After one month in office, US President Donald Trump’s executive orders have confirmed that global warming will not be his priority agenda, and that fossil fuels development will feature highly.
However, oil and gas investors are unlikely to blindly embrace Trump’s call for increased drilling, for indeed these commodities are governed by global supply and demand dynamics which impact costs, prices and returns.
Nor will US renewable investors readily give up achievements made in renewable technologies and investments, especially in electric vehicles, solar and nuclear energy. This is despite Trump’s threatened withdrawal of renewables subsidies and preferential regulations.
Elon Musk, a key electric vehicles investor and a prominent influence in Trump’s administration, is expected to canvass for renewable energy growth and sustainability.
The new US Department of Energy has already acknowledged increased energy demands from AI and data centres, whose investors have expressed preference for solar and nuclear energy.
However, Trump is expected to impose import tariffs to protect US renewable energy capacity and investments.
China is the current global leader in renewable energy technologies and investments, both in domestic and foreign markets. Indeed, China views renewable energy as a major global economic opportunity whose space the country plans to dominate. This is why China will easily make up for any USA renewable energy slowdown attributable to Trump’s policies.
And as Europe’s energy supply chains recover from disruptions caused by Russian invasion of Ukraine, expanded renewable energy investments are filling energy supply gaps created by reduced oil and gas supplies from Russia. And this includes revival of nuclear energy.
The oil industry has readily welcomed Trump’s reduced pressure on climate agenda. The oil industry does not have to budget for greenwashing and ESG programmes and projects.
And indeed, they are rolling back their participation in renewable energy projects, as they reduce spending on carbon capture projects. Financial institutions and equity investors are following suit and are no longer hesitant to lend for increased fossil fuels production.
Kenya has already done more than its fair share of global climate obligations by maximising electricity generation from renewable sources. However, at about 70 percent, imported oil and coal remain the main part of Kenya’s commercial primary energy demands, with electricity taking the balance. This is a major drain on our foreign exchange for a country struggling to stabilise its macroeconomics.
Whereas Kenya has done well in reducing oil-based power generation, we should accelerate transport electrification, as we seek cost-effective local solutions to replace oil and coal in industrial heating.
These efforts will ultimately reduce dominance of fossil fuels in our commercial primary energy mix, while strengthening balance of payments.
