Filenews 10 November 2024
One of the very good connoisseurs of global geopolitical and energy developments, Professor of Geopolitics & Energy Policy at the University of Nicosia Theodoros Tsakiris gave a very informative interview to euro2day.gr about what he expects the newly elected President Donald Trump to change in US energy policy.
The changes in the US will directly affect the EU's choices regarding the speed of implementation of green transition policies, but also industry and trade. According to Tsakiris, Trump's policies will give rise to a new internal debate in the EU, not on the direction but on the speed and real cost of the energy transition.
Here are excerpts from the interview with euro2day and George Fintikakis.
What will be the attitude of the US, under Trump, towards China in critical energy sectors, such as electric cars, batteries and photovoltaic panels?
Tariffs, tariffs and tariffs on Chinese imports and subsidies on domestic production of batteries and electric cars until U.S. companies can regain some control of global production chains of these three key technologies to accelerate the energy transition.
Such an effort will of course fail if the U.S. does not open new rare earth mines at home and accelerate efforts to dilute China's hegemonic position in global trade, production and especially processing of critical energy ores.
In this context, Trump will seek to cultivate special relations with those Latin American countries that can make a difference in this area, most notably Chile, Brazil and Argentina.
The new US president has expressed the view that the US should withdraw from global climate initiatives. How do you think his victory will affect the global energy map?
How Trump decides to move on energy and climate change will play a decisive role in achieving (or rather not achieving) the goals of the already faltering Paris climate treaty. It is unclear at this time whether Trump will again withdraw the United States from the 2015 treaty, but he will certainly implement policies that will not have – with the exception of boosting electrification – direct relevance to the treaty's guidelines or the even more general decisions taken at COP28 last year in Dubai.
Trump's rise foreshadows the prolongation of the current impasse in the annual climate negotiations, as they take place in the framework of the COPs, something very likely to be confirmed this year in Azerbaijan and next year in Brazil. What is almost certain is that he will lift all of his predecessor's restrictions on opening new federal areas for hydrocarbon exploration and production, reverse Biden's decision to impose a moratorium on licensing new LNG export terminals, though it is difficult to bring the Keystone XL pipeline back into the spotlight. given Biden's removal of his operating license in 2021.
What other reversals will we see, for example, on the Inflation Reduction Act, which grants subsidies and tax credits of about €350 billion to companies that produce green products either using U.S. equipment or within the U.S., critical minerals or electric cars?
It is important to clarify that the American and European green transitions are at completely different speeds. Despite provisions of the Inflation Reduction Act, which Trump will revise, U.S. domestic oil and gas production over the past four years has continued to grow and the most extreme voices have been marginalized since the start of the Russian-Ukrainian war in 2022.
Trump is more likely to roll back the IRA's provisions for federal aid for green H2 (or H2) production and place greater emphasis on controlling critical energy minerals by strengthening the Mineral Security Partnership (MSP) and opening new mines within the US.
The biggest difference between Trump's two terms will, I believe, be found in his stance on electric cars, but this does not mean that he will set unrealistic margins for the mandatory withdrawal of diesel vehicles, as is currently the case in Europe by 2035. The special relationship he built with Elon Musk before the election is no coincidence, although the new president's emphasis on the competitiveness of the domestic auto industry may act as a brake on the speed of development of electric mobility in the US, especially if it imposes additional tariffs on exports of electric cars and/or their components from China.
Influencing the EU
D. Trump has spoken out against renewables and pledged to halt the development of offshore wind farms "from day one in office." Could Trump's new term negatively affect the green transition of the EU and the planet as a whole?
The planet's definitely yes. The EU not particularly, as it has chosen a different pace. What Trump's second term could do is spark a new internal debate in the EU, not about the direction but about the speed and real cost of the energy transition. We cannot continue the current absurdities of European energy policy in terms of not tolerating blue H2 and not encouraging CCS infrastructure - especially those related to H2 production, or setting unrealistic timetables for the withdrawal of energy-intensive European industry from gas or the withdrawal of new diesel vehicles in just ten years' time.
Regarding the discussion of offshore wind farms (LAGs), it is important to underline that some of the planned offshore wind farms are located within or within the limits of state territorial waters (reaching 12 nm) and not the federal continental shelf or the US EEZ. If California and Massachusetts decide to move forward with stable offshore wind farms, Trump cannot block them, but it is clear that, if this commitment is kept, all federal subsidies and subsidies will be withdrawn, with disastrous consequences for floating wind development in the US, which will obviously primarily benefit China.
Russian gas
Can supporting fossil fuels and U.S. gas exports to Europe boost the EU's effort to wean itself off Russian gas faster?
This is already being done. Nor has Biden reduced domestic U.S. hydrocarbon production, regardless of his public diplomacy in favour of the necessity of accelerating climate change. A further increase is not excluded, but in terms of LNG already in the next three years until the end of 2027, 184 bcm/a (billion cubic meters/annum) will enter the global LNG trading system, 116 bcm/a from the US and the remaining 68 from Qatar, as a result of investments that began before the Russian-Ukrainian war.
Whether a supply surplus is created that lowers prices will depend on maintaining Asian demand on the one hand and on the EU's ability to act as an oligopson on the other, as clearly proposed in the Draghi report (September 2024) through the extension of the Aggregate EU initiative. Any additional increase in U.S. LNG exports will be investments that have not yet reached the point of the TEA (Final Investment Decision) and could bear fruit after 2028, if Biden's moratorium is lifted.
