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US Withdrawal from Paris Climate Accord: What’s Really at Stake?

Posted by John Greene on June 7, 2017

“The United States will withdraw from the Paris Climate Accord but begin negotiations to re-enter either the Paris Accord or really an entirely new transaction on terms that are fair to the United States,” the president said last week in the Rose Garden. “So we are getting out but we are starting to negotiate and we’ll see if we can make a deal that’s fair.”

President Trump is once again making good on the central component of his campaign of putting America First by proposing a US withdrawal from a (non-binding) global agreement that is, in his opinion, not in the best interest of the American people. The Paris Climate Accord (also referred to as COP21), which is sponsored by the United Nations, seeks global cooperation and participation in addressing climate change and some of the related social and economic costs associated with it.

Environmental Protection Agency (EPA) Administrator Scott Pruitt said withdrawing from the accord was based on sound financial reasoning and noted that the accord “was a failed deal to begin with.” On NBC, Pruitt added, “This is a decision that was right for this country from a jobs perspective, an economy perspective, and an environmental perspective. It was not a political decision.”

 

Background of the Paris Climate Accord

  • Participating nations in the Accord made a pact on December 12, 2015 in Paris to adopt green energy sources, cut down on greenhouse gas (GHG) emissions and limit the rise of global temperatures. Specifically, nations that signed on to be a part of the Accord agreed to limit the 21st century’s global average temperature increase to no more than 2° Celsius (3.6° Fahrenheit) above the levels experienced from the years 1850-1900 (pre-industrial revolution era). The US officially entered the Paris agreement (along with China) in September, 2016.
  • As of May 2017, 196 negotiating countries have signed the agreement (147 parties have since ratified it.) Under the terms of the agreement, each participating nation must have an individual strategy (“Nationally Determined Contributions”) to tackle its own GHG emissions. For example, under the Obama administration, the US vowed to cut its emissions by 26 percent (based on 2005 levels) by the year 2025.
  • The agreement requires wealthy nations to maintain a funding pledge of $100 billion per year to help developing nations adapt and fight climate change, and to use that figure as a base figure for further support agreed to by 2025. Under the Obama administration, the US also pledged an additional $3 billion to the Green Climate Fund to further help these nations. In his Rose Garden speech, this redistribution of American resources was specifically identified by President Trump as being unfair to American taxpayers.

 

Heated Reaction

Predictably, the backlash has been swift and firm. Led by Michael Bloomberg, former Governor of New York, at least 30 mayors of other US cities, three governors, more than 80 university presidents and more than 100 businesses have pledged to maintain their individual commitments to combat climate change, regardless of the direction the federal government ultimately chooses to take.

For these outspoken individuals and groups, Trump’s decision to withdraw is a clear indication that the US is shirking its responsibility to combat climate change. “It means that that country that’s most responsible for climate change has reneged on its promise to be part of the solution,” said Timmons Roberts, a professor of environmental studies at Brown University. “It’s very worrisome that we’re delaying the inevitable work we need to do on this issue.”

International policy experts also say that the decision will affect US standing abroad. “It will threaten our credibility in the world,” said Nicholas Burns, a former US diplomat and professor of international politics at Harvard University. “It may begin to create the impression that China is a more responsible country than the United States, and it might give a real boost to the Chinese because we will be seen as not doing our part on the biggest global problem.”

Former Vice President Al Gore—who is currently on a media tour promoting the upcoming release of a sequel to his environmental film, An Inconvenient Truth, said he firmly disagrees with President Trump’s decision to withdraw from the Paris Accord. “It makes no sense to me,” Gore said. “I think that it was a reckless decision, an indefensible decision. I think it undermines our nation’s standing in the world and isolates us and threatens to harm humanity’s ability to solve this crisis in time.”

It is also worth noting that the hysteria coming from many of Trump’s critics is based in opportunism. But COP21 was never a formal treaty with related obligations, and President Obama never submitted it to Congress for review. By signing on to the Accord in 2016, Obama took up a global cause with voluntary procedures that would have a substantial impact on the American economy and, despite that impact, he did not present the Accord to Congress for ratification or debate. If the future of humanity really hinged on COP21, surely Obama would have involved the legislative branch of the US government to rally support and streamline its implementation.

 

What's Really at Stake?

However, there are far less emotional—and far more realistic and shrewd—reasons to remain level-headed should the US formally withdraw from the Paris Climate Accord. A number of economists and analysts believe that President Trump’s decision essentially changes nothing because COP21 commitments are non-binding. “Not only is participation in the Paris accord voluntary, but each country is charged with setting its own emissions-reduction goals, however stringently or laxly they wish. Should a country later change its mind or simply not meet its own goals, there is no penalty,” wrote Josiah Neeley, energy policy director for the R Street Institute, a D.C.-based free-market think tank.

Key reasons why President Trump’s decision will have no measurable impact include:

  • The official global target of a 2°C temperature rise is “utterly inadequate,” according to a lead author on the Intergovernmental Panel on Climate Change (IPCC). Petra Tschakert from Pennsylvania State University and a coordinating lead author of the IPCC's Fifth Assessment Report noted that, "The consensus that transpired during this session was that a 2°C danger level seemed utterly inadequate given the already observed impacts on ecosystems, food, livelihoods, and sustainable development.”

    • In her commentary, Tschakert explains that the target of keeping the global average temperature rise to below 2°C originates from early studies performed during the 1970s. This target became embedded in policy debates over the decades and was adopted as an official long-term global goal for GHG emission reductions at the Copenhagen Climate Change Conference in 2009. Tschakert added, "Using a figure for average global warming may indeed be the most convenient and compelling means to discuss the severity of climate change impacts, but not only does it inadequately capture the complexity of the climate system, it poorly reflects locally experienced temperature increases and the extreme and large variation across regions—no single person or any species faces a global average."

  • Fundamental economics and rapidly emerging technologies, rather than regulation, are driving the US shift away from fossil fuels and toward renewable energy sources. Besides the improving economics of renewable energy sources, coal is coming under pressure from competitive natural gas prices. Even with natural gas prices poised to rise over the next two years, they remain far below what's needed to shift the country back to coal use, says Evan Kurtz, US mining analyst at Morgan Stanley Research. “Our fundamental analysis of power generation economics shows that longer-term coal simply cannot compete with natural gas or renewables, regardless of any changes made to environmental regulations," he argues.

  • "The increasingly favorable economics of renewables are more important than the presidential election’s impact on the industry, in our view,” says Stephen Byrd, a senior analyst with Morgan Stanley. “Wind and solar are price-competitive in many parts of the US. It’s the economics and not the politics that’s driving the use of renewables.”

    • Over the past seven years, the cost of wind power has dropped from $60-$100 per megawatt-hour (MWh) to around $15-$25/MWh in the middle third of the US, and for large solar installations, it’s gone from $100-$300 to $40-$70 per MWh. Wind power is currently the cheapest source of energy in the middle third of the country, with its all-in cost of $15-$25/MWh, comparing with the $55-$65/MWh for a new natural-gas-fired plant.

    • Demand for solar power is expected to grow by an average of 47 gigawatts per year from 2014 through 2020. A majority of that power—39 GW a year—is attributable to six markets: the US, Europe, China, Japan, India and Brazil. China alone is forecast to make up 27 percent of that demand.
  • The process of a US withdrawal from COP21 is complex; it’s not as if the US can immediately scrap its current responsibilities as a member nation of the pact—even if they are non-binding in this case. A country that is part of the Accord can withdraw only four years after giving notice of its intent to do so. “Moreover, the four-year period does not appear accidental, but rather, designed to limit Trump’s ability to exit: If he does not do so now, his potential successor will have the ability to cancel the withdrawal before it takes effect,” noted Eugene Kontorovich, a professor at Northwestern University School of Law and expert on constitutional and international law.

 

However, another likely—and potentially worrisome—result of the US pulling out of COP21 is China's ascent toward a leadership role in promoting green technology, despite an abysmal record on the ground. The world's largest emitter of man-made carbon dioxide is already making rapid progress toward its own Paris goal of halting emissions growth by 2030. Call it good PR, but China is clearly trying to assert itself on the global stage when it comes to the climate change discussion; it has overtaken the US in transitioning to renewable energy by generating a fifth of its electricity from renewable sources.  

China recently canceled construction on more than 100 coal-fired power plants (its consumption of coal fell in 2016 for a third consecutive year despite accounting for roughly half of global coal consumption) and plans to invest at least $360 billion in green energy projects by 2020. That said, China's newfound appreciation for green energy is largely driven by domestic concern and unsustainable levels of industrialization. Growing global apprehension about China’s air and water pollution, as well as soil contamination from unchecked development has prompted the communist leadership to address the situation.

It is also worth noting that China has been positioning itself as a leader on this issue well before President Trump’s decision to pull out of the Paris Climate Accord. Chinese officials reiterated that they would work with the European Union (EU) to uphold the agreement regardless of what Washington decided. But with political and economic cooperation comes greater influence, and countries in Asia and beyond are seizing on opportunities to do more business with China's expanding economy.

Josiah Neely astutely notes that, “[The] United States has over the past decade reduced its greenhouse-gas emissions by more than almost any other country. It did this despite the fact that it had not joined the Kyoto Protocol, a previous international agreement meant to fight climate change. Instead of imposing costly measures to reduce emissions, the United States succeeded because of new technologies that were both cheaper and cleaner than existing sources.”

While such nebulous international agreements as COP21 and the Kyoto Protocol do have the potential to galvanize support, the free market—not government—will ultimately develop and implement scalable renewable solutions that will benefit both the environment and humanity in the coming decades. True to his America First philosophy, President Trump appears to value results for American taxpayers more than foreign relationships and thus, is betting on the market.

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Topics: Paris Climate Accord, renewable energy

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