While President Trump has renamed the Gulf of Mexico, the greater consequence of his presidency is to be found on its shoreline. From Texas to Louisiana, his administration has approved six enormous terminals for the export of liquefied natural gas (LNG), several of which had been blocked by Joe Biden for fear of their impact on the climate.
These terminals are Trump’s shot at energy dominance. Together, they will nearly double America’s gas export capacity, which is already the largest in the world. They are also a bet against global ambitions of limiting climate change.
Britain and the EU may say they want to reach net-zero carbon emissions by 2050. China and India may say they want to get there a decade or two later. But the Trump administration is betting that the world will realise abandoning fossil fuels is just too expensive, and buy more and more American oil and gas for decades to come.
“Net Zero 2050 is a sinister goal. It’s a terrible goal,” Trump’s energy secretary, Chris Wright, told the Alliance for Responsible Citizenship conference in London in February.
“This is not an energy transition. This is lunacy. This is impoverishing your own citizens in a delusion that this is somehow gonna make the world a better place. It’s not.”
His number-one goal, he said, was for the government to “get out the way of the production, export and enhancement of our volumes of coal, oil and gas”.
Chris Wright, the US energy secretary, has dismissed net zero plan as “a terrible goal”
LISA LEUTNER/REUTERS
Wright has good reason to think that demand for fossil fuels will keep on rising. After all, it has grown almost constantly for more than two centuries. But at the very moment that Trump’s America is doubling down on oil and gas, many analysts have concluded that the world is losing its appetite for them — not primarily out of concern for the environment, but because the cost of clean energy has plunged.
Last year, the International Renewable Energy Agency said that 91 per cent of new renewable energy projects delivered power for less money than the cheapest fossil-fuelled alternative. Solar energy, on average 41 per cent cheaper, is the fastest-growing energy source in history, having doubled its share of global electricity generation in the past four years. Batteries, which can store solar energy for when the sun goes down, are booming, with 53 per cent more connected to the grid last year than in 2023. Investment in clean energy is now double that in fossil fuels.
“This is about as obvious a technology shift as I have seen in my career,” said Kingsmill Bond, who worked as a financial analyst for Citibank before becoming an energy strategist for Ember, a think tank. “Trump is like Canute,” he said. “He’s trying to command the forces of economics to go back, but on and on they come.”
Trump’s America is doubling down on oil and gas, yet the world may be losing its appetite for fossil fuels
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Bond’s team has forecast that if renewables, batteries and electric cars keep growing at their current pace, they will push fossil fuel demand into decline by 2030. It would drop by more than half by 2050, with coal falling fastest, then oil, then gas. That is emphatically not the future banked on by investors seeking to make their money back from all those new terminals on the Gulf Coast.
ExxonMobil, which is building a terminal in Sabine Pass, Texas, has predicted the world will be using 20 per cent more gas by 2050. “You can’t expect the incumbent turkeys to forecast Christmas,” said Bond. ExxonMobil declined to comment.
If fossil fuel demand does collapse, Bond believes it will be largely due to China. That may seem counterintuitive — after all, China operates the majority of the world’s coal plants. But recently those plants have been switched on less and less, thanks to an unparalleled clean energy building spree. In the first six months of this year, as the Trump administration was dismantling Biden-era subsidies for renewables, China deployed more solar panels than America had in its history.
Like Washington, Beijing has its eye on energy dominance. But whereas Trump hopes to flood the world with American oil and gas, China has made itself the factory floor of the global energy transition.
It now has over 70 per cent of the world’s manufacturing capacity for wind turbines, solar panels and batteries. Its solar manufacturers alone have capacity to make nearly twice as many panels as the world will need per year to reach net zero by 2050.
One of its biggest car companies, BYD, this year overtook Tesla as the world’s leading supplier of electric vehicles. In August, China’s clean tech exports hit a record monthly high of £15.2 billion, up 325 per cent in five years.
With an increasing proportion of the world’s electricity generated by Chinese-made solar panels and wind turbines rather than gas power plants, some believe America’s push to double its LNG exports is badly mistimed. The London Stock Exchange Group predicts a glut of 200 billion cubic metres of LNG by 2030, more than a third of current demand.
Christopher Doleman, a gas specialist at the Institute for Energy Economics and Financial Analysis, said: “I’m not saying everyone in the LNG sector is going to go bust, but margins are going to go [down] and we’re going to enter a finding-out phase.”
American oil majors have dismissed talk of a glut, arguing that fast-growing Asian economies will lap up all the LNG they can get. Andrew Barry, Exxon’s vice-president of LNG marketing, told Reuters the company was “very bullish” about China and spied “significant potential markets” in Thailand and Vietnam.
But Asia’s LNG imports have fallen this year. China, in retaliation to Trump’s tariffs, has not imported any American LNG since February. In Vietnam, over half of planned gas plants are delayed, while solar energy has tripled in five years.
In Pakistan, gas generation is falling thanks to the influx, in just two years, of more solar panels than Britain has ever installed.
Bond said that US oil and gas companies were “gambling on the failure of the most successful energy technologies of the past 50 years: solar and batteries”, adding: “I think that’s a very big gamble.”
The Trump administration is trying to prop up demand for American fossil fuels by pressuring countries to buy them in return for tariff reductions. In July the EU agreed to buy $750 billion of US energy in return for a halving of tariffs. But because the EU can’t force companies to buy gas, Bond believes the bloc is merely paying lip service to Trump’s fossil fuel aspirations while continuing to shift to renewables.
The vast majority of solar panels are manufactured in China
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The superpowers have placed enormous bets on two very different energy futures for the world: transitioning slowly to renewables, burning a lot of American oil and gas along the way; or switching quickly to renewables largely made in China. Whichever side wins its bet, the other stands to waste a lot of money on superfluous industrial capacity.
Not everyone shares Bond’s conviction that the US is backing a loser. Michele Della Vigna, head of natural resources research at Goldman Sachs, expects the transition to happen more slowly, with global gas demand rising until 2050. “Every energy transition tends to be very slow, because energy infrastructure takes a long time to build,” he said.
He said America’s doubling of LNG exports would “be a major benefit to the world and especially a major benefit to Europe”.
Della Vigna expects it will reduce Britain’s wholesale gas price by 60 per cent, finally bringing an end to the sky-high electricity prices it has endured since Russia’s full invasion of Ukraine.
Whether China or America’s bet pays off, the repercussions will be profound — not just for the climate but for Britain’s place in the world. If Della Vigna is right, and the energy transition is destined to progress slowly, the world’s hopes of limiting global warming to less than 2C above pre-industrial temperatures are likely to be dashed. He added: “It’s certainly not what I’d wish for, but I think we need to be realistic.”
If humanity does warm the atmosphere by more than 2C, then climate change could acquire a momentum of its own, sparking so many wildfires and kicking so much carbon dioxide into the air that the planet spirals towards a hothouse state no matter what humans do. If, on the other hand, Bond is right, and the world is on the cusp of a rapid clean energy transition, then warming could be limited to about 1.8C.
While China’s build-up of clean industrial capacity is undoubtedly good for the climate, some fear it would be unwise for Britain to source most of its energy infrastructure from an authoritarian state that has been spying on it.
Bond believes that Britain has less to fear from China than it does from fossil fuel suppliers, because whereas the latter could turn off the taps tomorrow, China can’t stop solar panels working once it’s sold them. “But we do definitely need to find more than one supplier for all our tech,” he said.
“We definitely need to be shifting some of our demand from China to India or Morocco. That’s simple risk management.”