Trump's Early Days Executive Orders
A review of their effects on green investments and the environmental movement.
Newly reelected President Trump has wasted no time, signing a variety of executive orders that are targeted at pursuing fossil fuel-friendly policies.
Does this mark the start of dark times for some green industries? Let’s review what has been released so far.
Leaving Paris Treaty
As promised, Trump has once again pulled the United States out of the Paris Agreement.
The process demands a year's notice before the USA can leave, so we’ll see that officially occur in 2026.
This profoundly impacts global efforts to fight climate change, but does it affect our investments? Not directly.
One of the commitments the USA made as a part of its international leadership on climate change, before Trump, was to donate billions to the Green Climate Fund (GCF). That sum of capital is set to help developing countries mitigate the effects of climate change.
Unless you’re investing in agricultural advisory services in Burundi, this doesn’t directly affect anything we would be buying in public markets.
What stings a little more is the sentimental impact this move has on the climate change narrative.
According to Nik Popli from Time Magazine, carbon emission mitigation efforts did begin to stall in the wake of Trump pulling out of the Paris Agreement last time:
Additionally, Trump’s withdrawal was seen as an open invitation for other nations to scale back their own climate commitments. While some countries, particularly in Europe, reaffirmed their commitments to the accord, the global momentum to cut emissions stalled in the face of U.S. retrenchment. According to the International Energy Agency, global energy-related CO2 emissions increased by 1.7% in 2018, the same year that the U.S. formally began the process of withdrawal, after three years of relatively steady declines.
Given that the United States is still seen as the global leader in many domains, it does strike a blow to any industry dependent on the climate change narrative or government policy.
This exact scenario is why I tend to avoid those situations and invest in economically viable businesses that can survive with or without government support:
With that said, the one industry I’m invested in that does rely on wider climate change efforts could be impacted here. The voluntary carbon markets (VCMs). Particularly the CORSIA emissions offsetting scheme for the aviation industry.
A TLDR summary is that the US pulling out of the PA will likely alienate any potential supply that could come from the US over double-counting fears. Also, it's unclear how much emissions US airlines would decide to offset since we probably won't see the US penalize any of the airlines for not meeting their commitments.
This could reduce demand depending on what the US airlines do. Base Carbon (BCBN) will likely be largely unaffected unless CORSIA collapses.
You can read more about the effects on the VCMs here.