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President Trump is reviewing the US commitment to the 2015 Paris climate agreement (known as COP21). He has publicly stated his intention to save the US coal industry. How will his actions affect the global coal market? And what knock-on effects will we see?
Coal has the most to gain (and lose)
When burned, coal releases more CO2 than any other fossil fuel:
- 30% more than fuel oil
- 34% more than gasoline
- 80% more than natural gas
Coal faces an uncertain future as greener energy sources are developed. However, President Trump was elected on the promise of restoring economic growth, especially to coal and Rust Belt industries. His presidential success relies on maintaining his coalition and delivering (domestic) economic success.
How will Trump change the US’s approach?
Trump has long argued for changes to deliver economic growth, which will open up opportunities for US workers. His presidential campaign promised to help the coal industry. He also promised to unburden US industry. And he’s already started making these changes. He’s removed the stream protection rule. He’s issued an executive order requiring every new environmental rule be accompanied by the removal of two existing rules. But, in themselves, these measures are not going to have much impact on coal’s basic carbon problem.
What’s the future for COP21?
Meeting the targets of COP21 will involve real costs and problems for the coal industry. However, the president could choose to simply ignore the treaty — there are no penalties for non-compliance. We feel he’ll go further than this. If he withdraws from the COP21 treaty he’ll feel he’s showing his coalition he says what he means and delivers on his promises.
Trump’s team knows that environmental groups are likely to sue to make the US stick to the terms of COP21. We expect Trump to use this situation to prove to his coalition supporters that he not only says what he means but he also means what he says. Once that happens we’re left with a bigger question — how will the world react?
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Learn more about what COP21 means for the energy market with our Coal Insight report.