By Kate Abnett and Virginia Furness
BRUSSELS/LONDON (Reuters) – A second U.S. withdrawal from the world’s main climate pact will have a bigger impact – in the United States and around the world – than the country’s first withdrawal in 2017, analysts and analysts told Reuters diplomats.
One of President Donald Trump’s first acts upon returning to office on Monday was to leave the Paris Agreement as part of his plan to end U.S. climate action.
The impact will be to increase the risk of an escalation of global warming, slow US climate finance internationally and leave investors struggling to come to terms with the divergence between European and US green rules.
This US withdrawal will take effect in a year, faster than the 3.5 year exit period when Trump first left the Paris agreement in 2017.
Since then, climate change has become more extreme.
Last year was the hottest on record on the planet and the first in which the global average temperature exceeded 1.5 degrees Celsius (2.7 degrees Fahrenheit) of warming – the limit that the Accord of Paris forces countries to try to stay below.
“We are looking at exceeding 1.5°C – it is becoming very, very likely,” said Christina Voigt, a law professor at the University of Oslo.
“Which, of course, highlights the need for much more ambitious global action on climate change,” she said.
THE PARIS PACT PROJECTS
The current climate, measured over several decades, is 1.3°C warmer than in pre-industrial times and is on track to experience warming of at least 2.7°C this century. Although perilous, this situation is less serious than the 4Cs projected before countries negotiated the 2015 Paris Agreement.
Each country’s commitment to the Paris goal is voluntary. Nevertheless, Trump is expected to abandon the US national emissions reduction plan and potentially also the Biden-era tax credits for CO2 reduction projects.
All of this will “further undermine achievement of the Paris Agreement’s temperature goals,” said Michael Gerrard, a law professor at Columbia Law School.
“It obviously has an impact on the others. I mean, why should the others continue to pick up the pieces if one of the key players leaves the room again?” said Paul Watkinson, a former French climate negotiator who worked on the 2015 Paris Agreement.
Some US states have said they will continue climate action.
Regardless of politics, favorable economic conditions led to a boom in clean energy during Trump’s first term – with Republican stronghold Texas leading a record expansion of U.S. solar and wind power in 2020, according to US government data.
But Trump has already taken steps to try to prevent this from happening again, suspending offshore wind energy leases on Monday and revoking Biden’s electric vehicle goals.
The United States now produces about 13% of global CO2 emissions, but is responsible for most of the CO2 released into the atmosphere since the industrial revolution.
CLIMATE CASH (TSX:) STOP
As part of the exit from the Paris Agreement, Trump on Monday ordered the immediate cessation of all US funding promised as part of the UN climate negotiations.
It will cost the poorest countries at least $11 billion – the US government’s record financial contribution in 2024 to help them deal with climate change.
Together, all rich country governments contributed $116 billion in climate finance for developing countries in 2022, according to the latest available OECD data.
That doesn’t include the massive climate-friendly government funding Biden has rolled out domestically, the future of which under Trump is uncertain.
Total (EPA:) U.S. climate spending – counting domestic and international sources, from private and public sources – has jumped to $175 billion per year over 2021-2022, massively boosted by the 2022 Climate Change Act. reduction in Biden-era inflation, according to the nonprofit research group The Climate. Political initiative.
The United States is also responsible for funding about 21 percent of the core budget of the U.N. climate secretariat, the body that leads global climate change negotiations, which faces a funding gap.
MISSED OPPORTUNITIES
The We Mean Business Coalition, backed by Amazon (NASDAQ:) and Meta (NASDAQ:), said Trump’s disruption of the U.S. business environment could spur green investments elsewhere.
This could “open the door for other major economies to attract more investment and talent,” the nonprofit said.
Three investors told Reuters the transition to green energy, including in the United States, would continue regardless.
One of the impacts of leaving Paris will be to prevent American companies from selling carbon credits on a UN-backed carbon market that could be valued at more than $10 billion by 2030, according to the financial information provider MSCI.
Although they would no longer be able to make money selling excess credits, American companies could buy them on a voluntary basis.
U.S. airlines, for example, could still buy them to meet U.N. aviation climate goals, said Owen Hewlett, technical director of carbon market standards body Gold Standard.
The Paris withdrawal is also a problem for banks and fund managers, caught between the United States’ climate withdrawal and pressure from Europe to meet climate goals there more quickly.
“U.S.-based asset managers with European clients will have to be like a two-headed Janus,” said Mark Campanale, founder of the nonprofit Carbon Tracker Initiative. “Will they risk losing European customers to satisfy American politicians? I doubt it.”
U.S. banks have already left a banking industry climate coalition following Republican criticism.
This does not exempt them and other multinational companies from having to comply with future strict European rules on sustainability reporting.
Given the diversity of global climate policies, companies will likely continue their climate efforts, but with green silencing tactics, he said.
That means Campanale said, “Do it, but don’t advertise it.” »
