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America sidelined, the climate caravan moves on

The Trump administration’s backward-looking and isolationist stance is the opposite of what's needed by the industries of the future.

Supporters of US President Donald Trump and his policies at a 'Pittsburgh Not Paris' rally on Saturday. (Photo: Saul Loeb/Getty Images)
Supporters of US President Donald Trump and his policies at a 'Pittsburgh Not Paris' rally on Saturday. (Photo: Saul Loeb/Getty Images)

It's been only a few days since US President Donald Trump announced the US will withdraw from the Paris climate agreement. And it is already clear the greatest damage has been done not to global climate action, but to America’s influence and standing in the world - and its own economic trajectory.

The US has dealt itself out of the game leaving others - China, Europe and emerging powers including India and Brazil - to take charge of a crucial global policy agenda. It was already clear the US would step back from climate policy, but the in-your-face gesture of withdrawing from Paris, and the inflammatory manner in which it was announced, seems to have galvanised others. Since Trump announced his decision on Thursday, European and Chinese leaders have been quick to reassert their commitment to climate action.

A domino effect, in the shape of other countries pulling out, is clearly not on the cards. And working out the details of the agreement and moving towards implementation might well be easier without a hostile US administration inside the tent bent on obstruction. As my ANU colleague Luke Kemp put it, in terms of the Paris process, it's better the US 'is out than in'.

It's clear the US will not fulfil its climate finance pledge to developing countries, and at a federal level will not work towards meeting the 2025 national emissions targets. But this was going to be so under Trump anyway, whether the US stayed in the Paris agreement or not. Trump’s speech was replete with misrepresentations and a rhetoric aimed squarely at his political base. This decision was all about domestic politics; Trump's made good on a promise to the base, and pleased the coal industry. His assertion it was an unfair deal for America will fall on deaf ears elsewhere, especially as national targets were determined by each country and not negotiated among nations. The economic arguments in Trump’s speech do not add up and the numbers he quoted are spurious. 

Trump's suggestion the US could 're-negotiate' the Paris Agreement is fanciful. Perhaps it was not meant seriously. Perhaps the US will propose specific amendments to the agreement, which would be unlikely to pass but could clog up the negotiations on implementation of the agreement.  

Or perhaps the Trump administration plans to rescind the US national pledge including its emissions target – the Nationally Determined Contribution (NDC) – and replace it with a weaker pledge. This would be possible without adjustments to the Paris agreement so no re-negotiation would be needed. This might allow Trump to claim to a domestic audience that he 'got a better deal'. There would be plenty of time to change the national pledge and take back the withdrawal notice, which would take four years to take effect.

In any case, it is clear that Trump’s policies on climate change and energy are harming the long-term prospects of his nation's economy. The US will be slower to adopt clean, modern energy technologies and industrial systems, and will pour more money into old, last-century features. At the same time, many US states and cities will continue with progressive climate change policies. This will widen the gulf between the old and new parts of the US economy. It will also create pressure for change from industries that would benefit from the transition, and from many US states.

There are very good reasons why large numbers of major American businesses lobbied for the US to remain in the Paris agreement. Future prosperity does not lie in coal mining jobs as Trump implied in his speech, but in high tech and services. Elon Musk's decision to step down from roles on presidential advisory councils is emblematic of the view from emerging and fast-growing industries: what they need is openness to new ideas and a preparedness to change practices when technologies change. The Trump administration’s backward-looking and isolationist stance is the opposite of what industries of the future need.

And it is not just the Californian new economy businesses that see the need for change. Most business leaders, including in mainstream industries, understand the need for decarbonisation of the world economy. But the fossil fuel lobby remains powerful, climate change has become an ideological issue for much of the Republican party, and Trump’s loving comments about coal mining show where the influence lies. The rhetoric is about jobs; the real focus is profits in incumbent industries. 

Yet it is rare that governments sustain policy that is fundamentally against the interests of large sections of business, and against overwhelming technological change. So it seems quite possible that once the populist trumpeting of the Paris withdrawal has run its course, the US will moderate its stance.

Climate change is likely to play a role in the next Presidential election, and a new President may well re-engage with the international climate policy process. A future President could re-join the Paris agreement at the stroke of a pen, using executive powers. This then will raise new questions about cyclical policy: how are investors to deal with a situation where every change in governing party means a fundamental change in climate policy?

The US has taken a backwards step and relinquished another piece of global influence to China, Europe and the emerging powers. But climate change is a long game. The chances are that in the future the US will re-join the caravan - and look back on the Trump years as time lost.

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