The United States’ Withdrawal from the Paris Agreement – Does it matter?

The_Arc_de_Triomphe_Is_Illuminated_in_Green_to_Celebrate_Paris_Agreement's_Entry_into_ForceAt first glance one can argue that the US withdrawal from the Paris Climate Agreement hurts the United State’s standing in the climate mitigation arena and puts the entire agreement at risk. The US has abdicated its leadership position on climate and is turning its back on the global effort to mitigate climate change. That sounds pretty bad and there are plenty of experts arguing that by stepping away, the United States has created a leadership vacuum that may or may not be filled (some see China stepping into the role) and that a domino effect will occur where other countries will withdraw or at least step back on their climate goals. On the contrary, what we have seen so far is that signatories to the agreement are increasing their commitment to the Paris Agreement.

Will this defiance to the Republican Party’s actions to withdraw from the Paris Agreement continue? At this point, it is hard to say. However, there is no reason to believe that countries will not continue to pursue their goals.  There is no reason for them not to. The economics to continue the transition are already here. The NERA Economic Consulting report, (funded by the US Chamber of Commerce, Koch Brothers and ExxonMobil) was the report largely sited by the Trump Administration and Republican Party as the justification for why the US should lead the accord. It argues that it is too costly to make the renewable energy transition and would have negative economic consequences. However, the reality on the ground completely counters this report and any of the other arguments that climate mitigation efforts would have negative consequences on economic growth.

Here are some examples from countries, India and China, that the Republican’s see as a key threat to the US. The belief by the Republicans is that these countries get a free ride with the Paris Agreement continuing business as usual while the United States suffers economic losses through overly stringent climate regulations. However, for India and China, the status quo of a carbon based economy is quickly becoming a thing of the past.

For example, India has already stopped the development of 13.7 gigawatts of coal-fired power plants in May 2017, and feels that with the current cost of renewables, the 8.6 gigawatts of recently built coal-fired plants will be not able to compete with renewable resources. That is 22 GW of power that is not coming online or will not remain online because of renewables. India has also committed to only selling electric cars by 2030. Of course, this may not be too great of benefit of there is still significant coal powered electricity. However, if it meets its goal of 60% renewable energy by 2027, then it is a very good thing. 

In China, they have already put in place policies that will over-achieve their carbon reduction goals.  If you want to argue that these policies are not that stringent, then look at their transition of their coal fired power plants. China is currently shuttering their old-coal fired power plants and all new plants must meet very stringent efficiency standards that far out-perform US plants. China is also rolling out the largest renewable energy investment on the planet. Their commitment to renewable energy makes up 36% of the total renewable energy investment made in 2016. Their goal is to lead in clean energy technology manufacturing while the Republican Party decides to sideline the United States. They are also looking to add 13 million new renewable energy jobs by 2020 and shed about 1.3 million coal related jobs

For the United States, at least for the short-term, any progress will have to depend upon the policies of state and local governments, as well as the private sector.  Although we have lost the strength of the United States government leading climate mitigation activities and supporting the deployment and export of US clean energy technology and services, there is room to be optimistic. Many city mayors, state governors and the private sector have agreed that it is too important to not work on decarbonizing our economy. Further, many of them find economically, it makes absolutely no sense to not decarbonize our economy. Decarbonizing our economy has proved to be a very large job creator and economic engine for many companies and communities. According to a Meister Consulting Group and EDF report, in 2016 there were 4.4 million working in the clean energy and sustainability sector. Renewable energy jobs are growing at a rate of 20% per year in the last few years. A great reference to further understand the economic benefit of a decarbonized economy would the Rocky Mountain Institute’s  (RMI) Reinventing Fire. Research by RMI suggests that a $5 trillion benefit awaits the United States economy if we take the appropriate steps.

So, does it matter? We will see. Other countries have upped their commitment to carbon reduction goals. Our main rivals, at least according to the Republican Party, are doubling down on decarbonization while the Trump Administration and the Republican Party takes another step away from the global stage. Fortunately, we are a country that has the capacity and capability to do work in absence of federal leadership. The desire and drive to decarbonize is still here in the United States, it has just been made a lot more difficult to accomplish.

 

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