President Trump withdrew his country from the Paris climate agreement last week, claiming it was a bad deal for the United States. What he really did, was trying to conceal a political decision as an economic one.
The reactions afterwards - whether they came from the 194 remaining signatories or from businesses in the US - show that very few people bought the story. It is indeed remarkable in this day and age - when renewable energy sources are growing spectacularly and their costs are coming down faster than ever anticipated - that removing carbon dioxide caps, drilling for oil and digging for coal would be recipes for success. A quick glance at the latest projections by the Energy Information Administration, for example, shows that the cost for onshore wind is almost on par with the cheapest conventional alternative (closed cycle gas turbines) without taking into account any subsidies. Coal is more than twice as expensive. The same broad trends hold for technologies in energy storage, efficiency and electric mobility, according to the International Energy Agency
This is why Mr. Trump’s actions, however deplorable, do not have all that much impact. Simple and straightforward economics - the kind Wall Street understands - are the real driver for the energy transition. Decisions to consciously manage one’s own consumption, to go for renewable energy or to integrate energy assets like PV panels and batteries, are taken because they make business sense, and no longer just because they are politically mandated. Many major (industrial) energy consumers have discovered that the opposite holds true - not taking action on energy management has become so expensive it negatively impacts on the competitiveness and the profitability of the core business.
The real question for such companies therefore is not whether to engage on energy management or not. It is rather ‘how’ to do so. As it is not the core business for most of them, it is not evident to always consistently tackle the topic. Three disciplines need to be brought together.
Cracking energy management is not necessarily easy, but an increasing number of companies have discovered that it pays off. Initial savings around 10% are common; up to 30% not unheard of. Moreover, the benefits are recurring once it becomes a structural part of an organisation’s business processes. Best of all, the upside will only increase further as the cost of doing nothing will inevitably continue to be going up over the coming years. And that is something not even Mr. Trump is going to change.