Trump and the Paris Agreement

Written by Author on . Posted in Current opinions, Opinions

Xavier Labandeira is Director of FSR Climate, part-time professor at the EUI and Professor of Economics at the University of Vigo. He was a lead author of the UN Intergovernmental Panel on Climate Change for the elaboration of its Fifth Assessment Report (released in April 2014). He also director of Economics for Energy, a private research centre specialising in the economic analysis of energy issues and aimed to create and disseminate rigorous, neutral and useful knowledge in the field. Labandeira’s research lies at the intersection of Public, Energy and Environmental Economics.

Xavier Labandeira, Director of FSR Climate

On June 1st, Trump announced the US would pull out of the Paris Agreement (PA). This was not a big surprise: his negative views on the fight against climate change and on the PA, its main international instrument, were well known. Indeed, shortly after his inauguration, he started to dismantle the modest climate and energy policies that the Obama administration had recently developed to facilitate compliance with US targets within the PA.

The announcement, unlike many other cases, involves the actual implementation of Trump’s campaign promises. Ideas, by the way, which are not too solid when confronted with objective facts and/or scientific evidence. For example, he claimed in his statement that the PA treats the US badly in relative terms, yet he seems forgetful of the fact that his country has one of the highest per capita GHG emissions in the world; it is responsible for a large share of historical emissions and thus of current and future damages; and that he leads the biggest and one of the most successful economies of the world. His point on the ineffectiveness of the PA in reducing temperature increase is incongruent with the act of dismantling of Obama’s policies, as this will certainly contribute to an increase in GHG concentrations and temperature. Finally, his suggestion to ‘renegotiate’ a new agreement does not consider the immense difficulties in achieving the PA and the fact that it is a very flexible instrument that allows changes in national contributions or implemented policies without the need of ‘renegotiations’.

Some commentators have indicated that the damage that Trump can inflict to climate change mitigation is limited: US GHG emissions will become less and less relevant than those from emerging and developing economies; US states and cities are promising new and more intense policies given the increasing support for climate action by US population; technological advances are likely to contribute to the solution of the problem even with passive public policies, particularly in a country with such a proactive business sector; and dismantling Obama’s federal policies in this area may not be so easy in face of legal opposition and lobbying. However, as stated in a recent opinion piece, my view is not so optimistic. The collateral effects of Trump’s decision may be negative on PA signatories, as many may fear competitiveness losses with the US given its global ‘free-riding’ behaviour. Let us recall that this is not a minor issue: it has been monopolising the debates on EU climate policies for almost a decade. Perhaps even more importantly, putting a halt to the US contribution to the green funds agreed in Paris may compromise mitigation and adaptation efforts in many countries and exacerbate international equity problems associated with GHG emissions and damages. Finally, it is evident that a US pull-out of the PA will make it even more difficult to attain its 2ºC goal, even less its 1.5ºC aspirational objective.

FSR Climate has been analysing and reflecting on EU climate policies for almost ten years now, and our insights may offer some guidance for international climate policies within a Trumpian context. First, existing evidence indicates that competitiveness effects are not significant with moderate climate policies. Second, socio-economic concerns regarding climate policies may be tackled through the use of carbon prices, such as the EU ETS or taxes on GHG emissions, because they guarantee cost-effectiveness (emissions reductions at a minimum cost), promote a framework prone to new investments and innovation in the area, and provide resources to compensate losers. In late September, within our LIFE SIDE project, we will organise a workshop on how to increase international cooperation in emissions trading, with the presence of leading decision-makers from the EU, China and … some US states.

Tags: , , , ,