The many unacceptable risks of Trump's oil obsession 

Last week, in a reckless cluster of executive orders on climate and energy, President Trump put himself on a collision course with the Constitution, Congress, the rest of the international community, future generations, the nation's economic health, middle-class taxpayers and even life on the planet. 

Trump regarded it as a good day's work. He staked out his claim not only to presidential power but also to command of America's oil cartel — the corporations, shareholders, banks and other investors that comprise the nation's fossil fuel sector.

In normal circumstances, Trump's influence would be limited simply because another president will replace him in four years. But climate change is accelerating rapidly toward the point where it will be catastrophic and irreversible on a planetary scale. The international community must remain on a fast track to decarbonize by 2050 to avoid that outcome. That's 25 years for an energy transition that is more ambitious than those that took 50 to 100 years in the past.

Nevertheless, Trump used an executive order to impound some of the $370 billion Congress appropriated in 2022 for clean energy investments under the Inflation Reduction Act (IRA). Yet the Constitution puts Congress in charge of federal purse strings; the president's job is to administer Congress's decisions. Trump's impoundment order will join several other decisions that will challenge Congress to defend the separation of powers. 

Regarding his decision to pull out of the Paris climate agreement, Trump can no longer claim that climate change is a hoax. Americans can see it, if not experience it directly, in disasters like the Lahaina and Los Angeles fires or the high-country flood in Asheville, N.C.  

It's not a short-term trend. During the 1980s, the U.S. suffered an average of 3.3 mega-disasters annually — those causing more than a billion dollars in damages. From 2014 to 2023, the average was 17. Nine of the 10 worst disaster years in America and all 10 of the hottest recorded years on the planet occurred in the last decade. 

As the world's biggest producer of climate-altering fossil fuels, the U.S. is Global Energy No. 1 regarding climate change. Former President Joe Biden's Inflation Reduction Act was meant to help change that. But Trump's agenda is to solidify that title. 

That's the international confrontation, but how does Trump's aggressive support for fossil fuels affect U.S. taxpayers and the economy? Consider what economists call "stranded assets."  

America's oil and gas infrastructure was worth nearly $74 million in 2023. Analysts predict it will experience "robust growth" to almost $110 billion in 2029. Those bullish on fossil fuels expect the sector to build new infrastructure and update its existing assets to serve the nation's growing electric demand for data centers and new manufacturing facilities. 

However, these assets and investments are likely to become worthless.  

For example, the average age of an oil refinery is about 40 years, although many last longer. The life expectancy of an oil or gas pipeline is also 40 years. The Paris Agreement calls for the world to decarbonize within 25 years to hold global warming below 2 degrees Celsius, the "critical threshold above which dangerous and cascading effects of human-generated climate change will occur." Last year, Wood Mackenzie predicted that by 2030, more than 20 percent of the world's petroleum refining capacity will be at risk of closing because of falling demand for oil, carbon pricing and other factors.

Ignoring the risk of stranded assets, the world's 60 largest banks have provided $7 trillion to finance fossil fuels since nations signed the Paris pact. That included over $700 billion last year, nearly a third from U.S.-based banks.

After Joe Biden took office in 2021 and set aggressive decarbonization goals, nearly 140 banks from 44 countries joined the Net Zero Banking Alliance to "align their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050." With Trump now in charge, several of the biggest banks have dropped out, including Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley and JPMorgan Chase. 

This is part of a broader pushback against "woke" climate worries. Many pension funds and investment managers have shied away from fossil fuels in recent years, but Republican-led states are punishing them, claiming that fund managers are violating their fiduciary duty to their customers. Yet fiduciary duty includes avoiding unwise investment risks. 

Under Biden, the Securities and Exchange Commission required publicly traded companies to disclose their climate risks. Potential shareholders should be entitled to transparency. However, Trump's new SEC chairman plans to scrap that rule. 

Many middle-class voters who supported Trump will feel the pinch of his fossil fetish in rising insurance premiums and less disposable income. The Rhodium Group warns that Trump's stated policies "could raise average household energy costs by as much as $489 a year in 2035, increase dependence on oil and gas, drive greenhouse gas emissions levels 24 percent to 36 percent higher by 2035 compared to current policy and, risk substantial levels of private investment."

That last category, private investment, is most at risk. Research in Nature Climate Change warned nearly three years ago that private investors in rich countries have "greater exposure to stranded (fossil energy) assets than the literature has suggested." The authors expect that oil and gas companies listed in the stock market will lose $1 trillion if the world decarbonizes by 2050. Investment funds, including pensions, would suffer the most significant losses. 

Trump's policies put taxpayers at risk because wealthy stakeholders will lobby for government bailouts when decarbonization causes fossil fuel investments to lose money. Authors of the Nature Climate Change research point out that the richest 10 percent of U.S. households hold about 82 percent of the potentially stranded assets. "Investment decisions in oil and gas could already be pricing in potential bailouts," the authors note. 

The longer infrastructure investments continue, the greater the liability grows. Writing in the journal Environmental Research Climate, a team of economists from the U.K. estimates that if the international community waits until 2030 to stop investing in carbon-based energy, nearly $560 trillion in physical, environmental and human capital (jobs) will be at risk. 

Even if nations renege on the Paris Agreement, other powerful forces, including markets, are working against fossil fuels. As the world electrifies, inexhaustible energy from carbon-free resources like sunlight and wind is already cheaper than oil, gas and coal. 

The industry would have us believe that emerging carbon capture technologies will allow fossil fuels to join the clean energy club. However, these technologies are not ready for commercialization — and may never be. Should they become ready, they will significantly increase the cost of fossil fuels, adding to the fuels' market disadvantage. 

Politics will also turn against fossil fuels as weather disasters accelerate and become more destructive. Today's disasters are merely a taste of what's to come if the world doesn't decarbonize. Human suffering, unaffordable costs and pressures on government spending will shift sentiment away from traditional energy. 

In short, investors today should shift their money from fossil fuels to carbon-free energy. Goldman Sachs estimates there is a $75 trillion "investment opportunity on the path to net zero." This path leads to reliable profits, secure pension funds, shareholder rewards and a society that avoids fossil fuel consumption's most tragic knock-off disasters. 

The good news is that the world is investing almost twice as much in clean energy as it is in fossil fuels. In the U.S. in 2023, clean energy jobs grew at double the rate of those in the overall economy. That's where the sun is rising, where we will create the future we want, and where the smart money should be directed. 

William S. Becker is a former regional director at the U.S. Department of Energy and author of several books on climate change and national disaster policies, including the “100-Day Action Plan to Save the Planet” and “The Creeks Will Rise: People Co-Existing with Floods.”