The next November the 8th will not only be the election of the Democratic or Republican candidate to the US government, it will also be the starting point of the new energy scenario for the next legislation of one of the main world players. Financial markets are already showing signs of uncertainty and nervousness. Polls show minimal differences between the two parties, however, the market response to a president like Trump or Clinton are very different.
At a time of great change in the US and global energy landscape, Hillary Clinton and Donald Trump have campaigned very different energy and climate platforms. Clinton’s vision of turning the United States into a “clean energy superpower” includes an energy plan focused on climate and will look to continue the transition to a low carbon energy system. By contrast, the Trump’s “America First Energy Plan” rejects the importance of climate change and takes advantage of the exploitation of domestic energy resources, with more emphasis on coal, oil and natural gas, and focuses on reverse government regulation.
This debate comes at a very delicate moment where the global transition to a sustainable future is more than present. What is clear is that the energy debate is far from over, beyond the result.
The current global energy landscape is changing dramatically. The main causes include:
- increased production of oil and US shale gas
- The decline of the coal industry
- The current environment of low oil prices and changes in the world market for oil and gas
- The rapid transformation of the electricity sector driven by new technologies, business models and political incentives.
- And ongoing efforts to reduce emissions of greenhouse gases to meet and shape the global objectives of climate change.
What do they propose?
REPUBLICANS: In their speeches emphasizes the importance of including in its foreign policy the goal of making America a dominant player in the world without taking into account existing international agreements.
Exploitation of Shale-gas and oil reserves are an important part of its commitment to energy development and announces it will intensify its activity. In that vein, it is also in favor of building the controversial Keystone XL connection between the oil wells of Alberta (Canada) and the United States.
Another important point has to do with coal industry. America has proven reserves of 19.000 million tons according to the EIA (Energy Information Administration) and due to the fall in domestic consumption and lack of interest in international markets, the coal industry is subject to a major crisis for a clear oversupply scenario.
Despite the foregoing, he advocates for clean energy as well, but only as an additional part of its generation capacity. However, the program does not endorse international agreements and intends to cancel US participation in the agreements of the COP-21 (Summit Paris) and cancel all programs involving Global Warming US taxes.
DEMOCRATS: In contrast to Donald Trump, Hillary Clinton establishes as main objective, to join the agreement on Climate Change in Paris and promises to develop renewable energy in both projects and regulatory environment. Through the modernization of transmission grids and subsidy reforms to contribute to this sustainable energy plan. The main concern is the lack of a solid financial plan to support the applicability of this program. Without a tax or rate on emissions of carbon dioxide, all funds should go by public debt (something clearly impossible). This makes Hillary Clinton’s speeches to be taken as mere promises in the air.
This shift to sustainable and renewable model is an opportunity to restructure the mining sector in crisis. Announces a plan of 30,000 million dollars to restructure this sector.
As expected, she is diametrically opposed to the implementation of the interconnection between Canada and the United States as advocates the Republican Party by Donald Trump.
Clinton, on the other hand, attempts to implement more stringent fracking regulations. It agrees to the development of this industry as long as the region or state is not against, when not involving methane emissions or water pollution and as long as the industry explain what chemical elements are exactly using. This leaves virtually no options to exploit American soil.
President Obama said in September this year that the US ratifies the agreements of Paris climate change (COP 21). Clinton wants to go further and says that with 10 years in office, she will generate enough renewable energy to power every home in America.
Europe and the US Energy Policy:
Whatever the winning party of the elections is, the United States has important interests in the European energy scenario. Since the revolution of shale in the US, the largest consumer of hydrocarbons has become energy independent. And not only that, also one of the largest exporters of oil and gas worldwide.
With this position the US is increasingly using oil and gas as a tool of foreign policy, deepening his involvement in a high-stakes game of pipelines ranging from Russia to Israel to Turkey and even Syria.
This opens a new “cold war” with Russia. One of the most important issues in the US is its interested in breaking European dependence on Russian gas.
This implies an aggressive stance against the proposed Nord Stream pipeline 2 from Russia, which would redirect the gas around Ukraine expanding the current Nord Stream 1, which runs under the Baltic Sea to Germany.
The interruption of the Russian project pipeline to Germany (Nord Stream 2) has two objectives:
- By-passing Ukraine to economically destabilize the country.
- Keep the Russian gas monopoly over a significant part of Europe
Source: BBC News
This would leave the US offside gas in the struggle for market share of one of the most demanding gas regions in the world. There is a clear commercial interest in it, but also argue that there is a high risk of security of supply by having such a high dependency.
Source: BBC News
However, there is another project of great interest to ensure Europe gas from the eastern Mediterranean and Turkey, and that is the main transit country for a chain pipeline called the Southern Corridor Gas from the Caspian Sea to Italy, promoted by Europe and the United States as a non-Russian option. Ankara is eager to exploit these opportunities, especially because it wants to reduce its energy dependence on Russia, which gets more than 50% of its gas supply.
The new US president will have a complex chessboard to contend with. Any of the candidates will have an aggressive international energy policy fraught with difficulties. Their differences are focused on jobs and environmental regulations rather than diplomacy. Donald Trump emphasizes increasing restrictions and to reactivate the coal industry, while Clinton focuses on renewable energy. But whoever wins will need to play a strategic game long term to shape the future of the global energy map.
Climate change is undoubtedly the most important global energy problem that may be affected by the outcome of US elections. While it is likely that a Clinton administration pursue stronger policies, Trump will be less likely to make domestic and international efforts in the fight against climate change. Four years of lackluster progress on this front of one of the major emitters in the world could significantly hamper, if not derail, global efforts.
Alejandro de Roca | Operations Director