IMD Professor Reacts
Ref: PR017-17


What Mr. Trump didn’t say about leaving the Paris Agreement

Francisco Szekely on the latest US climate move

Francisco Szekely

By Adjunct Professor Francisco SzekelyFrancisco Szekely

The US President announced on June 1st that his country will leave the Paris Accord and leave behind an international effort of diplomacy that took 20 years to develop, and which 195 countries have signed. The US will not be alone. It will join a similar decision by two other countries: Syria – which was subject to European sanctions, and Nicaragua – which felt that the agreement was too soft.

In preparation for the Paris agreement the US and China set expectations for a global agreement of truly international cooperation. The decision of the US government to leave the agreement now creates a serious vacuum in global leadership. Will China be the only country to lead the world to face the challenges of climate change? Or will new leadership emerge from elsewhere?

The rationale for the US decision focused on the apparent potential negative implications that the agreement would bring to the US economy and to the American taxpayer. The rhetoric included calling the Agreement a “draconian international deal” and stating that it would cost the United States 2.7 million jobs by 2025. These arguments and numbers have been disputed by many analysts.

But what Mr Trump didn’t discuss were all the benefits that the Paris Agreement would bring to the world and particularly to the US economy.

1]      The Paris Agreement will lessen a global threat and diminish the frequency and intensity of flooding and unusual weather events specifically on low land coastal zones and islands – including the US.

2]      The Paris Agreement creates jobs: In the US alone there are more than 2.5 million Americans working in the clean energy sector in all 50 states. This includes 1.9 million jobs in energy efficiency and nearly 414,000 people in renewable energy generation, (about 300,000 in solar energy and 77,000 in wind energy).

3]      The agreement promotes business innovation. Tesla – a 14 year old company born from a sustainable approach – became in May 2017, larger than General Motors – a 106 year old company and the largest automaker in the USA.

4]      The agreement will promote trade. The 194 countries that are committed to the Paris Agreement need efficient renewable energy technologies. Only a few countries can provide these. The US is certainly one of them. This trade opportunity is directly derived from the existence of the Paris Agreement.

5]      The business sector wants the Paris Agreement. China has decided to spend 360 billion dollars on renewable energy and build over four million electric vehicles. US oil companies such as ExxonMobil and ConocoPhillips recently reiterated their support for the global agreement to cut greenhouse gas pollution. They prefer that the US participates and influences global efforts to curb emissions that are largely produced by the fossil fuels they profit from.

Mr. Trump also did not say that his decision won’t come into effect until November 2020. Article 28 of the Paris Agreement states that:

  1. At any time after three years from the date on which this Agreement has entered into force for a Party that Party may withdraw from this Agreement by giving written notification to the Depositary.
  2. Any such withdrawal shall take effect upon expiry of one year from the date of receipt by the Depositary of the notification of withdrawal, or on such later date as may be specified in the notification of withdrawal.
  3. Any Party that withdraws from the Convention shall be considered as also having withdrawn from this Agreement.

What this means is that even while Mr. Trump has decided to leave the Paris Agreement, the US is still obliged to fulfil its voluntary national commitments until the time that it can give a written notification to the United Nations Climate Change Secretariat – the depository of the agreement. That will happen only on November 2019, and that decision will come into force only one year later which is November 2020, the year in which Americans will be voting for a new president.

The US decision requires new leadership to address a global issue that concerns us all. And the leadership is emerging. 20 American cities such as Boston, Pittsburgh and others have decided to keep their commitments to the Paris Agreement. Many US states have pledged to continue and a number of American companies and universities have decided to become carbon neutral. There is hope.  With or without US leadership, the world community needs to address the climate change challenge.

Francisco Szekely is Adjunct Professor of Leadership and Sustainability at IMD

Francisco Szekely on the latest US climate move

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