In the four years since the last US election, the energy conversation has moved on. Nations have changed their concerns and expectations around the energy industry without one of the world’s largest power producers and consumers. Half of the top ten polluting nations have now made a net-zero greenhouse gas emission commitment, but the US is not among them. Among the world’s five biggest economies, the US stands alone in having made no pledge.
Regardless of the outcome of the elections, the US will withdraw from the Paris Agreement on Climate Change this Wednesday. As the 2020 US election goes into its final day, how might the result change the global attitude to energy?
Gas, oil, and offering an alternative to Russia
The US’s political opposition to Russia has meant it is willing to go to great lengths to present itself as an alternative fossil fuel provider. When Belarus attempted to move away from Russian oil imports earlier this year, the US intervened and supplied the country with the majority of its supply.
During the oil trade war earlier this year, the US suffered as Russia and Saudi Arabia aimed to increase their market share. The consistent low price of petrochemicals has significantly hurt the US shale industry, which could in turn benefit the country’s expanding renewable energy market.
Now, Russia and Saudi Arabia stand united. Both would profit from resisting any global movement towards greener technology, to maintain the power and money gained from their oil. Global oil prices remain low, meaning the US shale industry remains largely unprofitable.
Global climate pressure, and the absence of the US
Earlier this week, a group of western governments attempted to apply environmental pressure to the leadership of Australia. Leaders of the UK, France, Italy, and Chile signed a letter encouraging Australian prime minister Scott Morrison to commit to a net-zero emissions target ahead of a global summit.
Morrison faced similar calls for action when visiting the Trump administration last year. He visited the US during a UN climate summit in New York but was not given a speaking slot due to his lack of climate promises.
While the US has previously taken a proud roll in perpetuating ‘Western values’, it has taken a back seat in the energy transition. While allied countries such as Germany have taken initiative in pushing renewable technology forward and prices down, the US has allowed the EU to become one of the world’s leading voices against climate change.
Broad goals from the EU and China have led countries such as Japan to make their own commitments. Japan has not yet enshrined them in law, and the US election will offer an insight into how much support the country will receive for its goal.
Setting a precedent for green market intervention
Within the US, investment groups say recent rulings have limited their ability to invest in sustainable companies, such as green energy businesses. While investors might like to put money towards companies with strong ‘ESG factors’, the US Labour department recently confirmed a new rule meaning investors would need an economic reason to invest in green industry.
Progressive think tank Better Markets president Dennis Kelleher told Reuters this week: “The Trump administration and his regulators have been ideologically anti-ESG and climate from the start. This would change significantly if Biden wins. His administration will prioritize addressing climate change and will also boost ESG disclosure and promotion.”
However, the US Chamber of Commerce set the rules have effectively help shareholders and hindered activists.