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Coal is resurgent, renewables in retreat: Energy with Trump

If you want a snapshot of what the global energy map will look like under President Donald Trump, look no farther than the stock market.

Glencore Plc, the world’s top coal trader, surged more than 7 percent the day after the election. Vestas Wind Systems A/S, the world’s biggest wind-turbine maker, plunged as much as 13 percent. The swing foretells a story of the most carbon-intensive fossil fuel making a comeback, while the fight against climate change — and investment in wind and solar power — languishes.

“De-carbonization, which has been the organizing principle of Obama’s energy policy, came to a screeching halt last night,” said Bob McNally, president of consultant Rapidan Group in Washington and a former senior energy official at the White House under Republican President George W. Bush.

In his only major energy policy speech before the elections, Trump said that he would rescind “job-destroying” environmental regulations within 100 days of taking office and cancel the climate deal reached last year in Paris.

“A Trump administration will focus on real environmental challenges, not the phony ones we’ve been looking at,” Trump told supporters in May in North Dakota, the birth-place of the U.S. shale revolution.

If the president-elect delivers on his campaign promises, he could effectively roll back eight years of U.S. energy policy, with consequences to industry giants like Exxon Mobil Corp. and oil-rich nations including Saudi Arabia and Venezuela.

“Trump has promised a dramatic shift in U.S. energy policy, from getting out of the Paris climate deal, to easing regulation on domestic oil and gas drilling, to scrapping the Clean Power Plan that affects the role of coal,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former White House official under President Obama.

Few clues

To be sure, Trump has offered few clues on how he plans to implement his plans. Energy and climate policy has taken a back-seat to immigration, the economy and debate about the candidate’s fitness for office. And some of his proposals are contradictory, like his pledge to boost both natural gas and coal, two fuels that compete against each other in the power generation market.

Yet few doubt who’s likely to win and lose, particularly as Trump can rely on supportive lawmakers in Congress to push his agenda.

“The result is undoubtedly a blow for the renewable energy industry,” said Matt Loffman, an analyst at energy consultant Douglas-Westwood in Houston. “The historic election result is perhaps welcome news for a hydrocarbon industry that has been on the ropes for over two years.”

As Trump shapes his energy agenda, the first clue about his priorities could come with his selection for secretary of energy. Obama surrounded himself with policy experts and academics such as Steven Chu and Ernest Moniz. Trump has relied so far on the advice of Harold Hamm, the founder and chief executive officer of Continental Resources Inc., one’s of America’s largest shale oil producers, but Hamm has declined the job.

Whoever his choice as energy secretary, the global fossil fuels industry, which over the last four years has been on the defensive with Obama, is likely to find a friend in the White House.

“The oil and gas industry is a clear winner with the new president,” said Alexandre Andlauer, head of oil at research firm Alphavalue in Paris. “U.S. oil companies have a better future today than yesterday.”

 

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