DOW – 20 = 21,008
SPX – 1 = 2411
NAS – 4 = 6198
RUT – 1 = 1370
10 Y – .02 = 2.20%
OIL – 1.03 = 48.63
GOLD + 5.80 = 1269.60
BITCOIN + 3.27% = 2406.36
ETHEREUM – 1.46% = 228.19
President Trump could pull the United States out of the Paris climate accord. Trump refused to endorse the landmark climate change accord at a summit of the G7 Saturday in Italy, saying he needed more time to decide.
The accord, which has been agreed to by 195 countries and ratified by 147 countries since it was signed in December 2015, established a specific set of tools to help countries cut greenhouse gas emissions over time.
Its goal is to hold global warming below 2 degrees Celsius and to avoid the worst risks of a warmer planet. While it’s certainly not the end-all, be-all scheme to reverse global warming, the agreement is the most comprehensive international effort yet to tackle the climate problem, even though compliance is voluntary.
Trump has been dithering on the decision for months, thanks to a tug-of-war playing out among his advisers. He’s already rolled back the policies that would ensure we might make our commitment to Paris, so effectively, he’s stepped out of the accord before officially doing so.
Scientists have been warning us for years that a rise in global average temperature more than 2 degrees Celsius will mean widespread stresses on food and water, sea level rise, and conflict and suffering. To try to avert the worst of these threats, countries agreed to dramatically cut emissions as part of the Paris accord.
But it is essentially a nonbinding agreement and wasn’t ratified by the Senate. So, leaving could be pretty simple, though it will take about four years to formally do it. In the meantime, US officials could stop participating in climate talks. And Trump could pull out of the underlying UN Framework Convention on Climate Change.
That could happen in a just a year’s time and would send the message that the US is done with international cooperation on climate change. A third option is that Trump could declare that the Paris deal is a legal treaty that requires Senate approval.
Such a vote would fail, and then Trump would have Senate backing to not abide by the deal, which he deems a treaty. A letter that 22 Senate Republicans sent to Trump this week urging him to withdraw from the deal, increases the odds of this happening.
Pulling out of the Paris accord could cause serious diplomatic damage. The countries of the world care about climate change. They see it as a profound threat. A decision to withdraw would also fly in the face of nearly across-the-board support for Paris among top American companies, in sectors ranging from oil and gas to retail, chemicals, utilities, agriculture, finance, information, and autos.
The CEOs of ExxonMobil, Apple, Dow Chemical, Unilever and Tesla were among those urging Trump to remain in the agreement, with Tesla’s Elon Musk threatening to quit White House advisory councils of which he is a member if the president pulls out.
Business leaders know climate change is real. They know Paris is an agreement they can work with. They know having US negotiators at the table to protect their interests on matters like intellectual property and trade is crucial.
They know that the transition to clean energy is one of the biggest economic plays of this century, that climate change is a major driver of this transition, that the United States is perfectly positioned to lead with our unmatched culture of innovation, but that opting out of Paris will undermine this opportunity to expand markets, create jobs and build wealth.
In late 2015, Exxon came under fire when New York’s attorney general opened an investigation into whether Exxon misled investors about the effects of climate change. Exxon’s scientists had allegedly been telling company leadership that climate change was an issue as early as the 1970s and ‘80s, but Exxon executives cast doubt on the idea publicly for decades.
Now, Exxon backs the Paris accord. Today, 62.3 percent of investors in Exxon Mobil voted for the company to produce an annual report on the impacts of climate change policies on the company’s business. According to a copy of the resolution, the investors want Exxon to “publish an annual assessment of the long-term portfolio impacts of technological advances and global climate change policies.”
They also instruct the company to annually assess the financial risks of “a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2-degree target.”
We are far past the point when we should be discussing whether climate change is a live risk. The Pentagon calls it a “threat multiplier” in vulnerable regions of the world. The National Intelligence Council says climate change “will almost certainly have significant effects, both direct and indirect, across social, economic, political, and security realms during the next 20 years.”
Firms like BlackRock, Goldman Sachs, Citigroup, and Shell, among others, have produced serious climate reports focused on the transition needed to meet the goals of Paris.
And just look at the signals from nature, at the dozens of “100-year” events—floods, superstorms, droughts, wildfires, record heat waves—taking place in the United States and around the world in recent years. Weather-related losses have tripled since the 1980s.
In the United States, the already strong efforts of our states and cities will loom even larger. States from California, Washington, and Oregon to Minnesota, Illinois, New York, New England, and many others are dedicated to strong climate action and will examine whether there is still more that they can do. Many more states, both red and blue, are charging ahead in developing wind and solar energy.
The dozen US cities that are part of the global C-40 group on climate change account for 25 percent of US population and 30 percent of US GDP. In Mexico City last December, they promised to deliver action, regardless of what the new Trump administration decided to do.
Business also has a crucial role to play in driving the clean energy transformation. The boom is well under way. Wind and solar accounted for two-thirds of all new electric capacity in the United States in 2016. Costs of wind and solar have dropped over 80 percent in the past eight years for solar PV and over 60 percent for wind.
And hi-tech advances are happening all the time, in battery storage, materials science, electric vehicles, and other key elements of the transition. It would be a mistake for companies to bet on a go-slow, “Trump” phase. The transition to clean energy is the smart bet for businesses and investors need to keep their eyes on the prize and not get distracted by the ideological wars of Washington.
While US withdrawal from the Paris accord might cause some other countries to pull back from their commitments to clean energy, it will likely encourage others to step up efforts to fill the void. China has just announced that electric cars are going to account for essentially all growth of car sales as of now.
China’s “road map” plans to have 20% (7 million) of new annual sales to be electric vehicles by 2025 (that is in 8 years), with 2 million electric car sales by 2020. In an extraordinary move China is seeking 8% of new car sales in China being electric vehicles in 2018 (next year). This is not only an emerging problem for the oil industry, it is also a big problem for foreign car makers without electric cars available in China next year.
Many foreign manufacturers are paying attention to China. The latest news means that if you don’t have electric cars or Chinese electric car making partners, then the Chinese market is going to be challenging. BMW has announced that it is prepared to meet the Chinese Government targets. Daimler projects electric vehicles and hybrids will account for up to 35% of worldwide sales in the next 7 years.
And the story for Indian electric car/Internal combustion engine substitution is similar, if not more dramatic (all vehicles electrified by 2032). The scale of the projected changes is huge: 1 Gigaton of CO2 emissions saved and savings of $60 billion in annual petrol/diesel costs in 2030. India is projected to be the 3rd largest automotive market by 2026.
Oil giant BP’s 2016 future energy report barely mentioned electric cars (less than 1.5% penetration by 2035). In its 2017 Energy Outlook, BP had penetration of BEVs at ~4.5% by 2035. BP has projected that the expansion of future oil demand would be dominated by China and India. Now China is saying that it plans to have electric vehicle penetration at 20% of new sales in 2025. And that might be conservative.
Self-driving electric cars are ten times cheaper to run than fossil-based cars, with an expected lifespan of 1 million miles. The only thing holding them back is battery power. The “tipping point” could arrive over the next two to three years as EV battery ranges surpass 200 miles and electric car prices in the US drop to $30,000.
By 2022 the low-end models will be down to $20,000. After that, the avalanche will sweep all before it. What the cost curve says is that by 2025 all new vehicles will be electric, all new buses, all new cars, all new tractors, all new vans, anything that moves on wheels will be electric, globally.
Revolutions have a way of creeping up on you.