As US Energy Secretary Chris Wright promoted an anti-renewables agenda at S&P Global’s CERAWeek Monday, a new report hit the streets suggesting growth ahead for renewable energy — not despite the Trump agenda but, oddly, because of it.
The contrarian view came from global investment firm The Carlyle Group in “The New Joule Order” by Jeff Currie, chief strategy officer of energy pathways.
Following Currie’s logic, we have entered a policy and economic period that bodes well for renewables and distributed energy. And it’s not just favorable pricing and climate efforts pushing these resources forward; energy security is the new global preoccupation.
That means that local, domestic energy – renewables and nuclear – becomes more important to investors and nations than tradable energy – fossil fuels.
“If trade is under threat, then so are fossil fuels,” says the paper. “Non-fossil fuels are generally not traded and hence are local. These types of fuels thus become more demanded when security is paramount, which historically drives a more profitable, cleaner, and faster transition.”
Holding to Currie’s theory, Trump’s America-first policies could inadvertently cause an upsurge in domestic renewable energy. Tariffs, a hallmark of Trump’s economic policy, encourage local production. As a result, local energy can command a premium because it ensures security, which may spur the energy transition more quickly.
Subscribe to the free Energy Changemakers Newsletter
Trump’s agenda isn’t the only force driving a move away from fossil fuels and toward domestic energy sources. Currie describes the shift as a global phenomenon with “nations creating a diversified energy mix of joules across multiple sources to insulate themselves (and investment portfolios) from geopolitical, macro, and financial risks.”
While Trump’s energy policies may hasten a US push toward renewables and nuclear, the shift began several years ago. Currie points to historical trends that led to this moment, going back to the pre-oil era, when domestic energy dominated because it was hard to trade and ship coal. Oil changed that because it is easy to transport; it offered a tradable energy commodity that deeply influenced the economic wealth of nations and political alliances.
Oil’s strength becomes its vulnerability
But oil’s dominance began to come into question after the 1973 oil shock, which left some believing we were nearing peak oil supply. Attention again turned toward domestic fuel supply, and we saw the beginnings of the renewable energy movement.
“At the time, localizing energy supply was seen as the pathway to energy security. Oil and gas imports can be disrupted, but the wind and the sun cannot,” Currie writes.
Former President Richard Nixon then became the “first environmental president,” creating the Environmental Protection Agency.
Another big step toward re-emphasizing domestic energy came during the post-Covid era, when the US, the world’s second largest energy consumer, became a net oil exporter, so lost the incentive to protect global shipping lanes. Meanwhile, the world’s biggest energy consumer, China, had already shifted toward domestic energy in 2000, causing its fossil fuel imports to peak in 2019.
As a result, the world has entered a period that Currie calls “peak oil trade,” a measure of how much oil crosses borders. The period began in 2017, the peak year for fossil fuels traversing borders to serve energy consumption. Such trade has since declined by 5%.
Because they cross borders, oil and certain gas supplies can be easily interrupted, making them vulnerable and less preferential in an era when security concerns dominate.
“If consumers are able, they will try to reduce their imports of fossil fuels, which in many cases will mean increasing their supply of nuclear and renewable energy,” Currie writes. “And now they are able to do so.”
Security premium becomes the new green premium
Currie sees security as a stronger driver for renewables and nuclear than green energy premiums. He notes that France has one of the lowest carbon footprints in the world, not because of climate concerns but because it wanted energy independence – and was willing to pay for it.
“Thus, a tariff and a security premium are analogous to a carbon tax and a green premium.” The premium will drive the development of renewables and nuclear and dampen the growth of fossil fuels, which are largely traded commodities, according to the report.
Renewable energy’s vulnerability becomes its strength
This localization of renewable energy output was initially a flaw but is rapidly becoming a feature, according to the report. Fossil fuel imports are a lot easier to block than wind and solar energy.
“Because of this, we believe that the benefits of a diversified and localized energy supply system will lead to a reduction in trade and thus slower oil and gas demand,” Currie writes.
Electrification is part of diversification. In fact, Currie maintains that there is “no diversification without electrification.” This is because electrification “helps to further unlock the embedded optionality in energy assets, thus increasing their value.”
To be clear, Currie doesn’t see fossil fuels disappearing any time soon, nor does he advocate for it. The “New Joule Order” requires diversified energy assets, which will vary based on the natural resources within a country, he says. In the US, for example, natural gas is likely to remain a dominant energy source because it is so abundant.
But renewables will get a new boost from the ”security premium,” which will drive their growth more effectively than the earlier green premium did, Currie argues. This is especially true for the US, where wind and solar resources are plentiful.
A different reason for optimism
Despite short-term uncertainty caused by the Trump administration’s threats to federal funding and tax incentives, the renewable energy industry has continued to express optimism about its future. Much of the optimism stems from the ability of renewable energy to compete on price in the marketplace.
But Currie’s premise is different because he focuses on a larger economic macro trend.
The oil industry appears well aware of the threats tariffs bring. The New York Times quoted Mike Sommers, chief executive of the American Petroleum Institute, saying at CERAWeek, “We’re hopeful that as we continue these conversations on trade, that the energy dominance agenda becomes more important than the tariff agenda.”
What it means for distributed energy
The New Joule Order does not address distributed energy. But its core message – that we’re in a period where local, domestic energy is gaining value – bodes well for onsite energy. Nothing is more secure than each household or business generating all or part of its own energy supply.
