The spread of policy drivers, as well as falling costs of solar and wind power, will ensure the de-carbonisation of the energy system continues globally, according to projections made by the Economist Intelligence Unit (EIU). Analysts cautioned however that the extent to which Mr Trump reverses the momentum of the Obama administration on green issues, and whether he will pull out of the 2016 Paris Climate Agreement, will be a key development to watch.
During his presidential campaign, Mr Trump railed against the Paris agreement. He said he was going to "cancel" the landmark climate change deal that has now been ratified by more than 140 countries and legally entered into force last November. Under the agreement, all signatories – including China and the US – committed to keeping the global temperature increase below 2 degrees Celsius above pre-industrial levels.
However, falling costs of wind turbines, solar panels and batteries storage are an economic fact – and the main driver behind the deployment of renewable energy source. Renewables now attract two-thirds of the investment in power generation worldwide, EIU figures show.
Fossil fuels will still remain the mainstay of the energy system, with hydrocarbon accounting for 85% of the world’s primary energy consumption.
As for cost, fossil energy will come comparatively cheap in 2017. The EIU believes that the prices of oil, natural gas and coal have already bottomed out, but over the year “we expect them to remain well below recent highs,” analysts said.
“Strategic cuts in Chinese coal output, driven by climate policy and safety concerns, will tighten market conditions somewhat,” analysts say. Hence the EIU forecasts a modest increase in coal (Newcastle thermal) prices, to US$62.9/tonne in 2017 from US$58.8/ tonne in 2016.
On the demand side, weak consumption globally is likely to prevent prices from rebounding further. “The demand for coal in electricity generation will be stagnant in the US and Western Europe, while losing momentum in China.”