renewable energy industry,” said Matt Loffman, an analyst at Douglas-Westwood.
Coal prices already are enjoying a renaissance after China cut domestic production, forcing power plants to buy overseas. The cost of thermal coal in the Australian port of Newcastle, a benchmark for Asia, has more than doubled since January to a four-year high of $114.75 (R1590) a ton.
Shares of big coal miners such as Anglo American, BHP Billiton and Rio Tinto rose between 2 percent and 4 percent this week. Peabody Energy, one of the largest US coal companies, surged 67 percent. Meantime, wind turbine makers Gamesa and Nordex fell.
As coal enjoys a comeback, the biggest loser could be the fight against climate change. Under President Barack Obama, the US rescued a two-decade-old process the UN promoted to rein in pollution, forging a climate change deal last December. Along with China and more than 190 other countries, the so-called Paris agreement set out a framework for all nations to cut emissions.
It would be difficult, but not impossible for Trump to pull out of the Paris accord. While the Senate never voted on the Paris deal, it is part of the 1992 UN Framework Convention on Climate Change, which the US ratified under Republican President George HW Bush. Trump would have to renounce the 1992 treaty and risk bringing down the entire UN process to scrap Paris. The US would have to give three years’ notice to withdraw from Paris.
But Trump doesn’t need to cancel Paris to derail the process, effectively hampering the growth of renewable energy, analysts and campaigners said.
The first clue about his priorities could come with his selection for secretary of energy. Obama surrounded himself with policy experts and academics such as Steven Chu and Ernest Moniz. Trump has relied so far on the advice of Harold Hamm, the founder and chief executive of Continental Resources, one of America’s largest shale oil producers.
“The oil and gas industry is a clear winner with the new president,” said Alexandre Andlauer, head of oil at Alphavalue in Paris.”