Trump’s orders spell winds of change for automakers to renewable energy

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It’s been just 11 days since Donald Trump was inaugurated in the US and so far the new president seems set on solidifying the promises he made during his campaign, including some that would impact climate and energy. The 1,000-mile long wall that Trump intends to build between the US and Mexico would release as much as 1.9m tonnes of carbon dioxide into the atmosphere if it were to be built out of concrete, according to an estimate from Columbia University. Trump signed an executive order last Wednesday to direct the construction of such a wall and to boost the number of patrol forces along it.

Meanwhile, another executive order signed over the weekend to halt immigration from seven Middle Eastern countries could have an impact on companies from General Electric to General Motors – both of which employ immigrants from the nations affected. GE is one of the world’s leading wind turbine manufacturers and in 2015 almost 14% of its revenue came from the Middle East and Africa, according to Bloomberg data. GM, maker of the all-electric Chevrolet Bolt and Volt plug-in hybrid, has vast manufacturing operations in Michigan – a state with a substantial Muslim population.

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Trump is also likely to follow through on his intention to pull the US out of the landmark climate pact signed by more than 190 nations in Paris in December 2015, according to Myron Ebell, who headed Trump’s Environmental Protection Agency transition team. “President Trump made it clear he would withdraw from the deal.” As the world’s richest nation and second largest polluter, US participation in the accord is fundamental to limiting global warming, say climate researchers.

One area that might survive Trump’s protectionist stance is the gas export market between the US and Mexico, according to asset manager ING Groep and Pira Energy Group. Pipeline deliveries of natural gas from the US to Mexico have more than doubled in the past two years, in response to declining oil and gas production in the latter and a supply glut in the former. The market supports jobs in the US and provides Mexico with cheap fuel and so may avert any interventionist measures, say the companies.

In California, large battery storage plants are moving in on the traditional role of natural gas to provide electricity to the grid during peak hours of demand. Three large plants – built by Tesla Motors, AES and Altagas – will go live in southern California this week in order to fill the power glut caused by the natural gas leak at Aliso Canyon in Los Angeles, which was subsequently shut down. The leak emitted 109,000 tonnes of methane into the atmosphere and led to the displacement of thousands of local residents. The battery storage projects have all been completed within six months and will alleviate the risk of winter blackouts.

On the US east coast, the country’s largest offshore wind farm received approval last week, a key milestone on the way to its deployment in waters off Long Island. The 90 MW project will generate enough electricity to power 50,000 homes and is the first step towards New York Governor Andrew Cuomo’s goal to develop 2.4 GW of offshore wind by 2030.

In Europe, the offshore wind industry will install more than 3.5 GW of capacity this year, according to a forecast by the WindEurope industry group. Germany and the UK will be market leaders – installing more than 1.6 GW each, while Belgium will add 165 MW and Denmark 23 MW. This will add to the continent’s current capacity of 12.6 GW of offshore wind.

The market for offshore wind in Polish waters and elsewhere in the Baltic Sea also looks promising, according to a BNEF Research Note that sees a current unfinanced pipeline of as much as 2.5 GW. The Baltic region has so far been behind in developing offshore wind due to a lack of supportive policy, low power prices and a ready supply of hydro-electric and nuclear power. Nevertheless, Poland has an auction on the cards for 2017 and at least 200 MW of capacity could be commissioned in the country by 2022, the note says.

Taiwan’s market for offshore wind is also heating up following news last week that Dong Energy and Macquarie Capital had both bought stakes in the country’s first commercial-scale offshore project– the 128 MW Formosa I wind farm. Macquarie now owns half the project, Dong Energy holds 35% and the initial developer — Swancor Renewable – holds the remainder. Formosa I is expected to be fully built in 2019, subject to a final investment decision.

India’s solar installations to escalate from 2017 onwards (GW of capacity)

India added 3.85 GW of grid-connected solar generation capacity in the first 10 months of 2016 — almost double total installations in 2015. BNEF has revised its projections for subsequent years based on the amount of capacity auctioned in 2016 and anticipated installations in the future. States will be under increasing pressure to meet the renewable purchase obligation targets set out at federal level, which require 6.75% of total electricity consumption across all states to come from solar-powered generation by the end of 2019

This article is based on the BNEF Week in Review published January 31.