After the celebrations sparked by the Paris Agreement in 2015, followed by its earlier-than-expected ratification, Donald Trump has delivered a shock to the system, says Peter Cripps.
The exact details of US President-elect Donald Trump's policies relating to climate change are currently unclear, but the mood music is ominous.
In his first major speech on energy policy, in May 2016, Trump vowed to "cancel" the Paris Agreement. So, having him lead the US – the world's biggest economy and second biggest emitter of greenhouse gases – is not helpful for global momentum on tackling climate change.
The US President-elect appeared to weaken his stance somewhat in the days following his election, telling New York Times' journalists that he has "an open mind" about US involvement in Paris. But this was followed by the selection of climate change sceptic Scott Pruitt to head the Environmental Protection Agency, and of ExxonMobil CEO Rex Tillerson as nominee for Secretary of State. Both choices were met with dismay by environmentalists.
While the future does not look bright for the Clean Power Plan, which was designed to reduce the emissions intensity of the power sector in the US, there will still be numerous non-federal drivers, such as state-level Renewable Portfolio Standards, emissions trading systems, the numerous cities such as New York that have signed up to lower their carbon footprints, or the hundreds of companies that called on Trump to honour Paris.
Trump's infrastructure push, meanwhile, will potentially create opportunities for renewables and energy efficient technology.
Despite fears about a Trump administration, we should remind ourselves that there have been many developments in recent months that have boosted the prospects of meeting the goals laid out in Paris.
The G20 made green finance a priority in September. So, even if US support for Paris wavers, it seems a fair assumption that other G20 members will continue to honour the agreement.
Progress was made at the Marrakesh climate summit.
France has brought in an ambitious energy transition law that will require asset owners to report on climate risks, pushing the issue up the boardroom agenda. The EU is considering something similar.
Renewables continue to come down in cost, meaning that in many markets they are competitive with fossil fuels without subsidy support. This should make it easier for countries to meet the emissions reductions target pledged in Paris.
The green bond market had seen $84 billion of issues from the beginning of 2016 to early December, double the figure of the whole of 2015, according to Environmental Finance's green bond database. Its credibility has been boosted this year by the involvement of large corporate issuers such as Apple and Starbucks, and ratings agencies Moody's and S&P.
In other words, the area of 'environmental finance' has momentum that even the largest economy in the world may find it difficult to scupper.
As UNEP FI's Eric Usher argues, there has been a lot of "mutual signalling" from policymakers and the market. But the wider transformation of the economy has not yet happened.
It seems likely that, under Trump, the US will not be in the vanguard when it comes to international action on climate change. But there will be others drivers of this agenda next year. The Financial Stability Board's Taskforce on Climate-related Financial Disclosures reported its findings last month. Having the FSB take climate risk seriously has been a significant catalyst for change among financial institutions.
I expect there will be numerous climate-related shareholder resolutions in coming months. It will be interesting to see whether the Taskforce's findings cause 'mainstream' investors and companies to take notice.
Peter Cripps is the editor of Environmental Finance
