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Trump's climate move likely doesn't matter much
Guest Commentary

Trump's climate move likely doesn't matter much

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Donald Trump's decision to exit the Paris climate accord is boneheaded and self-defeating. But it might matter less than you think.

Obviously it would be better if the White House led on tackling climate change, rather than freeloading on other countries' commitments. Even if looked at in purely selfish terms, Trump's logic is twisted.

Decarbonizing the global economy will require several trillion dollars of investment in power generation, electricity distribution and new transport capacity. The president should be trying to help domestic companies win the biggest possible slice of that. Coal-mining accounts for about 50,000 U.S. jobs, about one fifth of those in solar. Trump says he's putting Pittsburgh before Paris, but almost as many Americans live in France (about 100,000) as work in U.S. steel (140,000).

Trump's climate gambit also carries personal risk; his Florida properties could plummet in value if sea levels rise further. He'd better hope U.S. states like California, who continue to incentivize climate action, can keep the seas at bay.

Beyond the importance of these local responses, there are other reasons to not despair:

1. Trump can't stop the decarbonization of the economy.

The shift towards lower carbon power is happening, and economics - not policy - is driving it. In the U.S. it's already cheaper to producer electricity from combined cycle natural gas plants and onshore wind than from coal, according to Bloomberg New Energy Finance. Solar is more and more competitive, with photo-voltaic costs projected to shrink by about two-thirds by 2040. The cheapest tech tends to win out over time. That's true for cars too. BNEF thinks falling battery costs will make electric cars price competitive in about 2025.

2. We've already made some (though no way enough) progress.

Emissions are starting to decouple from economic growth. Energy-related carbon dioxide emissions were flat in 2016 for the third successive year, even as the world economy expanded. In the U.S., the switch from coal to cheaper natural gas (and renewables) caused greenhouse gas emissions to fall to their lowest point in 25 years (about 12 percent below 2005 levels). That's not enough to stop the planet warming, but it shows the impact of market forces.

3. Tech, not Trump, will drive corporate-decision making.

Tesla's market value exceeds that of General Motors and Ford because investors believe in electric vehicles. Industries can't ignore technical advances - at least, not for long. A decade ago, Eon AG and RWE AG were among Germany's most valuable companies. After billions of euros in losses, both utilities have separated their fossil fuel and renewable energy businesses to prioritize investment in the latter. Capital allocation may be swayed by politics, but over the longer run technical progress wins.

4. U.S. companies must think globally (and about life after Donald).

S&P 500 companies make more than 40 percent of their sales overseas. Unlike Trump, they can't ignore Europe and China's determination to stick by Paris. When boards make investment and R&D decisions, they consider the next couple of decades, not just the next four years. Trump may go easy on fuel economy standards but GM and others will no doubt press on with electric cars. The five most valuable U.S. companies - Apple, Alphabet, Microsoft, Amazon and Facebook - all support the Paris accord.

5. Shareholders are weighing in.

Trump's largely symbolic decision was possibly not even the biggest environmental story of the week. A majority of Exxon Mobil Corp shareholders (including several large asset managers) voted on Wednesday to force it to disclose how climate change would affect its business. Investors are also piling pressure on oil companies to show they can keep production costs low (avoiding the risk of stranded capital when oil demand starts to decline). So Trump can allow all the offshore drilling he likes, it doesn't mean anyone will drill there. The S&P 500 closed at another record high Thursday. Perhaps markets are mis-pricing the risk of climate catastrophe.

It's also possible that this is just a shrug about the ability of one man to hold back the future.

Chris Bryant is a Bloomberg Gadfly columnist covering industrial companies. Readers may email him at


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