Skip to content

Our Privacy Statement & Cookie Policy

All Thomson Reuters websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.


A bunch of hot air: Why hasn’t Trump affected carbon markets?

Hæge Fjellheim  Head of Carbon Research

Hæge Fjellheim  Head of Carbon Research

United States President Donald Trump's fight against climate change reduction efforts hasn't had a noticeable impact - yet. Why not?

Since his inauguration, United States President Donald Trump has consistently displayed skepticism toward formal efforts to curb climate change. In fact, his support for the U.S. coal industry and withdrawal from the 2015 Paris Accord climate agreement could be seen as evidence of his actively working against it.

Now, a year in to his administration, have Trump’s attitudes, policies and actions affected carbon markets?

In a word, no. At least, not yet.

Hikers walk on the Matanuska Glacier near Palmer, Alaska REUTERS/Lucas Jackson
Hikers walk on the Matanuska Glacier near Palmer, Alaska. Glacial melting is one evidence of a warmer global climate. REUTERS/Lucas Jackson

Hopes for a green future dim

In his election campaign, Trump promised a decidedly anti-environmental agenda. He vowed to cut funding for the Environmental Protection Agency (EPA); roll back its Obama-era signature climate change regulation, the Clean Power Plan; withdraw from the Paris Accord; and “end the war on coal.”

One year of pursuing this agenda, however, has had remarkably little effect on actual climate change mitigation policy, which is moving ahead at the international and regional levels despite (and to some extent precisely because of) Trump’s efforts. This is due in part to three primary reasons:

  • Congress wouldn’t play along: Most of the Trump administration’s attempts to fulfill his campaign promises took the form of proposed massive budget cuts to relevant programs. However, throughout 2017, Congress pushed back on repeated efforts to axe existing green spending, revealing that even a majority-Republican U.S. legislature favors basic environmental protection. For example, in May 2017, Trump proposed cutting the Department of Energy’s Office of Renewable Energy and Energy Efficiency by 70 percent; Congress actually increased the budget by 1 percent.
  • Industry thinks otherwise: Current trends in U.S. renewable energy investment and the rapid shuttering of its coal-fired power facilities are proof that if coal doesn’t make financial sense, businesses don’t want it. Natural gas is cheaper and alternative energy sources offer more potential, so coal is on its way out. The U.S. may very well achieve its Paris Accord target of a 26 to 28 percent reduction from 2005 levels by 2030 regardless of its status with regard to the agreement.
  • Carbon markets flourish: Developments in carbon markets last year were independent of the change in the U.S. administration. Some 6.3 gigatons (Gt) worth of emission allowances and offsets were traded in the various national and regional compliance markets in 2017. That represents a 5 percent increase year-over-year. With prices recovering strongly in Europe and rising in North America’s Western Climate Initiative, the overall value was up 22 percent from 2016. Carbon markets continue to be the climate change mitigation instrument of choice in many parts of the world. In 2017, China launched a national emission trading system (ETS) that is set to be the world’s largest in terms of emissions covered – the EU and North American programs tightened their markets, providing certainty towards 2030.
Century City and downtown Los Angeles are seen through the smog December 31, 2007. REUTERS/Lucy Nicholson
Century City and downtown Los Angeles are seen through the smog December 31, 2007. Los Angeles is one of the most smoggy major U.S. cities. REUTERS/Lucy Nicholson

Darker days ahead?

While the Trump effect is not tangible yet at the international level, over time the lack of commitment from the U.S. could wear on its international counterparts and influence their decisions. Thus, the Trump administration’s legacy on carbon markets and climate change may prove to be more insidious than one year’s worth of data reveals.

Learn more

Read the full report, “A bunch of hot air – why a year of Trump presidency has not affected carbon markets.”

More answers