Trump Vows to Exit Paris Agreement as Business Pushes Back

The Paris climate agreement, the landmark accord between 195 countries to reduce carbon emissions in an effort to combat climate change, faces fresh challenges this week. The Trump administration is widely expected to announce its intention to withdraw from the agreement in the coming days, according to CNN, following an early-morning tweet from President Donald Trump on Wednesday, May 31.

I will be announcing my decision on the Paris Accord over the next few days. MAKE AMERICA GREAT AGAIN!

— Donald J. Trump (@realDonaldTrump) May 31, 2017

The agreement, signed in December 2015, marked the first time the countries of the world officially agreed to aim to keep global warming well below 2 degrees Celsius — the point at which climate scientists have argued that warming could become catastrophic. While the agreement requires countries to monitor and report on their progress in reducing emissions, many of its provisions are non-binding — countries can decide for themselves how to lower emissions and set their own targets — and others lack teeth. Signatories, for example, are required to peak their carbon emissions “as soon as possible.” In many ways, the accord is more a statement of principles than a binding contract.

Just the same, the agreement is still important according to Geoffrey Heal, a professor at Columbia Business School, a director of the Union of Concerned Scientists, and a founder and director and chairman of the Board of the Coalition for Rainforest Nations. “This is the first time that every country, or virtually every country in the world, has committed to addressing climate change.” While the critics are right that the targets countries have adopted in the agreement won’t solve the problem by themselves, Heal explains, they make significant contributions to reducing the world’s emission-levels.

Trump’s anticipated withdrawal has been opposed by more than a thousand businesses who have signed an open letter affirming their commitment to the accord, including not only likely suspects like SolarCity and Patagonia, but also major emitters like Chevron and ExxonMobil. In a personal letter to Trump sent this March, ExxonMobil CEO Darren Woods, who took over for Rex Tillerson following Tillerson’s departure to head the State Department, argued that the accord provides America with “a seat at the negotiating table to ensure a level playing field.” Woods had previously voiced his support for the agreement in his first blog post after taking over as CEO in February, writing “At ExxonMobil, we’re encouraged that the pledges made at last year’s Paris accord create an effective framework for all countries to address rising emissions; in fact, our company forecasts carbon reductions consistent with the results of the Paris accord commitments.”

ExxonMobil isn’t alone — the US is on track to meet its commitments to the Paris accord, and emissions in the US have fallen over the past five years, Heal explains. The Trump administration has framed the issue around jobs, promising to bring back the moribund coal industry. But the coal industry isn’t dying because of Paris, Heal explains, but because of shifts in the economics of the energy industry and the need for utilities to pursue the lowest-cost options when constructing new plants. “The cost of solar panels and wind turbines is dropping all the time,” Heal says, “and that’s what’s changing the game.”

And that change is global. In January of this year, China canceled plans to open 103 new coal-fired power plants, on top of another 30 plants on which construction was shelved last year. “Coal’s US electric power market share has dropped from about 54 percent to about 38 percent,” Heal continues, “and that’s been taken by gas, wind, and solar, and the biggest winner has probably been gas.” That may partially explain the eagerness of companies like Chevron and ExxonMobil to maintain a seat at the negotiating table: while the future of coal seems clear, regulations concerning oil and gas remain up in the air.

The biggest loser from pulling out of the agreement then is likely to be the US itself, as Heal explains. “Other countries will put policies in place that will dramatically affect US industries. General Motors, for example, is a major exporter of vehicles to China, and, should China decide to push heavily on electric cars, that could have an impact across the industry. Paris is the forum in which these policies are discussed and established. For business, it’s vital to stay in the conversation.”