Trump falls flat with climate change retreat, Markets, not politics, drive energy sector’s push to cut greenhouse gas emission Ft.com by: Ed Crooks, 7 Aug 17, US Industry and Energy Editor On Friday, the US state department submitted a notification to the UN that the administration intended to withdraw from the Paris climate agreement reached in 2015. The statement, confirming the decision that President Donald Trump announced in June, is at one level momentous. The world’s largest economy and second-largest emitter of greenhouse gases is quitting a deal that the governments of leading European countries have described as “a vital instrument for our planet”. In terms of the consequences for the global energy industry, however, its impact has so far been negligible.
Of course, the full implications have yet to play out. But in the nine weeks since Mr Trump announced that leaving the agreement would be “a reassertion of America’s sovereignty”, energy companies around the world have been making plans that suggest their views on the outlook have not changed in any significant way.
The most important reason for that is that moves towards reducing greenhouse gas emissions are going with the grain of energy markets, regardless of political decisions. The plunging costs of renewable power and electricity storage, the rise of electric cars, the availability of cheap gas for power generation, and the prospect of abundant supplies of oil, for a while at least, all point towards investment decisions that would curb emissions.
The comments from oil companies reporting earnings over recent weeks have provided a stark illustration of that point. For years, environmental groups have been raising concerns about stranded assets: projects that cannot be viable in a world where greenhouse gas emissions are constrained.
When they first started making that argument, with oil at about $100 per barrel, it was often a tough sell, says Andrew Grant of the Carbon Tracker Initiative, which has pioneered analysis in this area. Now, he adds, they are “pushing at an open door”.
The central idea is that in a world where fossil fuel consumption is curtailed to cut greenhouse gas emissions, investment in high-cost assets is likely to be wasted………..
Whatever happens to international climate policy in the aftermath of Mr Trump’s decision, unless some other shock comes along to shake the industry out of its current mindset, downward pressure on costs and caution on investment decisions are likely to remain the prevailing rules.
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