Trump’s climate tirade will not stop the new ESG
The US president’s assault on the green energy ‘scam’ is part of the struggle with China for global economic hegemony
SIX years ago, US President Donald Trump infuriated environmental activists by mocking the green campaigner Greta Thunberg during the United Nations (UN) General Assembly meetings. Now he is causing shock again. At the UN on Tuesday, Trump dismissed climate change as “the greatest con job ever perpetrated on the world”. He also derided renewable energy as a “scam”, lambasted Europe’s “suicidal (green) energy ideas”, and heaped particular vitriol on wind turbines.
So what should the wider world conclude? One rational response would be to weep. After all, there is widespread scientific evidence that carbon emissions are warming the planet. Antonio Guterres, UN secretary-general, admitted this week that efforts to stop temperatures rising more than 1.5 deg C above the pre-industrial average “are collapsing”. Worse still, a new report from Hank Paulson, former US Treasury secretary, suggests that biodiversity loss is accelerating. Trump’s indifference to this is a moral crime.
However, another rational reaction to the president’s tirade would also be to laugh – at him. For one thing, Tuesday showed that he is badly out of touch with the realpolitik of modern energy. While Trump apparently views green innovations as just a “woke” crusade, those actually driving the renewables boom now see it differently. Ursula von der Leyen, president of the European Commission, spelt out this shift in New York just before Trump’s tirade. “Clean energy is not only about addressing climate change. It is in my view also about energy security and prosperity,” she said.
More specifically, renewables will cut European energy costs (which are currently two or three times higher than in the US), reduce Europe’s exposure to Russia, create new jobs and power data centres, she said.
And it is not just playing out in Europe, but also in China and the Gulf states as well. So, too, in Texas, which has quietly become America’s biggest centre for renewable energy in recent years, because of its soaring need for power – never mind its traditional fossil fuel footprint. And Big Tech groups are embracing a variant of this new ESG too, backing renewables because they desperately need more cheap energy for their data centres.
That certainly does not mean renewable energy is a magic wand – or at least not yet. After all, as Lord Adair Turner, head of the Energy Transitions Commission (ETC), stressed this week, there are important differences between the world’s “solar belt” (in other words, sunny regions) and its “wind belt” (such as the UK, Canada and Germany).
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In the former, solar power is already so viable and cheap that energy costs could fall in half by 2050, the ETC says. In the latter, there are still “higher balancing costs”, since renewables must be supplemented with fossil fuels in the absence of smart grid policies or better battery storage. Not all of Trump’s critiques are wrong.
But even allowing for the limitations of current tech, the UN calculates that 90 per cent of newly installed renewable energy is cheaper than fossil fuels. That is why the International Energy Agency predicts there will be US$2.2 trillion of global investment into renewables this year – twice that for fossil fuels.
Could Trump derail this trend? Not easily outside America, since China is now so dominant in global green supply chains that it has every incentive to preserve this boom. And even inside the US, he faces obstacles. This week, for instance, the Danish company Orsted won a legal ruling overturning efforts to block offshore wind farms.
More striking still, a report from the Dallas Federal Reserve undermined hopes that Trump could unleash a “drill, baby, drill” fossil fuel boom just by tilting at windmills. “The uncertainty from the administration’s policies has put a damper on all investment in the oil patch,” one executive (anonymously) declared.
So perhaps the best way to frame Trump’s tirade is to see it as (yet) another example of “geoeconomics” and the battle for global hegemony. Since China now dominates green energy production, Trump is hitting back by trying to crush that boom and force regions such as Europe to buy US fossil fuels instead.
In the long term, I doubt that Trump can win this geoeconomic energy fight with China. But in the short run, it will produce more upheaval for business, and, most importantly, hurt the planet. For that, we should all weep, and also pray that some of Trump’s tech buddies find the courage to speak truth to power, and explain why this latest variant of ESG is the new game in town.
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