The new government in the UK, political deadlock in France, and dramatic confrontation in the US will have dire consequences for investment and the transition to clean fuels.
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(Bloomberg Markets) — Energy and climate change were the subject of voting around the world this year. Here’s a table of results for what to expect on infrastructure, power and renewable energy in five countries.
United kingdom
In July, Keir Starmer’s Labour Party ended 14 years of Conservative rule. With the largest majority since Prime Minister Tony Blair’s victory in 1997, the new government wants to move quickly.
What might change: Labour aims to create a net-zero carbon energy grid by 2030, a target the industry says will be difficult to achieve. The target requires a massive build-out of renewables, more than doubling wind and solar capacity. Labour has already taken action to lift a ban on onshore wind development. Another flagship project: the creation of a publicly owned energy company, Great British Energy, that would act as a renewables investment vehicle.
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Winners: Renewable energy developers stand to gain from the party’s push to overhaul the UK’s planning system, which has allowed local influence to delay projects in the past. The government also wants to modernise the grid to create faster connections for wind and solar farms. But Labour will have little money to support such efforts after slashing annual spending on its green plan to £4.7 billion ($6.1 billion) from £28 billion.
Losers: Oil and gas companies will suffer if Labor follows through on its pledge to end new exploration licenses. Labor also plans to extend the windfall profits tax on these companies. —Iman Farhat
France
France is heading for a long period of political deadlock after snap legislative elections failed to produce a clear majority. President Emmanuel Macron’s centrist party came in second behind a left-wing coalition, while Marine Le Pen’s far-right party performed worse than expected but gained ground.
What could change: A divided parliament risks indefinite delays to major energy investment decisions, including Macron’s plan to start building at least six nuclear reactors, along with solar and wind plants.
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Winners: In the short term, households may benefit, as the lack of a clear parliamentary majority could favour measures to support the purchasing power of consumers, who have been hit hard by rising energy costs.
Losers: A longer stalemate could undermine energy transition projects that require large government subsidies, such as the production of electric-car batteries and synthetic fuels, as well as decarbonization plans for steelmakers and fertilizer producers. —François de Beaupuy
South Africa
Last May, frustrated by unprecedented power cuts, voters handed the ANC its first electoral defeat since Nelson Mandela came to power 30 years ago. The loss forced the party to form a coalition government with opposition groups and share responsibility for key energy portfolios.
What might change: The energy transition could falter. Under the previous administration, Mineral Resources and Energy Minister Gwede Mantashe celebrated the coal industry, fueled conspiracy theories about environmental groups, and delayed plans to build more solar and wind farms. Mantashe has now been limited to mining and oil, with more control handed to the electricity minister.
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Winners: Private developers, including EDF, Enel and Scatec, should be able to continue building commercial and industrial projects that provide clean energy at prices that beat coal-fired power from state-owned Eskom. On the oil and gas front, the country’s shrinking refining capacity has followed a dearth of investment. The state is unlikely to step in, creating opportunities for traders like TotalEnergies SE and Vitol Group to import more fuel.
Losers: Many South Africans cannot afford to install solar panels on their roofs and must rely on electricity from Eskom Holdings Ltd. The company regularly imposes higher-than-inflation price increases. And while blackouts have declined, the inherent instability of coalition governments could jeopardize the transition to clean energy. —Paul Burkhardt
Mexico
In June, the coalition of Claudia Sheinbaum, a climate scientist with a doctorate in energy engineering, nearly won a landslide majority in Congress, cementing Morena’s dominance of Mexican politics. Some fear that the new president will have more power to consolidate state control over the energy sector, continuing the policies of her predecessor and political mentor. But Sheinbaum differs from Andrés Manuel López Obrador, or AMLO, in her strong focus on the green transition.
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What might change: Sheinbaum has proposed spending $13.6 billion on new energy projects, including wind, solar and natural gas plants. Investors are optimistic that she will be instrumental in unlocking much-needed private investment. She has also proposed public-private partnerships to attract the money.
Winners: The state-owned utility, Comisión Federal de Electricidad, will still have the edge in attracting renewable energy investments as Sheinbaum limits private sector participation in power generation to 46%.
Losers: Private contractors will continue to face payment delays from state-owned drilling company Petroleos Mexicanos, the world’s most indebted oil company. Sheinbaum is under pressure to come up with a plan to solve its financial problems and will send a key signal to the market with her choice of Pemex’s next boss. —Scott Squires
Looking to the Future: United States
The November 5 election will be a choice between two very different economic visions. It will also determine which party controls Congress.
But what might change: A Trump victory, especially coupled with Republican gains in Congress, would fuel efforts to curtail many of the tax incentives that help drive electric-vehicle sales, new carbon capture projects, renewable energy generation and clean-energy technology manufacturing. Trump would have wide latitude to rewrite Treasury Department rules governing tax credit eligibility.
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Winners: Oil and gas interests are likely to thrive under Trump, who has vowed to “develop the liquid gold right beneath our feet,” remove barriers to production and free up more federal land for drilling. A Democratic win would benefit renewables and other low-emission technologies. Vice President Kamala Harris, the presumptive Democratic nominee as of late July, is expected to largely follow President Joe Biden’s approach on energy and climate change.
Losers: Trump has made no secret of his hostility to electric vehicles and offshore wind. He wants to roll back Biden-era policies that support electric vehicle sales and has signaled he would halt approvals for new offshore turbines. Democrats would build on regulations that hurt fossil fuels, including through tough new limits on pollution from gas-fired power plants. And Harris has a history of tangling with oil companies and siding with communities affected by environmental damage, suggesting she could be tougher on the industry. —Jennifer A. Dlouhy
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