Calling it Quits

Ramifications of US exit from Paris climate accord

The global climate change mitigation programme received a severe setback as US President Donald Trump decided to pull out of the Conference of Parties [COP] 21 agreement, calling it an unfair deal for developed countries. The move elicited grim reactions from domestic and global leaders, climate change lobbyists and environmentalists. It, moreover, placed the US in the same league as Syria and Nicaragua, the only other non-parties to the Paris accord. The controversial exit of the US from COP 21 has established the fact that the realm of geopolitical interference in energy has extended beyond the traditional subjects of crude oil and natural gas to the business of renewable energy and climate change.

Renewable Watch takes a look at the likely ramifications of the exit of one of the largest polluters on its domestic market, on global climate change mitigation efforts and on India…

Impact on the US

Even though the US president has been vocal about his reservations regarding the climate change phenomenon, even calling it a “concept created by and for the Chinese”, the world community was left with a sense of disbelief when he actually announced the US’s exit from the Paris agreement. Ironically though, the US stands to lose the most from the move, according to experts.

Trump’s decision drew criticism from the top executives of American companies including Facebook, Morgan Stanley, Apple, Adobe, Google and Microsoft. Elon Musk, chief executive officer of Tesla and a strong advocate of climate change mitigation efforts, announced his exit from presidential councils. According to the 2017 US Energy and Employment Report, renewable energy and energy efficiency are growing significantly to become one of the largest industries in the US. Around 2.2 million people are employed in the industry, of which 350,000 are in the solar segment, 100,000 in wind energy and 700,000 in the alternative-fuel transportation sector. In addition, many US-based companies are involved in renewable energy technology and equipment exports, contributing significantly to the US economy. Therefore, with the country’s exit from the Paris agreement, the US economy stands to lose much more than just clean air.

However, defying the federal stand, most US states have pledged individual commitments to fulfil the climate change targets as per the Paris agreement.

Global impact

Trump’s refusal to acknowledge climate change as a real phenomenon despite scientific proof has helped unite 195 other countries that strongly support the cause. A new political axis has emerged with the convergence of the European Union (EU) and China, which have come together to “significantly intensify their political, technical, economic and scientific cooperation on climate change and clean energy”. This partnership has also pledged to compensate for the potentially lost $3 billion worth of aid promised to developing countries by the US by 2020 through the Green Climate Fund (GCF).

Impact on India

While Trump’s decision will not have a direct impact on India’s climate change targets or on the renewable energy industry, a ripple effect would be felt in the geopolitical corridors. With the US out of the climate change mitigation equation, EU member countries, specifically Germany, and China would become the leaders in this space. China’s domination in the renewable energy space (in both installed and manufacturing capacity) is already a cause of concern for India on the business front as it impedes the growth of the domestic industry. Therefore, India would need to lead climate change mitigation to avoid geopolitical friction with China. Also, with the dilution of the GCF, India could witness a possible slowdown in renewable energy investments, while on the flip side, it will provide a boost to the government’s Make in India programme.

The way forward

Going forward, the 195 countries that have signed the Paris accord are expected to stand together and intensify their efforts to compensate for the lost targets and investments after the US’s exit.

As for the US, the exit will not have an immediate effect on its economy as various clean energy initiatives, taken by the Obama administration, are currently ongoing. The US could, moreover, rejoin the treaty after renegotiating the terms in its favour, which may be detrimental to the interests of other countries. Either way, the US move has certainly isolated it from the rest of the world on the crucial issue of climate change.

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