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DID TRUMP JUST SET HIMSELF UP FOR SUCCESS BY LEAVING THE PARIS CLIMATE TREATY?
DID TRUMP JUST SET HIMSELF UP FOR SUCCESS BY LEAVING THE PARIS CLIMATE TREATY?

President Donald Trump’s decision on Thursday 1st of June 2017 to withdraw the United States from the Paris climate treaty won’t stop the clean energy revolution that is already replacing America’s dying coal industry. But what it could do, ironically, is set the stage for Trump to declare himself a “climate hero” in three years’ time, once the economic effects of cheap renewables and gas become more deeply and widely felt. What do we mean? 

As far as facts go, let’s state the obvious: coal isn’t ever coming back. Ask any energy utility executive in America today and they’ll tell you that the days of coal-based power are over—and that the time to invest in wind and solar is now. As I describe in my new book, “Goodbye to Deerland: Leading Your Utility Through the American Energy Transition” which will be published next week, electric utilities in conservative states like Texas and Oklahoma are at the epicenter of this great transition, where the shift from coal to renewables is already happening today.

Take wind. In Texas, Oklahoma and Iowa, wind is now the cheapest source of energy whether from clean energy or fossil fuels. Texas has outdone everyone, surpassing 20 gigawatts of installed wind capacity at the end of 2016, with 5.4 more gigawatts under construction. Wind power in the state already generates enough electricity to power 5.3 million homes, saving 28 million metric tons of CO2 emissions, or the equivalent of taking 6 million vehicles off the roads. 

In economic terms, the Lone Star state invested more than $32 billion on wind projects over the past decade, and it is paying off: the industry now employs upwards of 25,000 workers, with wind providing 12.7 percent of the state’s total energy production. According to Nathanael Greene, director of renewable energy policy at Natural Resources Defense Council, “I don’t think any state has been quite as fast at blowing past their [wind power] goals as Texas has.” 

Why is this happening in a state famous for its love of oil and gas? Simple: the economics of wind are just too good to pass up for Texas’s ranchers and landowners, who are getting rich watching new turbines spring up across the state. Iowa to the north is no different. Just ask Warren Buffett, whose MidAmerican Energy Company, a subsidiary of Berkshire Hathaway Energy, is busy building a $3.6 billion project known as Wind XI, installing 1,000 turbines to produce 2 gigawatts of electricity, enough to power 800,000 households. Thanks to Wind XI, Buffett’s company will supply 85 percent of its Iowa customers with wind power by 2020, shattering the future of coal in the state’s energy outlook. 

In his annual investor letter to Berkshire Hathaway shareholders, Buffett wrote that federal tax credits and other government support for solar and wind could “erode the economics of the incumbent utility,” which formerly ran as a monopoly keeping energy prices fixed at the rate of their choosing. Now, with increased competition from solar and wind, utilities that relied mainly on coal—and which  refuse to make the transition to renewables with gas—are seeing their end on the horizon.

Clearly President Trump doesn’t get his energy information from the same sources as Warren Buffett, who has now invested more than $16 billion in renewables nationwide and already owns 7 percent of America’s wind generation capacity, with 6 percent of its solar generation as well. But, strangely, it’s possible both men made a gamble that will prove each of them right.

Here’s why. As we’re already seeing with each passing month, coal plants across the nation are shutting down. That trend that will not reverse, but only accelerate with time. The reason is basic economics: not only are renewables cheap and getting cheaper, but low-cost and abundant natural gas has pushed down energy prices to the point that coal plants are hardly needed anymore, throw in increased energy efficiency and you have less power being produced, at lower cost, which equals bad prospects for coal.

This circle is self-reinforcing, because the more coal plants close, the faster America’s emissions will fall. Cheap gas will be used to supplement the greater use of renewables, and the clean energy economy will boom like never before, translating into less emissions and lower prices for American consumers. What does all this mean for the Paris treaty? 

Trump knew his decision to withdraw the U.S. from the climate agreement would provoke global outrage, and it did. For Trump, the economy is the priority. But Trump’s promise to revive the coal industry isn’t going to happen, and instead the opposite will occur. It’s safe to say that by 2020 – the earliest date that the U.S. can technically withdraw from the climate pact – Trump could point to his decision even as he points at all the shuttered coal plants, and say: “See, I told you we didn’t need the Paris treaty. America’s emissions went down anyway, and our economy was stronger without it.” 

Could all of this actually make Trump a “climate hero”? Stranger things have happened. At the end of the day, the clean energy train isn’t stopping and it isn’t slowing down, either. On the contrary, it’s speeding up, and with federal subsidies for renewables slated to last through 2019, utilities are more eager than ever to invest in clean energy. For this reason, America’s abrupt pullout from the Paris climate treaty may not end as badly as people fear. Who, in the end, takes credit for unleashing the giant economic wave through the renewables revolution is another matter.

As a result of this blog, Matti was interviewed by Time Magazine where he elaborates further on the topic.

Full article here.

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   Matti Rautkivi

   Sales & Marketing Director,
   Wärtsilä Energy Solutions
   
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Goodbye to Deerland: Leading Your Utility Through the American Energy Transition

GoodbyeToDeerland



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 Matti Rautkivi

 Origination, Americas 
 Wärtsilä Energy Solutions
 











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