For the second time in his political career, US President Donald Trump has initiated the process of withdrawing the United States from the Paris Agreement, a landmark global accord designed to combat climate change. Announced during his inauguration, this decision has reignited global debates over America’s role in climate action and the future of global environmental policies.

What is the Paris Climate Agreement?

The Paris Agreement, adopted in 2015, is a legally binding international treaty on climate change signed by 196 countries. Its primary goal is to limit global warming to below 2 degrees Celsius (3.6 degrees Fahrenheit), with efforts to cap it at 1.5 degrees Celsius compared to pre-industrial levels. To achieve this, nations commit to reducing greenhouse gas emissions, transitioning to renewable energy sources, and providing financial support to developing countries for sustainable energy development.

The United States, being one of the world’s largest emitters of greenhouse gases, plays a critical role in meeting these targets. Its participation not only strengthens global efforts but also sets a benchmark for other countries.

Trump’s Justification for Withdrawal

President Trump’s rationale for withdrawing from the Paris Agreement centers around economic priorities and energy independence. During his inauguration speech, he declared, “America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have—the largest amount of oil and gas of any country on Earth. We will drill, baby, drill.”

Trump has repeatedly argued that the agreement imposes undue financial burdens on the United States, particularly through its commitment to contribute billions to the $100 billion annual climate fund designed to assist developing nations in their energy transitions. He also opposes carbon taxes and penalties, which he views as detrimental to domestic industries.

Economic and Geopolitical Implications

Domestic Energy Policy

Trump’s administration has historically prioritized fossil fuel production, viewing it as a cornerstone of energy security and economic growth. This strategy includes removing regulatory barriers, expanding oil and gas exploration, and investing in infrastructure projects such as pipelines.

However, critics argue that this approach overlooks the long-term economic and environmental benefits of renewable energy. Investments in wind, solar, and battery storage technologies are not only reducing energy costs but also creating jobs in emerging sectors.

International Relations and Trade

By withdrawing from the Paris Agreement, the United States risks straining its relationships with allies committed to climate action. The European Union, for instance, has expressed disappointment in Trump’s decision. EU Climate Commissioner Wopke Hoekstra called it “a truly unfortunate development,” emphasizing the need for collective global efforts.

Additionally, the EU’s proposed Carbon Border Adjustment Mechanism (CBAM) could impose taxes on imports from countries without stringent carbon regulations. This policy aims to level the playing field for European industries adhering to stricter emission standards. If enforced, US exports could face significant tariffs, potentially escalating trade tensions.

Impact on Global Climate Goals

The Role of the US in Global Emissions

The United States is the world’s second-largest emitter of greenhouse gases, accounting for approximately 16% of global emissions in 2023. China leads with over 30%, followed by the European Union and India at 9% each.

Given its significant contribution to global emissions, the US’s withdrawal undermines the collective ambition of the Paris Agreement. Without its participation, achieving the 1.5-degree Celsius target becomes increasingly challenging.

Momentum in Renewable Energy

Despite Trump’s stance, renewable energy growth in the US remains strong. Under the Biden administration, the Inflation Reduction Act (IRA) catalyzed investments in clean energy, with $270 billion allocated for tax credits and incentives. As of 2024, these initiatives had already spurred $215 billion in private sector investments.

The Energy Information Administration (EIA) projects that solar and wind energy will dominate new electricity generation in the US by 2026, reflecting a broader global shift toward renewables.

Challenges to Trump’s Energy Policies

State-Level Autonomy

Many US states have implemented their own renewable energy mandates and climate goals. California, for example, aims to achieve 100% clean electricity by 2045, while New York targets a 70% renewable energy share by 2030. These state-level initiatives could counteract federal policies promoting fossil fuels.

Market Forces and Public Opinion

Renewable energy has become the cheapest source of electricity in many parts of the world, including the US. This economic advantage, coupled with growing public support for climate action, poses challenges to Trump’s efforts to revive coal and expand oil production.

Global Reactions and Strategic Implications

China’s Position

China, the world’s largest emitter, expressed concern over the US withdrawal. In a statement, its Foreign Ministry emphasized the importance of collective action, noting that “climate change is a common challenge facing all of humanity. No country can stay out of it.”

China has positioned itself as a leader in renewable energy, investing heavily in solar, wind, and electric vehicle technologies. The US’s absence from the Paris Agreement could allow China to further dominate the clean energy sector.

Russia’s Role

The US’s focus on expanding liquefied natural gas (LNG) exports aligns with its strategy to displace Russia as Europe’s primary energy supplier. By reducing Europe’s dependence on Russian gas, the US aims to weaken Russia’s economic leverage and bolster its geopolitical influence.

The Bigger Picture: Energy Transition and Climate Resilience

While Trump’s withdrawal from the Paris Agreement represents a step backward for US climate policy, it is unlikely to derail the global energy transition entirely. The International Energy Agency (IEA) predicts that renewables will account for two-thirds of electricity generation in developed economies by 2030.

However, challenges remain. As renewable energy adoption increases, so does the need for advanced storage solutions and grid infrastructure to manage intermittent power supply. These technological hurdles must be addressed to ensure a smooth transition to a low-carbon future.

Conclusion: A Divided Path Forward

President Trump’s decision to withdraw the US from the Paris Agreement reflects a broader debate over economic priorities and environmental responsibilities. While his administration focuses on fossil fuels and energy independence, market trends and state-level policies continue to drive renewable energy growth.

The global response to Trump’s policies underscores the interconnectedness of climate action. As nations grapple with the dual challenges of economic development and environmental sustainability, the need for collective solutions becomes ever more apparent.

The coming years will determine whether the US’s departure from the Paris Agreement is a temporary setback or a turning point in the fight against climate change. For now, the world watches as the balance between political will and market forces shapes the future of energy and climate policy.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

22^nd January, 2025