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Hot Topic: US President Trump withdraws from Paris Agreement: An opportunity for the rest of the world?

Friday, June 2, 2017

President Trump announced the US withdrawal from the Paris Agreement amid the EU-China pledge to strengthen cooperation on combating the effects of climate change

paris agreement(1)

American President Donald Trump officially announced the US withdrawal from the Paris Climate Agreement, claiming that the Climate Agreement represents a “bad deal” for the country that is ultimately slowing the US economy. His statement comes amid numerous calls from US mayors, senators, and CEOs, as well as, from foreign diplomats and political leaders to stick to the targets of the Paris Climate Agreement.

Will President Trump’s theatrical decision have a real impact on the global efforts to curb the effects of the changing climate?  We know the US emits approximately 15% of the global GHG emissions and was a major source of finance and technological innovation for many developing countries striving to tackle the effects of the rising global temperature. If the US were indeed to actually backtrack on the Paris objectives, it might become challenging for the international community to fill this potential void, unless stronger concerted actions combined with timely implementation are embraced. One may however wonder about the capacity of President Trump and his Administration to backtrack in practice.

The Paris Agreement

In 1992, 197 states adopted the United Nations Framework Convention on Climate Change (UNFCCC), which entered into force in 1994. The goal of the UNFCC is to prevent “dangerous human interference with the climate”. During their 2015 meeting in Paris, the parties to the UNFCCC agreed on the Paris Agreement, which aims to strengthen global actions to limit the harmful effects of climate change. One of the popular objectives of the Agreement is that of maintaining the increase in global average temperatures below 2°C. Participation in the Agreement and implementation of the measures it prescribes however remains voluntary.

On 22 April 2016, the Paris Agreement was signed by 175 of the UNFCCC parties. In the following year, 20 more participants signed it a total of 147 parties ratified it. The only two countries that have not signed the Paris Agreement are Nicaragua and Syria.

US Domestic Consequences

Internally, before President Trump’s announcement, there were a number of calls from influential politicians (including the Secretary of State, Rex Tillerson (also the former CEO of Exxon) and the Energy Secretary, Rick Perry), who voiced their support for renegotiating the Agreement while remaining a party to it. Even some of the President’s closest advisers, like his daughter Ivanka Trump and son in law Jared Kushner, pushed for the US to stay in the Agreement.

Industry leaders also voiced their strong support for the Paris Agreement (see Hot Topic of 31 March 2017: ‘President Trump signs Executive Order against climate change promoting coal’). Even some unlikely supporters, like two of the world’s biggest oil and gas producers, Exxon Mobil Corporation and ConocoPhillips, called for the President to upkeep the US commitments to the Agreement. Exxon’s shareholders and CEO, Darren Woods, made an even stronger commitment to disclose the company’s plans on achieving a low-carbon energy future transition. Furthermore, as a consequence of President Trump’s decision, Elon Musk, Tesla, Inc.’s influential leader, announced that he would leave the President’s advisory board consisting of leading high-profile US tech executives.

The amount of RES projects in the pipeline in the US will probably not be affected for now since the formal withdrawal procedures should take a lengthy four years to be finalised (assuming the US actually abides by the official timeline), unless the US President decides to adopt a much more radical stance and to pull out of the UNFCCC altogether. Interestingly and somewhat ironically, in Q1 2017, the impressive amount of RES integrated into the energy mix resulted in 19,35% of US electricity coming from RES. This represents a more than 2% growth compared to the same period in 2016 and comes roughly 40 years sooner than predicted by the US Energy Information Agency (EIA). Will the new US President also trim down these significant RES investments?

Luckily, future investment prospects in the US RES industry will likely continue to be appealing to many investors because US States are largely independent and have separate policies in stark contrast to the Trump Administration positions. For instance, on the same date as President Trump’s announcement, California’s Senate passed its new Renewables Portfolio Standard Program, which sets the path for the State to receive 50 % of its power from RES by 2026 and all of it by 2045.

Furthermore, the States of Washington, California and New York announced that they would form a US Climate Alliance, which will act as a vehicle for the States interested in coordinating their efforts in fulfilling the Paris climate goals. It is unclear whether others will join, thereby possibly creating an influential alliance that could continue the US climate efforts despite the Trump Administration’s withdrawal.

Finally, the exact domestic impact of the decision as announced by President Trump’s Administration is questionable. The development of RES in the US goes hand in hand with the creation of millions of jobs, investors are happy and, last but not least, a growing number of consumers (and the shareholders of major corporations) have become well aware of the importance of adopting a lifestyle in line with durable and sustainable growth. Announcing the withdrawal from the Paris Agreement does not necessarily imply that every American will pollute more and will become less conscious of environmental issues.

The External Dimension

The US withdrawal from the Paris Agreement was largely criticised by the international community. Most notably, criticism was strong from China and the EU, who held a joint ministerial meeting on 02 June 2017 in Brussels, just hours after President Trump’s announcement. At the meeting, they discussed the strengthening of ties and broadening of their cooperation in combating climate change so as to counteract the US withdrawal. The EU and China committed to cutting back on fossil fuels, further developing green technologies, and raising funds to support poorer States in cutting their emissions.

The prospect of a new EU-China alliance arises amidst strong reactions by European and international leaders towards President Trump’s actions. Emmanuel Macron, Angela Merkel, and Paolo Gentiloni, the leaders of France, Germany and Italy respectively, reiterated in a Joint Statement their countries’ climate commitments as a response to Donald Trump’s decision, which Joint Statement rightfully reiterates that the Paris commitments are non-negotiable as proposed by the US President. Additionally, a number of international diplomats and politicians have also signed a Joint Statement as part of the High Ambition Coalition to voice their disappointment with the US Administration’s decision.

President Trump’s controversial decision to withdraw the US from the Paris Agreement was, as expected, faced by strong opposition, both domestic and international. President Trump’s announcement seems to be focused more on the announcement itself and a marketing stunt than on a true stance meant to bring the US to backtrack in terms of RES growth. The announcement primarily seeks to please President Trump’s voters and ensure their loyalty amidst challenging times for the President.

The unfortunate announcement made by President Trump also represents a unique opportunity for Europeans to finally form a true energy union and to accelerate the development of its « green » economy while creating closer ties with other large nations that are finally embracing true ecological ambitions, such as China and India.







Washington Examiner (i)

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North American Clean Energy


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BBC News

Financial Times

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