Trump: A revolution within a revolution?
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The new President could encourage a further expansion of the U.S. unconventional industry and a return of American coal to the nation's energy mix

Donald Trump's election as the new President of the United States has surprised and concerned many. His views on energy, during the election campaign have raised fears of a sudden withdrawal by Washington from the international fight against climate change and an aggressive return of American coal to the nation’s energy mix. As regards the shale gas sector, the impact of ''Hurricane Trump'' could encourage a further expansion of the American unconventional industry. More uncertain, but with interesting prospects, is the impact on an international level, where the tycoon’s foreign policy choices could reshape some trends in key areas for the production of blue gold.

Full steam ahead!

During his race to the White House, Donald Trump repeatedly declared war on the Paris Agreement and the larger fight against climate change. The future president heavily criticized the multilateral efforts on decarbonization, implying that the U.S. might disengage on an international level (not necessarily making a formal exit from the Agreement, which could take a long time), with an accompanying U-turn on the Clean Power Plan on a national level. Although this may not necessarily lead to a dramatic collapse of renewables in the country, the Trump line would certainly favor a revival of coal but especially a potential acceleration of the natural gas sector. Trump could in fact further open up unconventional exploration and production to meet the industry’s hydrocarbon requirements and, above all, to encourage domestic economic growth. However, Trump’s approach could go further, with possible implications at the international level. The President, with the support of the Republican Party, could significantly loosen ''strategic'' ties to LNG exports, making American production more appealing on markets not subject to free trade agreements.

The path to change is outlined

On the international energy scene, the advent of Trump could have a limited impact. Despite the key role of the United States (in partnership with China) at COP21, a defection from Washington would not necessarily block a series of global processes that currently seem unstoppable. Beijing, a pivotal player in reaching the Paris Agreement, appears likely to continue its decarbonization process regardless of the decisions made on the other side of the Pacific. Domestic factors—first and foremost the urgent need to protect the environment and health of the Chinese from unsustainable levels of pollution—are forcing the government to proceed rapidly towards a more sustainable energy model. It is therefore difficult to imagine the impressive investments in renewables underway in the country slowing down only due to the United States’ less cooperative approach. More generally, the low-carbon sector might not be significantly affected by the (counter–) revolution introduced by Trump. The gradual improvements in technology, the continuous reduction in generation costs through renewables, and innovation in key sectors such as electricity storage and energy efficiency will continue to drive the global push toward decarbonization, dictating trends that the new American President will find hard to limit, even on an internal level. The most significant effect of the new American course will likely be noticed with reference to the financial cooperation, provided for by Paris Agreement, to promote investments in decarbonization in developing countries. America’s contribution of $100 billion per year required by COP21 for the Green Climate Fund could be curtailed, and, with it, efforts to speed up the transition process in the poorest areas of the world.

Despite the key role of the United States (in partnership with China) at COP21, a defection from Washington would not necessarily block a series of global processes that currently seem unstoppable

What is the future for blue gold?

Although threatened by a revival of coal, which still accounts for 30 percent of global energy consumption, gas will continue to be the transition fuel in the decarbonization process launched in Paris, even in the Trump era. In fact, not only could the domestic policies of the new president somehow strengthen the global gas supply, speeding up the procedures for exporting and expanding possible target markets, but the president’s lines in foreign policy could also have an impact on the energy dynamics of certain global players. Benefiting from this could firstly be Russia, which, thanks to a greater understanding between the White House and the Kremlin, could see the gradual lifting of the international sanctions which—albeit not directly affecting the natural gas sector—have effectively crippled the Russian economy and limited the ability to invest in the energy industry. The development of the Yamal peninsula and eastern Siberia as well as a general increase in LNG capacity could materialize in this context. A chapter yet to be written is that on Iran, since the tycoon’s position on the matter, and on the Middle East in general, appears more undefined than ever. The region is in fact intersected by the possible agreement with Russia on the fate of Assad’s Syria and the announced strengthening of the fight against ISIS Sunni fanaticism, issues on which the convergence between Washington and Tehran could become significant. A relatively soft approach towards the Islamic Republic, and the nonrejection of the nuclear agreement, could in fact finally open the doors to Western investment in the Iranian energy industry, with a potentially great impact (in the medium term) on the global gas supply.