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Is the Paris Agreement on climate change dead?

The new United States Energy Secretary, Chris Wright declared at the recent Alliance for Responsible Citizenship (ARC) conference in London, that he "would love to see Australia get in the game of supplying uranium and maybe going down that nuclear road themselves”, and that he was “thrilled to see recent efforts in the news recently of the development of shale gas in Australia”.

Already a large exporter of uranium, Australia could have an even greater influence in the nuclear energy market, Wright believes.

Wright also said the goal of net zero impoverishes economies. That "the aggressive pursuit of it, and you’re sitting in a country that has aggressively pursued this goal, has not delivered any benefits, but it’s delivered tremendous costs,” he said in an interview with Chris Uhlmann.

His comments at the ARC conference reflect the renewed commitment to fossil fuel driven energy security in the US under Donald Trump, and a message for Western democracies to step up to the plate on energy.

Is that it for the deal?

The Trump administration plans to bolster the production of fossil fuels by removing obstacles installed by the previous administration, according to Wright. That, coupled with the withdrawal of the US from the 2015 Paris Agreement on 'day one' of the second Trump presidency, prompts the question: is the Paris Agreement now dead?

Maybe not, though it could be on life support, with the departure of the world’s second largest emitter of greenhouse gases after China.

While the US Paris withdrawal under Trump in 2017 (re-joined in 2021 under Joe Biden), wasn’t terminal for the agreement, this time around it combines with aggressive fossil fuel expansion under the Trump mantra of ‘drill baby drill’, signalling to the world that fragmentation on climate and energy policy is set to escalate. In turn, this could lead to other countries moderating or even abandoning their net zero commitments.

The Paris Agreement aims to reduce greenhouse gases and limit the global temperature rise from industrial times to well below two degrees Celsius, shifting towards a net zero emissions world.

The impact of recent US moves

With the US withdrawing from Paris, and a renewed energy focus, there will be implications for global energy policy and markets.

In the short-term, the expected boost in fossil fuel production will create conditions for rising US exports which would impact global supply and prices. Short-term instability in implementing and delivering renewables derived energy will see costs remain elevated.

Medium-term implications with the US shifting back to a higher concentration of fossil fuels include that it may deter renewable energy investment, leading to higher capital costs rolling out green energy and higher electricity prices.

Recently, we have seen Andrew Forrest’s Fortescue pause green projects, blaming Donald Trump and European policy uncertainty. And in the past year in Australia, Woodside and Origin abandoned green hydrogen projects, with the Queensland Government also scrapping its billion-dollar hydrogen plan. And, the South Australian Government shelved funding for the greening of Whyalla steel.

Higher electricity prices have already been observed, particularly in Australia, to the point where the Government has provided electricity subsidies to consumers, with plans to roll out more subsidies. The intermittent nature of renewable energy, and grid upgrade and storage challenges, have contributed to rising costs.

In the long-term, we could see economies split into pro-fossil fuels and pro-net zero blocs. This could lead to trade disputes, carbon border taxes, and diverging investment focuses, which could make progress uneven and unpredictable.

But a long-term focus on R&D across existing and potential energy sources, with technology improvements for renewables in terms of storage, transmission, and grid upgrades, could eventually see economies less divergent on policy with a more even mix of energy generation. Diversification is likely to be the key to the world’s energy needs.

With the re-election of Trump, there will be implications for Australia.

If there is a deterrence effect for investment in the energy transition, costs will rise. In any case, investment hesitancy probably exists already due to a lack of bipartisanship on domestic policy, which swings between Governments of the day. To date, heavy subsidies have been required to underpin consistent private sector investment.

The US endorsement of uranium aligns with the Coalition’s plans for nuclear energy in Australia. Though short-term energy relief is unlikely with high capital costs and long lead times, nuclear could eventually stabilise the Australian energy market. Nuclear energy is being bolstered and fast tracked in other major Western economies.

The resurgence of US energy exports could undercut pricing of Australian liquefied natural gas and coal exports, but it should remain a major exporter to Asia in at least the short-term, if there is a resulting boost in demand.

And increased fossil fuel investment in the US could provide political cover for the extension of coal plant life in Australia, with evidence that aggressive renewables targets may be slipping, and costs blowing out. Already, NSW has underwritten a two-year extension of the life of the Eraring Power Station, recognising the state faced energy reliability risks as it transitions to renewable energy. Certainly, there has been increased recognition that gas will remain a key bridging fuel for possibly decades in Australia.

In the end, we all want cleaner energy, but it must be as cheap, reliable, and as abundant as possible. While the Trump administration may slow down the push to reducing emissions, it may well shake up global thinking to meet those ends.

 

Tony Dillon is a freelance writer and former actuary. This article is general information and does not consider the circumstances of any investor.

 

12 Comments
Ben
March 04, 2025

The Paris Accord has been designed to fail. The UN website states that to keep global warming to 1.5 DegC global emissions need to peak in 2025. Yet under the same agreement, China, the world’s largest emitter is allowed to continue to increase its emissions till 2030. A fundamental contradiction that will ensure the Accord fails

Winston
March 02, 2025

The campaign to net zero is primarily to the advantage of China.
We in the West will cripple our economy to buy solar panels and turbines manufactured in China using massive amounts of fossil fuels. Emissions from China, India and Indonesia overwhelm any reductions in the West.
The folly of Net Zero needs to be recognised.
Thankfully it is.

Stephen
March 02, 2025

And here’s the facts on renewable energy installation around the world.

https://www.statista.com/statistics/267233/renewable-energy-capacity-worldwide-by-country/

Trevor
March 04, 2025

China’s construction of new coal fired power stations hit a ten year high in 2024 according to Carbonbrief, a left centre source.

https://www.carbonbrief.org/chinas-construction-of-new-coal-power-plants-reached-10-year-high-in-2024/

Stephen
March 02, 2025


No matter what Trump and his henchmen say the drive to decarbonise is irreversible as it is based on science. His actions prove this. Look at his aggressive pursuit of minerals needed for the green transition in Greenland and Ukraine. Clearly he doesn’t believe his own BS.

As for his Energy Secretary the less said the better. I’ve seen an interview where that fool said a global rise in temperature of 8 degrees would have benign effects. Try telling that to the billions of people currently living in equatorial regions.

michael
March 01, 2025

Why does saving the planet come down to a business case?
Do decision makers always buy $10 shirts made by slave labour? Sometimes the best solution costs more.

Bill
March 01, 2025

Paris? Isn't that in France which produces 70% of its power from nuclear? But for some reason it is impossible for Australia to do that.

John
March 01, 2025

Can the Paris Agreement club just stop buying production from those countries abstaining, thereby naturally bring down that countries inputs to climate change?

Joe
February 28, 2025

"Though short-term energy relief is unlikely with high capital costs and long lead times, nuclear could eventually stabilise the Australian energy market."
but "we all want cleaner energy, but it must be as cheap, reliable, and as abundant as possible".
Not sure we have time for nuclear to eventually save us.
If there was a business case for nuclear, we'd be doing it, and we wouldn't need this Liberal propaganda.

Trevor
March 01, 2025

What’s the business case for renewables? In the ten years to 2023 taxpayers and electricity users paid $29b in subsidies to renewable energy suppliers.

https://www.cis.org.au/research/energy/

Cam
March 02, 2025

Labor and the Greens are ideologically against nuclear. Their propaganda, from an era where we feared nuclear war, made it electoral suicide for Liberals to have as policy.
Soaring energy prices have created an opportunity for nuclear.
To me it still sounded brave when Dutton announced it, but I think it’s going well for him.
If there was no business case, other countries wouldn’t have used nuclear.

michael
February 28, 2025

What will become of the Paris agreement when the target becomes impossible?
We are almost past that point, & Trumps attitude makes the world likely to fail.

I foresee a divergence of attitudes when 1.5 is no longer attainable. Agreement afterwards will be harder.

 

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