The world is moving to a low-carbon energy system built on wind, hydro, solar, and other zero-carbon sources and the electrification of transport, heating, and industry. Thirty years from now, today’s American fossil fuel giants — ExxonMobil, Chevron, TransCanada, Koch Industries, among others — will be shadows of today. Coal companies such as Peabody will be found only in the history books. President Trump’s attempts to protect the fossil fuel interests will have no success.
One can’t really be surprised at the arrogance of David and Charles Koch or the US Chamber of Commerce or the Republican leadership in their defense of a dying industry. For a century, Big Oil was king. Oil elected presidents, made fortunes, and stoked wars — indeed, many of them. Coal, oil, and gas powered the economy. It’s hard for this sector to believe it’s on the way out.
Yet facts are stubborn things. The climate is changing whether Trump likes it, believes it, and accepts it or not. Fossil fuels are the heart of the problem and will have to go. Trump tried mightily to break the Paris climate agreement in the lead-up to the G-20 meeting in Hamburg last month. He thought he’d peel away Russia, Saudi Arabia, Turkey, and Indonesia — all fossil-fuel-producing nations. But Trump had no success. The G-20 went 19-1 against the US position; every other country declared the Paris agreement to be non-negotiable.
At the end of the day, the politicians are not the key to this drama. Scientists and engineers have the upper hand, the former because they aim for truth rather than for power or wealth, and the latter because they hold the real keys to the kingdom: the technological systems that make the modern economy function. Elon Musk, not Donald Trump, will do the most to shape the future of transportation. And Tesla’s moderately priced Model 3, out this week, will deliver another sharp blow to the fossil fuel lobby.
In the end, smart money will follow the scientists and engineers, not the politicians, and today’s smart money will be the future’s big money. All signs are that the smart money is already on the move toward low carbon. Here are some particulars.
First, JP Morgan announced this week that it would channel $200 billion into green investments, including wind and solar power, by 2025, as well as go to renewables in its own energy use. This is not only a considerable sum in its own right, but an important signal by America’s leading commercial bank about its bet on the future of the economy. It squares with the ongoing boom in global green-bond funding, which looks set to reach around $200 billion this year, roughly double of last year’s total.
Second, the fossil fuel investments that Trump is trying to resurrect look unlikely to rise from the dead. The biggest stakes are the Keystone XL Pipeline project of TransCanada, a proposed pipeline from the heavy oil sands of Alberta Canada to US refineries in the Gulf of Mexico. Barack Obama closed down the project in 2015 because of its adverse impacts on global warming; Trump, with much bravado, issued an order this January to restore it.
The problem for Trump and Trans-Canada is that the world does not need, and cannot safely use, Canada’s oil sands. They are expensive to produce, result in high carbon emissions per unit of energy produced, and will have no market in the carbon-constrained world economy of the late 2020s and 2030s, when global energy consumers will be accelerating the shift to renewable energy. As Clint Eastwood might have said to TransCanada, “Go ahead, make my day.” If TransCanada puts down the billions to complete the pipeline, the company and its creditors will end up with a bankrupt project.
Even TransCanada is waking up to the hard truth. In its mid-year earnings call in July, the management disclosed that the company had not yet determined whether it would pursue the project, leaving the decision until the fall. The problem, it seems, is that it can’t be sure of customers down the road. Indeed.
We are in a time of rapid change — technological, economic, and political. The vested interests of the old order are resisting change, and Trump is resister in chief. But the direction of change is clear, and the industries of the future are already pushing aside the laggards.
Jeffrey D. Sachs is University Professor and director of the Center for Sustainable Development at Columbia University, and author of “The Age of Sustainable Development.”