What Trump means for the nuclear industry

Written by Zaf Coelho. Posted in Nuclear

us-nuclear

The 11/9 will remain a historic date. It is difficult to predict what is going to happen, but in our industry like in many others, the keyword is uncertainty.

Make energy cheap again?

This could be a way to sum up the President-elect’s plan on energy policy.

It is very clear through Trump’s statements and program that he is pro-easy-and-cheap energy. On his campaign website he advocates for “unleashing America’s $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves.” That means the US is going to go back to investing massively in good old fossil fuel.

Mr. Trump also stated that he regretted the US didn’t take Iraq’s oil to “pay back” the cost of invading the country. Perhaps it is part of the President-elect’s plan once he has “bombed the hell out of ISIS”, and would add the country’s oil wells to America’s assets.

Combined with the promise to cancel the Paris COP21 agreement that was supposed to ensure the reduction of CO2 emissions from the world’s biggest polluters, it is clear that Trump’s only goal is to get cheap and easy energy no matter what. It is in accordance with the President-elect belief that the climate change was a “hoax” staged by the Chinese government. Naturally, using coal, oil and gas probably would have no consequence on the environment and public health, according to him anyway.

Mr. Trump said: “We will get the bureaucracy out of the way so we can pursue all forms of energy… The government should not pick winners and losers. Instead it should remove obstacles to exploration.”

Trump will make America “independent” and bring the cost of energy down. It is an excellent news for the fossil fuel companies, and it could create jobs in the sector short term. However, the consequences for other energy sectors, mainly nuclear and renewable energy could be catastrophic.

Nuclear energy can only be economically viable when the fossil fuel energy offer is becoming scarcer. The sector was at its heyday after the 1973 oil crisis. But with the plan to dig out and use coal massively, the prices will drop and nuclear power plants in America will become obsolete losing money machines. The only thing left for American nuclear industry companies would be to invest their technology into nuclear weapons in prospect of selling them to Japan, South Korea and Taiwan. President Trump has indeed advocated for them to get their own nuclear weapons as he plans to discontinue the Nuclear Umbrella over US Asian allies.

Can the gain of the fossil-fuel industry account for the loss of other energy sectors?

On the short term, maybe. It will surely give a boost to the economy, it is always the case when energy becomes cheap. But how will America be independent when there is nothing left to dig out?

The President of Walls

During his campaign, Trump has promised to protect America’s interests by isolating the country from what he identifies as dangers. He promised to build a wall at the southern border to protect the US from Mexican immigrants and called to ban all Muslims to enter the territory to protect citizens from terrorism.

In a similar fashion, he has proposed a 45% tax on Chinese imported products, another “wall” supposedly to protect the US manufacturing. On the downside, this could have a huge impact on US exports to China as there is no doubt the Chinese government will retaliate. The US has played a major role in developing China’s energy boom and US companies profit enormously from this growth.

In its 2016 market report, the US International Trade Administration has identified China as the number one country for US civil nuclear exports. What will happen to the deals between Westinghouse, CNNC and CGN should Trump implement aggressive tariffs upon Chinese goods? It is likely that this could profit to other nuclear energy major stakeholders, like Russia, France or even Canada.

I believe that Trump’s energy policy as detailed during his campaign could only benefit to the traditional fossil fuel companies in the US. Globally, this could mean more business opportunities for European and Asian countries’ nuclear sector, should the US exports suffer from Trump’s presidency. The difficulty is attempting to determine which statements were made in order to attract attention, and which ones are true propositions to be implemented.

This is a story we will see unfold after Trump will be officially inaugurated the 45th President of the United States on January 20th.

I would be happy to hear your thought on this matter, what do you think Trump’s energy policy will be like?  Will he implement all his promises?

The future of the nuclear industry and the market opportunities are the focus of the yearly gathering Asia Nuclear Business Platform. The 5th edition will take place in Shanghai from the 16th to 18th of May 2017. For more information on how you can participate, contact romain@industry-platform.com