Legal Updates

Paris Agreement Exit: Who Holds the Real Power?

President Trump announced on June 1 that the United States is withdrawing from the Paris Agreement. The announcement follows months of uncertainty about whether President Trump would fulfill his campaign pledge to withdraw U.S. participation in the deal (which was signed by 195 countries with only two countries in opposition–Nicaragua (because it wasn’t stringent enough) and Syria).

According to the President, the decision is necessary to protect the U.S. economy from burdensome emissions restrictions and foreign interference in U.S. energy policy:

In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord . . .[s]o we’re getting out, but we will start to negotiate, and we will see whether we can make a deal that’s fair.

The obvious beneficiaries of the decision to walk away from the international climate agreement are oil, coal, and natural gas producers. Yet, even the energy industry is not unified in celebration. For example, two of the biggest oil producers, ExxonMobil and ConocoPhillips, voiced support for the Agreement. Similarly, many coal companies, including Cloud Peak Energy Inc., argued that sticking with the Agreement would give the U.S. influence over the future of fossil fuels in a carbon-constrained world. The rationale behind energy industry support of the Paris Agreement is that ongoing market forces and individual government policies addressing GHG emissions play a larger, more influential, role in driving the energy mix/demand. Quitting may be a short-term boon for fossil fuels, but it will not necessarily force the markets to change the direction in which they have been headed. Competitive advantage is also a concern for some companies. On the other side of the energy industry response, the head of the Western Energy Alliance, Kathleen Sgamma, wrote,

At a time like this, I like to remember how much more effective we as an industry have been in providing a real solution to climate change than any international treaty such as Paris or Kyoto; government policy like a carbon tax or cap-and-trade; or renewable subsidy. Our industry is responsible for 62 percent of the emissions reductions in the electricity sector, compared to just 38 percent for wind, solar and other non-carbon generation, according to the Energy Information Administration.

By contrast, tech companies appear to be united in their disappointment in the decision. Many of the strongest responses to Trump’s move came from big technology companies, which are leaders in reducing their carbon footprints. Technology companies also generally opposed Trump’s candidacy for president. Apple, Amazon, Google, Facebook, and Microsoft were among those who pledged to double their efforts to address climate change.

Predictably, environmental groups heavily criticized the decision to withdraw. Groups including Sierra Club and Natural Resources Defense Council expressed concern on the resulting climate impacts with dismay. These groups have aggressively fought Trump’s energy and environmental decisions thus far. The Sierra Club and the Center for Biological Diversity have flooded the Justice Department with 16 lawsuits each. Meanwhile, Earthjustice has filed at least nine lawsuits. However, because the agreement is an international treaty, environmentalists will have limited ability to bring a lawsuit to halt or reverse Trump’s decision.

State governments also chimed in. New York’s governor Andrew Cuomo unveiled a plan to invest $1.65 billion in renewable energy and energy efficiency. In Colorado, Gov. John Hickenlooper called President Trump’s decision to withdraw the U.S. from the Paris climate agreement a “serious mistake,” pledging to continue Colorado’s efforts to improve air quality and use renewable energy. In total about 30 states have adopted mandates for utilities to increase their use of renewable energy, standards that will not change with Trump’s withdrawal from the Paris Agreement or his effort to nullify the Clean Power Plan. Yet, some state and federal representatives voiced support and praise of the exit.

Most significantly, this reversal of U.S. policy has caused friction in international diplomatic circles, where the risks of climate change are considered an internationally important thread running through trade, development, and economic policy. Back in the United States, many worry that the Trump administration’s decision to exit the landmark climate agreement will not only damage the United States’ international standing on climate issues but also make it nearly impossible for the world to reach internationally agreed goals of limiting global warming. Although the actual effects on the climate from the Agreement were minimal (0.2 degrees Celsius), the symbolic effect of the U.S. withdrawing from this high-profile agreement is having an impact in the international community.

Overall, the ultimate impacts of the United States’ decision to rescind its participation in the Paris Agreement are yet to be determined. Here is what we know now:

  • Biggest winner:  fossil fuels.  Pulling out of this accord could further investment in developing fossil fuels along with an upward bump to the oil and gas markets.
  • Biggest loser:  renewable energy.  The Paris Ageement is designed to accelerate a transition away from fuels that emit greenhouse-causing gases and toward wind, solar and electric vehicles. Walking away retracts governmental support for this transition at the international level and signals further changes to U.S. energy policy may follow.
  • Undeterred:  state policies, the market, and corporations will continue to drive demand for renewable power.  Likewise, for cost reasons some utilities are forsaking new coal-burning power plants in favor of wind, solar, and cleaner-burning natural gas plants.  For example, Xcel recently announced that it is moving to a 35% wind-powered fleet by 2021.
  • Taking a stand:  Elon Musk, chief executive of Tesla, and Robert Iger, chief executive of Disney, both resigned from the president’s advisory council after the announcement.
  • Renegotiation:  may or may not occur but would most certainly include congressional debate and approval.
  • Withdraw timetable:  Removing the United States from the agreement will likely not be as “immediate” as President Trump promised.  The withdrawal date is four years from when the agreement took place.  This means that the withdrawal date falls one day after the presidential election, on November 4, 2020.