Trump’s plans to abandon UN climate deal puts EU projects in doubt

Listen to MLex Senior Energy Correspondent Laurel Henning talk with MLex Brussels Senior Managing Editor James Panichi about this analysis and related new developments in the first episode of The Best of MLex podcast.

First published by MLex 11 November 2016. By Laurel Henning.

If Donald Trump is a man of his word, this week's US election result marks the start of an overhaul of international climate policies and energy systems — an overhaul that will cast a shadow over projects with the EU.

In the course of the election campaign, the US president-elect said repeatedly that he would pull the US out of an international climate accord, having said that climate change is a hoax invented by the Chinese and dismissing global warming as "bullshit."

Trump's strong stance saw stocks in wind and solar energy companies plummet. The value of the US's largest solar-panel maker, First Solar, lost 6.5 percent; Vesta Wind, the world's biggest wind-turbine manufacturer, suffered a 10 percent blow to its share price.

Now, the uncertainty about whether Trump will back his rhetoric with policy initiatives is trickling through to EU regulators, who are concerned about the long-term future of their work with US counterparts.

And higher up the policy chain, one snap decision by the Trump administration to leave the UN's climate body could, within a year, make the future of a global accord to cut the world's emissions heavily reliant on Chinese climate policies.

It has been a rude awakening for European officials, particularly given that Trump's position is a far cry from the policy position of Democratic candidate Hillary Clinton, who had described climate change as "a defining challenge of our time."

Trump's stance on the issue also pits him against UN scientists, who have said the net effect of human activities since 1750 has been one of warming. Based on that understanding, a UN accord to curb the world's carbon output was reached in Paris almost a year ago.

US President Barack Obama ratified the deal using his executive authority to bypass Congress on Sept. 3. The accord entered into force on Nov. 4, when more than 55 governments representing over 55 percent of global greenhouse-gas emissions ratified the agreement.

Any government that wants to withdraw from the climate deal can do so three years after the accord's entry into force. The process would take an additional year, which could see the US pull out of the agreement by Nov. 4, 2020.

By then, the global superpower will be recovering from its next national election, scheduled for the day before — which could again throw environmental policy into a combustible political debate.

China rising

Once he takes office on Jan. 20, Trump could also choose a faster option to disentangle the country from its commitments under a third element of the UN accord's article on withdrawls from the agreement, which could cut the time required to leave to just one year.

To do that, the US would have to leave the UN body that oversees climate talks, the United Nations Framework Convention on Climate Change, or UNFCCC — something no country has done since the organization was set up in 1992.

Leaving the UNFCCC would be a slap in the face to those countries that, for two decades, have committed themselves to international negotiations on climate change and efforts to tackle global warming.

But, more importantly, slamming the door on the UNFCCC would thrust China's climate policies to center stage.

A US departure is an unthinkable scenario for those close to negotiations, who say investment in renewable energy and emission-cutting technology is a no-brainer.

For the first time this year, renewable power became the world's No. 1 source of electricity capacity. And as a businessman, observers argue, Trump wouldn't throw away those opportunities.

Yet the market isn't convinced, which is why renewable energy stocks took a nosedive this week, after Clinton conceded defeat.

Brexit Plus, Plus, Plus

If the US were to turn its back on the global accord, it remains to be seen how much of an extra burden this would place on other countries in their fight to stave off global warming.

The implications — and the calculations — are similar to those faced by the EU when the UK completes its process of leaving the bloc. In a post-Brexit union, countries including Italy, Spain and Portugal will probably have to do more to cut their carbon emissions.

The parallel was not lost on Trump, who said ahead of his election win that his victory would be "like Brexit plus-plus-plus."

While EU policymakers scratch their heads about exactly what that will mean over the next four years, energy regulators are worried about the short-term impact of Trump's policies — assuming, of course, that they match his pre-election public utterances.

European energy regulators are in constant contact with their US counterparts, exchanging information on renewable-energy development, wholesale market monitoring and grid management. This relationship could come under threat if Trump were to decide to cut ties with international partners.

Unless, of course, he proves more pragmatic about the US's international commitments once he takes office than he had been on the hustings. Yet the hiring of climate-change skeptic Myron Ebell as an adviser on national energy policy would suggest this is unlikely to happen.

In short: EU policymakers are waiting to see if Trump will be a man of his word. They are hoping he is not.

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