We’re out. But we might come back. That’s what President Donald Trump has decided to do about the Paris accord. We’re out because the accord is unfair: it allows China to pollute while we can’t; it kills millions of jobs; it requires us to pay tens of billions of dollars to other countries. No wonder foreign lobbyists love it, because “they have long sought to gain wealth at America’s expense . . . while they laugh at us”. Besides, the accord can’t have much effect on global climate.
But the president offered to work with Democrats and those who believe in the accord to negotiate a new agreement that is fair to the United States. That’s a consolation prize for first daughter Ivanka. She, along with most of the business community, argued vigorously for “Remain”, but lost to the “Leaves”, who held a trump card: the president’s campaign promise to withdraw from Paris because he represents Pittsburgh, not Paris. Prompting the mayor of Pittsburgh to announce his city, which voted 80% for Hillary Clinton, would behave as a signatory to the accord. But most important: Trump never said climate change was not real, only that the deal to slow it is unfair to the US.
“Trump claimed America would remain a leader in cutting emissions
Worse still, to sustain growth at the president’s target annual rate of 3%-4%, we need to use all the resources we have: renewables could provide the energy we need only if we continue to grow at our current annual rate of 1%. What he didn’t say, probably because he doesn’t know, is that serious environmentalists have little use for the Paris accord. The emissions reduction promised by the more than 190 signatories is too little to prevent serious warming, countries are free to adopt weaker plans, and non-enforceability makes it unlikely that they will redeem even those promises.
Trump claimed that America would remain a leader in reducing emissions. This, despite his plan to continue rolling back Obama-era regulations. One reason is that presidential executive orders are hardly as durable as treaties, which require the consent of the Senate, and legislation that requires congressional action. Trump-haters believe he will be a two-year president, soon impeached and removed from office; Trump-dislikers put that at four years, until the 2020 elections; Trump-lovers say he will be around for eight years. But industrial facilities are built to last decades, coal-fired generating stations 40 years.
Businessmen are not going to scrap their long-run plans because Trump has taken us out of the Paris deal when his successor might well uncap the presidential pen to put us back in, or draft regulations with that effect. Just last week, shareholders of Exxon, the world’s largest listed oil and gas group, defied its board and called for the company to publish an annual assessment of the impact of climate change on its operations so it will be forced to make changes if necessary to reduce that risk. Many companies already include a cost of carbon emissions when they allocate capital among their various divisions. Private capital is preparing to build a high voltage transmission line to move wind power from Wyoming to Nevada and on to California and Arizona. Bill Gates and his billionaire friends (combined wealth $170bn) have put together a $1bn (£776m) fund to reduce climate change by investing in clean-energy innovation. The sum total of these and other private-sector efforts leads some environmentalists here to believe that America is likely to meet the emissions-reduction target to which Obama agreed in Paris because of private sector investments in cleaner energy.
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That leaves three problems for America. The first is the threat of some of our trading partners to impose a border tax on US exports. Since we run trade deficits with most countries, Trump would be tempted to ask them to make his day so he could impose tariffs that might otherwise violate World Trade Organisation rules.
The second is the incredible claim by European Commission President Jean-Claude Juncker that America is not free to leave the agreement: “This notion, ‘I am Trump. I am American, America First and I’m going to get out of it’ — that won’t happen . . . We tried to explain that to Trump in clear German sentences.” The audience laughed, and laughing at Trump is not a good idea. Juncker, whose goal in life is to make it difficult for Britain to Brexit, apparently feels that once a member of an organisation, always a member.
The third is the moral high ground assumed by Chancellor Angela Merkel, highly critical of Trump’s decision. Never mind that pursuant to its Energiewende (energy transition), Germany is replacing its nuclear plants with wind and solar-powered facilities. But there are days when the sun don’t shine and wind don’t blow. So Germany is backing up these intermittent sources of electricity with — new coal plants. Last year it relied on fossil fuels — coal and natural gas — for more than 50% of its power. About half of that power relies on lignite, indigenous to Germany and perhaps the dirtiest of all fossil fuels. “Germany is likely to miss its 2020 target to reduce its greenhouse gas emissions . . . In fact, its carbon dioxide emissions increased last year [2015] by 0.8%,” reports the non-profit Institute for Energy Research.
So countries needing our markets might put a tariff on our goods; Juncker backed by the Luxembourg army of 900 brave souls is going to prevent the US from exiting Paris, and the chancellor of a country increasingly dependent on coal says the Paris accord “cannot be renegotiated”. How do you say “Wanna bet?” in French and German?
Irwin Stelzer is a business adviser
