The US is withdrawing from the Paris Agreement – what will happen next?

What is the Paris Agreement?

In 2015, almost every country in the world (excluding Syria and Nicaragua) signed up for the Paris Agreement. They pledged to reduce their greenhouse gas emissions to ensure that global warming is limited to a maximum of 2 degrees Celsius above pre-industrial levels.

As part of the Paris Agreement, the US committed to reducing their carbon emissions by 26-28% within a decade. They planned to do this mainly through the implementation Obama’s Clean Power Plan, which was intended to limit greenhouse gas emissions from power plants.

What happens now that Trump has announced that the US will be exiting?

Like Brexit, exiting the Paris Agreement won’t be a quick process. The accord came into force on 4^th November 2016, and countries can’t withdraw within the first three years of the agreement being made. Once November 2019 comes around, the US still won’t be able to fully leave the agreement as they need to give a one year notice period – so if Trump decides to take this route, the US won’t officially exit until late 2020.

If he wants to speed up the process, Trump could leave the organisation behind the agreement, the United Nations Framework Convention on Climate Change (UNFCCC). Leaving the UNFCCC requires one year’s notice, but it would mean that the US would automatically exit the Paris Agreement too.

What are the wider implications of this decision?

As the US is the second biggest carbon dioxide emitter in the world, its departure from the Paris Agreement will take its toll on the strength of the agreement. In exiting the agreement, the US are sending a message to the rest of the world that climate change is not a priority for the US government. This will inevitably dilute the arguments around the effects of climate change, which have been growing in momentum in recent years.

Since reports first surfaced that Trump was planning to exit the accord, many countries have reaffirmed their commitment to stay within it. Last week, Theresa May stated that the UK will remain in the Paris agreement, and other member countries like China, Germany and Russia have also backed the agreement.

The US’s exit from the agreement may actually be more detrimental for the US than the countries that choose to remain. As climate change policies have a significant impact on energy costs, businesses outside of the US could see American-based companies as having an unfair advantage in the market due to lower energy costs. Countries that stay in the Paris Agreement could impose a retaliatory carbon tax on American goods as a result. The possibility of increased taxes on US imports is a key concern for a number of large US businesses, with 25 organisations (including Apple and Google) running an advert in the US media yesterday which petitioned Trump to remain in the agreement.

America also runs the risk that they will be left behind as other countries move ahead with the drive against climate change.  The need for action to prevent global warming won’t disappear because the US has decided that it’s not a priority, and the market for environmentally friendly, energy efficient products and services is likely to continue to grow. Leaving the Paris Agreement could slow the growth of the green economy in the US, which is already behind the EU when it comes to renewable energy jobs – while there are over 800,000 jobs in the renewables sector in the US, there are over 1.2 million in the EU, and this gap could widen as a result of Trump’s decision.

In today’s ever-changing world, it can be difficult to keep ahead of new developments in the wider world and understand what they mean for your business. If you have any questions about how the Paris Agreement or any other legislation affects your business energy, we’re here to answer them. Give us a call today on 08451 46 36 26 or email enquiries@inenco.com.