- Gocompare.com Energy investigate how Trump’s election could affect the energy market in the UK
- UK fossil fuel industries, energy research, renewables industry and consumer energy costs set to feel impact of President Trump
Less than an hour after the inauguration of President Donald Trump, the new administration outlined its energy policy*, which aims to focus on gas and oil, and reviving the coal industry, whilst also indicating the Climate Action Plan will be scrapped.
Gocompare.com Energy has highlighted four major areas which could feel the greatest impact from President Trump:
- The UK fossil fuel industry
- UK energy research
- The UK renewables industry
- UK consumer energy costs
The first area which could be affected is the UK fossil fuel industry. Trump has said that he wants to ramp up oil and gas production under an ‘America First Energy Plan’, going after un-tapped shale, oil and natural gas reserves, pressing ahead with fracking and drilling as environmental regulation is cast away.
An increase in production could mean that global prices drop due to a glut of supply, which could hurt UK oil and gas firms operating in the North Sea, who are seeing*1 increasing costs and decreasing investment*2 due to having to drill deeper and in more complex places.
While the industry is striving to improve efficiencies, the high profits enjoyed when oil was expensive have disappeared, and if they drop further due to an American energy boom, jobs could be lost and wages cut.
Also in the firing line is UK energy research. During his campaign Trump said that global warming was a hoax, and that he would scrap the US’s obligations to the Paris Climate Change Agreement and NASA’s lauded climate research programme. His new team are of a similar mind-set, being comprised of climate change deniers and those with ties to the fossil fuel industry.
While this is bad news for the climate, it could mean good things for UK energy researchers. This month 100 important UK researchers and climate scientists penned a letter*3 to Theresa May asking her to be tough on Trump over the climate and encourage him to continue research, but that the UK science community stood ready to welcome scientists from the US who had seen their funding cut.
If President Trump cuts climate research programmes, the UK’s science community, and it’s world-leading climate research institutions, could pick up the slack, and this could be good news for the renewable energy research community.
With increased investment in the fossil fuel industry and a reduction in environmental regulation and research, the US renewables industry looks set to take a hit, and it could potentially be the same for the UK.
On a global level it’s anticipated that the incoming Republican government will only likely slow, not reverse, action on climate change.
If fossil fuel prices drop due to a big increase in US fossil fuel production, then this could hurt renewables due to them having to compete with cheaper oil and gas. If the US were to pull out of the Paris Agreement, it could also cause other countries to drop out, hampering the process.
Because of Brexit, the upcoming UK-US trade negotiations are also a point of contention. If the US holds firm on slapping high tariffs on renewable energy goods made in the UK, this could hit British industry.
But what does Trump’s election mean for the consumer? If his policies and actions cause oil prices to lower globally, fuel and energy prices in the UK could fall.
In terms of renewable energy – if you wanted to purchase solar panels for your home, the issue is very much up in the air. Lower investment could mean a stall in lowering costs, but if renewables are able to weather the storm, solar and wind prices could continue to fall.
It’s also important to think about the impact of the US dollar. Since lots of the world’s energy is priced in USD, a strong dollar will increase import prices, which in turn could raise household energy prices.
Ben Wilson, Energy & Home Services Product Manager at Gocompare.com said: “Although the news over the past few months here in the UK has been focused on Trump, there has been little mention of how he could make an impact on the everyday consumer in the UK. It’s really important for the British public to understand just how President Trump’s term in office could affect the UK energy market.
“With the world’s eyes fixed firmly on the incoming administration, all sorts of questions are being asked, but ultimately, we’ll all have to wait to see what the Trump effect really means.”
To read the report in full, please visit: http://www.gocompare.com/gas-and-electricity/the-trump-effect/