Trump and the global cooling

10 Nov

by Agnes Horvath and Ana Kecman

 

It has been only a week ago that the ratification of the Paris Agreement got into the headlines and environmentalists all over the world could celebrate a clear turning point in global climate policy. While there were countries that put the emission of greenhouse gases on their agenda in the past, without a global response these individual efforts were deemed to fail. Greenhouse gases remain in the atmosphere long enough to become well mixed and for this reason the amount that is measured in the atmosphere is roughly the same all over the world, regardless of the source of the emissions. Moreover, the most important achievement of the Paris Agreement was that the two largest polluters of the world, China and the US – who account for more than 40% of total carbon dioxide emissions – also ratified the agreement. Still, the sense of relief may be short-lived.

Since last Tuesday, the US has a new president who repeatedly said in his campaign that the climate change is a “hoax” and promised to cancel the Paris Climate Accord if elected. While there is an intensive speculation on the concrete policy details of the campaign promises, Trump seems to follow on his promise to get rid of the Environmental Protection Agency (EPA). On his second day, Donald Trump has selected one of the best-known climate skeptics, Myron Ebell, to lead the EPA transition team in the cabinet, signaling a drastic reshape in US climate policies.

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Trump calls himself a “friend to oil and gas” indicating to be more cooperative to opening up public lands for drilling, including the Atlantic and Arctic Oceans, something that the industry has struggled with under the Obama administration. It is also expected that he will be a friend to the midstream sector (in particular pipeline players and suppliers) as well, which has run into increasingly stiff environmental opposition lately.

Experts seem to be less concerned about cancelling the Clean Power Plan and other regulations on coal production and coal mining. Regulatory easing would probably keep more coal plants open for longer, but as the US coal industry had been in long-term decline, reviving it will not be an easy task. Over the last decade, breakthroughs in hydraulic fracturing led to a boom in the production of shale gas, narrowing the gap between coal and natural gas prices significantly. Somewhat contradicting coal companies on the brink of bankruptcy until recently seem to enjoy the renewed market interest that arose as a consequence (see Peabody share price development below).

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Transition to a cleaner world could also be slowed down by the expressed desire to end public spending on renewable energy. Eliminating the production tax credit, which subsidizes wind and solar, is something that could lead to lower renewable energy investments. Still, changing the tax system will require an act of the Congress. Moreover, even without tax breaks, renewables will probably win out on cost grounds ultimately. It could take longer for renewables to increase their share in energy production but the process is probably already irreversible.

Trump definitely will not make America the “clean energy superpower of the 21st century” and he will clearly lengthen the transition from fossil fuels to renewables and will make it harder to fulfill the goals of the Paris climate deal. Still, although they contribute significantly, US carbon emissions themselves should not prevent other countries to take global warming seriously. Indeed, the big disaster would happen if climate skepticism becomes a presentable, popular viewpoint and other countries follow…

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