THE ENERGY INDUSTRY TIMES - FEBRUARY 2017 Final Word 16 Master of the tide or master of disaster? Against all the odds, Donald Trump finally made it into the Whitehouse – still sounding his clarion call to “make America great again”. While his mantra might be understandable, some of the methods he is proposing to achieve his objective are questionable at best. Under former President Barack Obama, the US had largely won the respect of the global community in terms of its energy policy and championing the climate change drive. That all looks set to change under President Trump. Global leadership on tackling global warming now seems more likely to come from countries that would have just a few years ago been seen as unlikely candidates. The recent World Economic Forum in Davos, Switzerland, highlighted just how much the landscape has changed in terms of climate leadership. Speaking as the first Chinese President to attend the summit, Xi Jinping showed how China is increasingly taking a global leadership role in combatting climate change. While Trump stayed away, President Xi took the spotlight and, without directly mentioning him by name, urged climate change naysayer President Trump to keep the US in the Paris Agreement. During his speech he said: “The Paris Agreement is a hard-won achievement… All signatories should stick to it rather than walk away.” If Trump follows through with his threats to “rip up” the Paris Agreement, it will only leave the way open for China to further strengthen its growing climate leadership position. China is already home to five of the top six solar panel manufacturers and five of the top 10 wind turbine makers. In early January, it pledged to invest Yuan2.5 trillion ($360 billion) in renewable energy through 2020 to reduce greenhouse gases. Certainly China’s air quality is playing a role in government planning but its clean energy ambitions extend beyond its own borders. In 2016 China spent a record $32 billion on renewable projects abroad. According to Bloomberg New Energy Finance, its total investment in renewable energy reached almost $88 billion, the highest in the world and one third more than the US. Further, the green transition has boosted employment. Reuters reports green technology investment will spark the creation of 13 million Chinese jobs. By contrast, roughly 10 million jobs across all industries have been created in the US since the 2008 recession. These are numbers that President Trump should take note of. Christian Aid’s International Climate Lead, Mohamed Adow urged him to follow his business instincts and not “squander America’s hard fought pro-climate diplomacy”. He said: “Donald Trump is always telling us how smart he is. Well the smart thing to do on climate change is to listen to the scientists and businesses and ensure America is ready to capitalise on the growing low carbon revolution that will help make it great again. If he doesn’t he will hand the next industrial revolution to America’s economic rivals. “China is snapping at America’s heels and is ready to take its mantle as the most pro-active, low-carbon superpower.” He argued that it is in America’s interest for President Trump to take climate change seriously. Apart from the economic benefits, a recent study by the University of Massachusetts showed that parts of the US are expected to warm much faster than the global average. Climate change is a top tier geostrategic issue and the international community needs to be united in its commitment to tackle it. Carbon is not a typical ‘commodity’ that is produced and consumed in the same geographic area. This is one of the reasons we need a global solution. Speaking in Davos at a special debate on carbon markets, Douglas L. Peterson, President and Chief Executive Officer, S&P Global said: “Carbon is not like many other products. It can be produced in one place but the impact – the ‘consumption’ so to speak – goes into the air and it becomes a global issue.” It is for this reason that many argue that a global carbon price – in the region of $40-50 per tonne of CO2 – is needed to induce the right behaviour. At the same debate, Catherine McKenna, Minister of Environment and Climate Change said that “putting a price on pollution” instead of “putting a price on carbon” has worked well in Canada. She said the Paris Agreement was a signal to the markets, observing that addressing climate change was not just an obligation but also an opportunity. McKenna noted: “The conversation is no longer limited to the NGOs and governments. It has gone far beyond that. It’s now the business sector, financial institutions, etc. “I have had so many bilaterals with businesses and companies who are saying ‘yes we have an internal price on carbon’. Many good companies are looking at how they find opportunities but also how do they manage risk… I see this as a huge opportunity, so that’s why Canada has stepped up. Pricing pollution is a way to actually prepare our economy to make it more attractive for investors. I’ve actually had so many companies come to us and say ‘we like what’s going on in Canada’ because you’re providing certainty to the market.” It is a far cry from the noises that have been made by President Trump, who is doing little to ease the concern of international clean technology investors. His isolationist rhetoric on trade prompted President Xi to say: “Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war.” Indeed, his protectionism will do nothing to help the US take advantage from the burgeoning clean technology sector. In an interesting report, the UK’s Guardian newspaper interviewed more than a dozen leading global voices on climate change in the run-up to Trump’s inauguration. “The best way to make America great again is by owning the clean technologies of the future,” said Michael Liebreich, who has advised the UN and World Economic Forum on energy. “Not only will this create countless well-paid, fulfilling jobs for Americans, but it will also lock-in the US’s geopolitical leadership for another generation.” Meanwhile, John Schellnhuber, a climate expert who has advised Angela Merkel, the Pope and the EU said: “I would say to Trump, if you want to make China great again, you have to stay the course you have promised.” President Trump, who has called global warming a hoax created by the Chinese, appears to have softened his stance a little since his election win, saying there is “some connectivity” between human activity and climate change. However, he also claimed climate action was making US companies uncompetitive. Above all President Trump has to realise we live in an interconnected world and that he cannot turn back the clock; the clean energy surge is in full flow. He may want to build “a big beautiful wall” along the Mexican border, which may stop the less determined potential immigrants but that will not hold back climate change. New data released last month revealed that temperatures rose to their hottest on record for the third year in a row in 2016 and that global temperatures have already soared more than 1°C since pre-industrial times – halfway to the 2°C considered a crucial ceiling under the Paris deal. King Canute once demonstrated that he had no power to hold back the tide. President Trump will no doubt find the same applies for climate change. Junior Isles Cartoon: jemsoar.com
Energy Industry Times February 2017
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