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posted on 07 June 2017

Paris And Beyond: A Climate Change Accord Without The U.S.

from STRATFOR

-- this post authored by Sarang Shidore

The U.S. withdrawal from the Paris Agreement on climate change, announced by U.S. President Donald Trump last week, has led to a bitter and divisive debate on its likely impact. How critical is the U.S. withdrawal to global climate action? And what will be its impact on the international system?

Since Trump’s announcement, we have heard dire predictions about the consequences of the U.S. withdrawal on prospects for climate mitigation. Many critics, often in the same breath, have also described the march toward clean technologies and renewable energy as unstoppable. Of course, both of these arguments cannot be simultaneously true. After all, if market forces make the dominance of clean technologies inevitable, then would not either staying or exiting from Paris be largely inconsequential to the future of the planet?

In fact, while market forces and innovation are aiding the transition to clean energy (e.g., the remarkable drops in solar module prices), the same forces have also made extraction of fossil fuels cheaper and easier over time, as evidenced by the hydraulic fracturing revolution. Also, the sheer magnitude and speed needed for the transformation to clean technologies in the global energy system in order to meet climate targets requires coordinated action by states, markets, and societies. Nothing less will do.

This is because climate change, unlike some other global problems, comes with a concrete time horizon derived from the precise quantity of carbon that can be allowed to accumulate in the atmosphere to keep warming below the “safe" threshold of 2 degrees Celsius. Essentially, this means that net carbon emissions need to zero out in a few decades, and at an appropriately rapid rate. While wind and solar energy prices have dropped dramatically through competitive forces, much more innovation is needed in areas such as energy storage, steel, petrochemicals, waste and transport. It is not for nothing that an organization as hardheaded as the U.S. Department of Defense was one of the earliest to recognize the challenge of climate change, and it has put in place among the most proactive programs in the nation to green its operations.

The Paris Agreement is a relatively weak pact in which targets are entirely voluntary, nonbinding, and a floor (not a ceiling), presaging more stringent goals that countries will lay out after 2020. There are no penalties for noncompliance; the idea is that countries review each other at periodic intervals, making laggards vulnerable to "naming and shaming." But vitally, Paris provides the first genuinely global framework that can be built upon to tackle what is an extremely complex collective action problem.

Even before Trump was sworn in as president, the United States may not have been on a trajectory to meet its Paris target of reducing emissions from 2005 levels by 26 to 28 percent by 2025. The Clean Power Plan, an initiative under the administration of former President Barack Obama to accelerate the ongoing transition in the power sector away from coal, since early 2016 has been stuck in arcane court battles.

But the most critical setback to U.S. climate action came in March of this year, when the Trump administration issued its executive order on "promoting energy independence and economic growth." The order rolled back several Obama initiativesincluding the Clean Power Plan, regulations on methane leaks from natural gas wells and others. A previous order reversed fuel efficiency standards for automobiles put in place by the Obama team. The Trump team also canceled $2 billion in payments to the Green Climate Fund, which was set up to aid the poorest countries in combating climate change. Taken together these decisions all but assure that the United States would fall hugely short of its Paris targets. The aspirational global goal of 1.5 degrees Celsius is now almost certainly a chimera - and reaching the goal of 2 degrees Celsius will take very hard work.

Thus, Trump did not need to pull out of Paris from the standpoint of his climate goals. His earlier policy shifts had already reversed practically all Obama-era climate policies. Trump's Paris pullout, unless reversed quickly, is nevertheless hugely consequential for two reasons.

First, when the United States (cumulatively the largest and currently the second-largest carbon emitter) backtracks from climate action, other countries must raise their ambitions quickly to keep the planet on track. It's in the early days yet, but it appears that many countries are not even on track to meet their original Paris targets. Canada's emissions are actually increasing due to enhanced oil extraction from tar sands. Australia’s coal-dominated electricity sector is not seeing the sorts of investments needed to meet its targets. Germany is a global leader in renewable energy, but the replacement of nuclear plants with those fueled by lignite and rising emissions in its transport sector means that it, too, is struggling in achieving emissions reductions. Other major European economies such as Poland and Italy are also falling short. And the European Union is quietly pushing for much greater liquefied natural gas imports from the United States to replace piped natural gas from Russia - strategically sensible but adding to net emissions. Ironically, it is China and India that are currently on track to meet or exceed their Paris goals.

One could imagine that the exit of the United States will result in a more coherent climate club led by the European Union and China that would be able to move faster on mitigation. This is highly unlikely.

One could imagine that the exit of the United States will result in a more coherent climate club led by the European Union and China that would be able to move faster on mitigation. This is highly unlikely. U.S. leadership matters on climate, as on everything else. An excellent example of this was how the Obama administration dealt with China and India, long reluctant to make any climate commitments. The United States first cut a bilateral deal with China on coal consumption and an emissions peaking date. It then used this agreement as a lever to cajole India, highly sensitive toward a U.S.-China convergence in Asia, to dramatically shift its stance and agree to mostly erase the differentiation between developed and developing countries that had bedeviled previous negotiations and had led to the collapse of talks at the Copenhagen climate summit in 2009. This, in turn, opened the door for remaining developing states to follow suit. In other words, rather than being an exemplar of India and China taking advantage of the United States, Paris was a case of Washington persuading them to substantially align with its own preferences.

The reverse is equally true. When the United States is absent, there is as yet no comparable systemic actor who can set global goals and deploy as wide an array of tools to achieve them. China has indeed emerged as an environmental actor, with major additions in wind and solar and a robust domestic investment plan for more. It would have to act as the “great persuader" for key emitter states to raise their ambitions in the indefinite absence of the United States, but Beijing does not have the reach, leverage and relationships to do so. It could spur new global investments in clean energy, but several states would be resistant to market domination by Chinese firms.

The brave responses from world leaders notwithstanding, there is a real risk that several countries less than enthusiastic about Paris such as some Gulf oil producers, Russia, Australia and Poland will backslide on their commitments. The pace of ratification of the accord is likely to slow - 48 countries have not yet done so. Proposed carbon-trading regimes in key states such as China and Japan may also be delayed, as domestic businesses fear a trade disadvantage vis-a-vis a United States outside any carbon commitments. Low-cost multilateral climate finance will be dealt a setback. This could affect countries such as India, in which the high cost of finance is one of the biggest barriers to scaling up clean energy.

Second, the U.S. withdrawal has damaged the cause of global governance. Paris was much more than an environmental agreement. Paris was a historic deal between developed and developing countries that broke the Kyoto and Copenhagen logjams. The pact was a rare example of successful global governance in a time of much institutional paralysis in global fora in trade, investment, security, human rights, water and other collective action challenges. It acted as one of the few axes of strong U.S.-China cooperation, tempering the fraught rivalry and enhancing the stability of the international system. It had the promise of opening up new avenues in trade and innovation in clean technologies. And it could - just maybe - even have served as a template for future international compacts in other contentious issue areas. With the United States leaving, all of this is now in question.

"Paris and Beyond: A Climate Change Accord Without the U.S." is republished with permission of Stratfor.

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