Donald Trump's plan to leave Paris climate deal could hand competitors advantage in clean energy race

Experts warn US withdrawal could slow progress, boosting rivals in the global push for sustainability

US President Donald Trump holds a letter to the UN confirming the US withdrawal from the Paris Agreement during the inaugural parade. AFP

Donald Trump’s decision to withdraw the US from the 2015 Paris Agreement to reduce emissions and combat climate change sends the wrong signal to the world and could hand its competitors an upper hand in the clean energy race, experts have said.

It was an anticipated step by Mr Trump that comes despite heat records being shattered and scientists warning of more extreme weather events.

Market watchers have said that progress to tackle climate change will continue – although at a slower pace in the US.

Speaking to The National, Thomas Hohne-Sparborth, head of Sustainability Research, Lombard Odier Investment Managers, said that during Mr Trump's last administration, the energy transition continued despite a withdrawal from the Paris Agreement. “The cost of solar continued to fall, we had the quintupling of the number of electric vehicles on the road in the US,” Mr Hohne-Sparborth said.

The move, according to Karim Elgendy, climate expert and associate fellow at British think tank, Chatham House, “marks a dramatic reversal in US climate policy and an abdication of its global responsibility”.

“While the US currently accounts for 13 per cent of annual emissions, its historical emissions represent a quarter of accumulated atmospheric carbon from human activity to date. This weakens the United States' global standing and sends the wrong signals for some policymakers in developing countries that remained on the fence regarding climate commitments.”

Steven Okun, a member of former president Bill Clinton's administration and now chief executive of APAC Advisors, said the climate crisis would worsen regardless of Mr Trump’s decision “with devastating consequences for the environment, human rights and global stability”.

“The world will witness more frequent and severe extreme weather events, rising sea levels, economic disruption and melting of polar ice caps and glaciers,” Mr Okun told The National. “The US not being a party to the Paris Agreement will make this more challenging.”

Daniel Murray, deputy chief information officer and global head of research at Swiss private bank EFG International, told The National it was a “major setback for the climate change community”.

“It could encourage other countries to follow suit and will make it much more difficult for the targeted temperature change limits to be met, not least because the US ranks second behind only China in the world ranking of greenhouse gas emissions by country.”

It also potentially creates additional costs for businesses that might have to follow different rules and regulations dependent in which part of the world they are located.

Second time around

It is the second time Mr Trump has withdrawn America from the deal – to limit global temperature increases to 1.5ºC on pre-industrial levels – first in 2017 before Mr Biden rejoined.

“Every fraction of a degree matters,” Moustafa Bayoumi, climate change research fellow at the Anwar Gargash Diplomatic Academy in Abu Dhabi, told The National. “The world is not on track to keep the 1.5ºC target so this could make it even harder.”

Mr Bayoumi said it could slow US emissions cuts and lead to reduced funding for entities that tackle environmental issues. He said countries in the Middle East and other regions could be hit by climate finance cuts, while China and EU could play a bigger role globally. “The energy transition will happen but the pace could be affected,” he said. “It is quite worrying.”

However, coalitions of US states, cities and businesses that formed when Mr Trump pulled the US out the first time are making fresh commitments to shore up efforts to tackle climate change. “They still exist, are active and reiterating they will uphold targets,” Mr Bayoumi said. “For them nothing has changed.”

World has moved on

Analysis by the UK-based climate specialist website, Carbon Brief, has found that Mr Trump's second term could add four billion tonnes to US emissions by 2030 – equivalent to the combined annual emissions of the EU and Japan.

However, experts also said that the world is in a different place to 2017 when Mr Trump began his first term. Since then, countries have increased the clean energy transition with the International Energy Agency now forecasting the global market for such technologies to triple to more than $2 trillion by 2035. This is driven not so much through altruistic reasons but a desire for energy security and to develop future industries.

Mr Elgendy said the transition appears to have passed an “irreversible tipping point” that is being driven by increasing investments and declining costs in solar technology rather than policy commitments. “Solar photovoltaic costs have fallen by 15 per cent per cent annually between 2010 to 2020 and are set to become the cheapest source of electricity in 2027 in all but eight countries,” he said. “This technological and economic momentum exists independently of climate policies.”

Climate Analytics, a climate science and policy institute in Berlin, on Tuesday said Mr Trump’s decision could boost US competitors such as China and Europe in clean energy and technology. “Not only is US global leadership damaged but more significantly is its clean tech industry's competitive position in a growing global market, currently dominated by China,” said Mr Elgendy.

Will the US still attend climate talks?

The next annual climate gathering, Cop30, takes place in Brazil, but the US is still expected to take part in what is seen as a crucial meeting to stave off the worst effects of climate change. “What happens in those rooms does affect them,” said Mr Bayoumi. “They will not have the same obligations but they will definitely participate in the negotiations.”

Experts previously warned of much graver consequences should the US withdraw from the UN Framework Convention on Climate Change. Still, Mr Okun said governments and citizens across the world will “continue demanding climate action and sustainability” from businesses and investors. However, he cautioned that there could be more of a focus on climate adaptation and “less so on climate mitigation”. Adaptation refers to ways to deal with climate change such as building sea walls or using water more efficiently while mitigation refers to emissions cuts.

“Expect to see greater investment and focus on the former. The planet will only getting more dangerous as a result.”

'The door remains open'

Still, about half of Americans “somewhat” or “strongly” oppose US action to withdraw from the climate accord, according to a poll from the Associated Press-NORC Centre for Public Affairs Research. And even Mr Trump's Republicans are not overwhelmingly in favour. The move also comes after deadly fires in Los Angeles devastated large part parts of the city that scientists suggested climate change exacerbated.

Mr Murray predicted an increase in climate-related events, with a knock-on impact on the global insurance industry. “The recent Californian fires put this in sharp focus,” he said. Simon Stiell, the UN's climate chief on Tuesday, meanwhile, said embracing the global clean energy boom will mean “massive profits, millions of manufacturing jobs and clean air”.

“Ignoring it only sends all that vast wealth to competitor economies, while climate disasters like droughts, wildfires and superstorms keep getting worse, destroying property and businesses, hitting nationwide food production, and driving economywide price inflation,” said Mr Stiell in remarks carried by Reuters. “The door remains open to the Paris Agreement and we welcome constructive engagement from any and all countries.”

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