The White House faction of climate skeptics is tilting at windmills.
All but two countries have signed the Paris Climate Agreement that calls for mandatory reductions in carbon emissions and other policies designed to combat climate change and global temperature rise. Further, major oil producers are instituting voluntary steps to lower their carbon footprints. Reducing methane emissions; transitioning to more renewable sources, such as wind and solar; and investing in technology that will help lower carbon emissions, as well as reducing flaring, are just some examples.
Then there are investors: Institutions representing more than $15 trillion of investable assets are urging the implementation of the Paris Agreement.
Whether or not White House climate skeptics get their way, numerous reports indicate there is no turning back from renewable energy sources. How quickly renewables come online and where the most immediate opportunities lie are the top variables to be considered. Even Secretary of State Rex Tillerson, the former chief executive of ExxonMobil, admits as much. He is for remaining a signatory to the climate accord.
Countries from Canada to Sweden are looking to phase out electricity generated by fossil fuels. California recently introduced a bill to eliminate fossil fuels as a source of power generation by 2045. The trend is clearly heading in the direction of alternative energy.
Still, according to this year’s United Nations study on new energy, investment in the sector fell in 2016 to $242 billion from $312 billion in 2015. But renewable capacity has grown. The gap in seemingly new demand yet low investments is largely due to cheaper prices, the report says. It is less expensive now than two years ago to construct a solar project, for example.
A pullout from the Paris Agreement by the United States may taint America’s global reputation and impact certain municipal accords domestically. It may also push investors overseas. The business publication Quartz headlined this week: “It’s smarter to invest in renewable energy in India than the U.S.”
Ernest & Young, the global accounting and consulting firm, in its annual Renewable Energy Country Attractiveness Index, downgraded the U.S. behind China and India this year. The firm cited the Trump administration’s plan to dismantle the Clean Power Plan and the potential for abandoning the Paris Agreement.
Leaving the Paris Agreement would put the U.S in company with Syria and Nicaragua as the only nations on earth that aren’t signatories.
A sober look at that fact and lobbying from executive branch officials who believe the U.S should remain a signatory to the climate accord may well keep prospects for renewables on track for the world’s second-largest emitter of carbon dioxide. Then again, the White House has proved that it is anything but predictable—a reason why there is reportedly a lot of money aimed at renewable investments sitting on the sideline.
The administration is expected to make a decision on the Paris Agreement in the coming days. The decision will be either wise or ignorant.
Editor-at-large for Financial Advisor and Private Wealth magazines, Thomas Kostigen is a New York Times best-selling author who chairs FA's & PW's Impact Investing Conference, held annually, on environmental, social and human rights issues.