So, the US is going to exit the COP21 agreement. Is this a catastrophic development?
We think not. While US president Donald Trump may have disappointed and/or embarrassed much of his nation with his announcement, it is not going to be catastrophic to the global effort to combat climate change. Trump will most likely only be president for four years, and even if he were in office for eight years, many US businesses have already embraced renewable energy and much of its citizenry are pro ‘save the planet’. Further, US technology companies are not about to be left behind by their foreign counterparts and many have established themselves as world technology leaders. Add to that the fact that many of the 50 states already have their own emissions controls and clean energy agendas, US efforts will continue with or without Donald J Trump’s support. It’s just a waiting game until someone more progressive gets into office and the US ‘officially’ rejoins the world effort once again.
Motivating the rest of the world is the fact that the cost of renewable energy, especially solar and wind, has dropped dramatically. And as long as it maintains its cost competitiveness with crude oil and natural gas, it will continue to gain momentum. According to Jochen Wermuth, Founder and CIO of Wermuth Asset Management, “The global cost of energy generation from wind and solar power has continued to fall and is now offered at less than $3cent/kWh, with which oil can only compete at a price below $5/barrel.” It is doubtful we will see $5 crude as if we did, this would truly be a catastrophic development – global economies would be rocked. Never say never, but such a scenario is highly unlikely.
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