Wednesday, November 9, 2016


It is tempting to turn to despair, not least because Trump has been propelled to victory by a number of constituencies with a strong vested interest in disputing climate science and promoting the production and burning of coal (still a significant industry in many states), as well as the traditional oil interests. But it is still much too early to form a clear view. The campaign has thrown up multiple threats and promises that, were they all to be carried out, would utterly transform national and international landscapes.

Rejection of Paris has been part of that picture, but it is only one of a number of dramatic promises with huge consequences. Others include a strong repudiation of free trade, possible withdrawal from NATO, less US involvement in the Middle East, the possibility of rapprochement with Putin’s Russia, and much more. All have profound political and economic consequences across the globe.

A particular question for the UK arises in respect of its approach to Europe. An explicit element in the Brexit campaign was a move away from the EU towards a global free trading vision, and implicitly a strengthening of ties with the US. Prima facie, and from a rational perspective, a strongly protectionist US President, possibly abandoning NATO, leaves that vision in tatters, and it will be interesting to hear the reaction of Fox and Johnson to this result. In due course, I suspect, it will shift British opinion on Europe.

The bigger questions are around what compromises will have to be made on all fronts, including climate. Trump's campaign statements and his appointment of leading climate sceptics as his environmental and energy advisers is a worrying signal. But there are still factors that might provide some crumbs of comfort. These include:

·       Strong support for environmental and climate policies in many states of the US, and the fact that most Americans do now accept the concerns of climate science.

·       The growing international consensus expressed in the Paris agreement. The possible impact of international peer pressure and push back from America's allies in Europe and elsewhere.

·       The business opportunities that low carbon energy can provide for US business interests and for infrastructure development.

I anticipate we shall have a lot to think about in the coming months, and there is still everything to play for. That at least is what we have to believe.

Trump has called global warming a hoax invented by China to make US manufacturers uncompetitive and vowed to “cancel” the Paris climate agreement.

FT 9 November 2016

Marcel Fratzscher, head of the DIW economic think tank:
 “Trump will be unable to implement his election promises – that is quitting the World Trade Organisation, ending free trade with Europe and so on.”

FT 9 November 2016
Dominic Rossi, Fidelity International.

“We are heading into a world of unprecedented political risk which calls into question the pillars of the post-WWII settlement. It’s unsurprising investors are heading for cover.”

FT 9 November 2016

Hillary Clinton obtained a majority of the popular vote, but in the US system this still translated into a Trump victory in terms of electoral college votes.
Trump’s administration must obtain congressional consent if it wants to legislate on energy issues and the Democrats will still have a blocking majority on most issues in the Senate.

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