The 2024 US Presidential election and withdrawal from the Paris Agreement have shaken the global political consensus on climate. ANGEA Senior Advisor Neil Theobald explores how this may result in a more realistic energy debate, in the latest edition of The Energy Diary.
The 2024 US Presidential election and withdrawal from the Paris Agreement have  shaken the global political consensus on climate. In Asia, the delicate balance between energy security, cost and emissions is likely to tilt to the former and potentially slow progress towards national emissions targets. This may result in a more realistic energy debate.
The US Presidential election in November 2024 seems an eternity away. Since the inauguration, policy initiatives are coming thick and fast and in energy these changes may be some of the most significant and long lasting of all.
For the last 10 years, since the Paris Climate Accords, the world has been on a pathway to try to limit the global surface temperature rise to well below 2°C above preindustrial levels, primarily by reducing emissions.
The changes required are so dramatic that this pathway was always going to be challenging, with missteps, disagreements, technology mistakes and poor compliance to be expected but at least there was a degree of agreement on the overall objective.
As with all international agreements however, adherence relies on nations having the political will to do what is necessary to meet the targets. There is no enforcement mechanism or penalty for failing to do so.
The withdrawal of the United States from the Paris Agreement and refocusing of US energy policy, if sustained, are fundamental shifts. But the reality is that the Paris targets were in trouble already, as acknowledged by the International Energy Agency with its increasingly strident demands for faster global action after every COP. Â Now, the political consensus to aim for, however imperfectly, the Paris targets, could be on the verge of collapsing.
So, how aggressively will countries outside the US continue to pursue emissions targets if it is to the detriment of economic growth and energy security?
For Europe, where the most has been done to phase-out fossil fuels and move the power grid to renewables, the implications are profound. Already suffering from higher gas prices due to the Ukraine war, they face some of the highest energy prices in the world. There is a strong correlation between high levels of renewables penetration and electricity prices and while the reasons for this can be debated there is no question that it is leading to deindustrialisation that could put not just energy security but actual security in jeopardy.
In Asia the impact will vary. Geography here is more challenging, with interconnection more difficult and rapid population and economic growth meaning that the region will be a net energy importer in the future.
For Japan, the difficulty of reaching Paris targets has been evident for some time. In late 2024, the 7th Strategic Energy Plan called for a revived nuclear industry, aggressive renewables rollout but a continued role for fossil fuels and technologies such as carbon capture and storage. While not a radical change from previous plans, the pace of change was acknowledged to be below that required to meet targets. Even at this level there is concern that Japanese competitiveness will be undermined and now the question will be how hard the government will continue to push emissions reduction without US involvement.
In the less developed economies of Southeast Asia, the changes in the global political environment may be easier to deal with. Most countries here had developed  ambitious energy transition plans with unachievable levels of renewables investment, expensive major grid upgrades, reduction in coal use and in some cases nuclear power towards the end of the forecast period.
Even these optimistic plans usually didn’t meet Paris targets and the impact on economic growth was likely to be significant. The chance of successfully executing these plans was extremely low, as was quietly acknowledged within governments where the real focus is on economic growth and energy security. The changes in the political environment could make it easier to adjust the unrealistic plans, but the danger is that it will result in increased use of coal for an extended period as the cheapest and most secure form of energy.
If the energy transition does slow, natural gas will continue to be critical but in a subtly different way. Renewables will continue to be deployed at scale and will need the backup that natural gas is best placed to offer. But displacing coal with natural gas could slow if there is less emphasis on emissions reduction and more on cost and security. Although LNG can never be as cheap as coal, the expected increase in exports from the US will close some of the gap and give confidence to customers in emerging Asia that LNG is a reliable and affordable energy source as part of broader portfolio.
In summary, the changes of the last few months may slow the transition away from fossil fuels, extend the use of coal and natural gas and support nuclear. The rollout of renewables will still be rapid but as part of a more realistic and reliable energy system.
And the Paris targets, which were already under pressure, now seem certain to be missed.
Neil Theobald has more than 40 years’ experience in the oil and gas industry, including 17 years at Chevron, where he was Vice President, Global LNG, Gas Supply & Trading. He has been a Senior Advisor to the Asia Natural Gas & Energy Association [ANGEA] since 2021.
ANGEAÂ is an industry association representing LNG and natural gas producers, energy buyers, suppliers and companies in APAC. Based in Singapore, it works in partnership with governments and societies across the region to deliver reliable and secure energy solutions that achieve national economic, energy security, social and environmental objectives and meet global climate goals.
