Why Donald Trump's Election Is Good News For Renewable Energy.


Why Donald Trump's Election Is Good News For Renewable Energy.

Many feared the worst for Climate Change action and renewable energy, in particular with the election of Donald Trump, but to every cloud there are silver linings.

Firstly, what does Trump's election mean for the energy world? While nobody can be sure of the future, it is likely that supports such as subsidies for renewables will be reduced or removed. On the other side of the coin, policy supports for fossil fuel use (oil, coal & gas) are likely to be put in place.

It could be argued that we are already beginning to see this play out in global energy markets, with crude oil prices at annual highs and looking like they might rise further into the future. In turn this is leading to higher gasoline/petrol, diesel and heating oil prices. So how is any of this bad news for renewables?

Many of the subsidies renewables enjoy are to help make them more cost competitive with fossil fuels. This can be achieved in two ways, subsidise renewables or increase fossil fuel prices (usually through additional taxes). The problem with additional taxes (and even with subsidies) is that they are rarely unchallenged at a political level. This means it is hard for a politician to stand up and tell his voters s/he's increasing the price of their home heating or car fuel. However if energy prices rise due to world market increases there are less calls for politicians to intervene.

Subsidies are always supposed to be temporary. They help transition systems from one path to another. So their eventual removal is usually factored into economic decisions.

Donald Trump's election will likely lead to higher fossil fuel energy demand and therefore higher fossil fuel energy prices. This is good news for alternatives. Many renewable and energy efficiency technologies are already cost competitive with fossil fuels. Increases in oil and coal prices will only increase their desirability and that, surely, is a good thing.