Paris Climate Accord

What happens after Trump has walked out?

In a move that was not exactly surprising, Donald Trump announced the unilateral withdrawal from the Paris Climate Accord. Trump’s contention was that the Climate Deal was heavily loaded in favor of countries like China and India and was contrary to the interests of the US. The big question now is what happens to the climate deal?

Remember, it is a voluntary deal…

First and foremost, it needs to be remembered that the Paris Accord on Climate Change was always a voluntary decision by countries by carbon emitting nations to reduce their carbon emissions by 2030 to a percentage of the 2005 levels. Each signatory to the accord was required to voluntarily comply in terms of emission reduction, carbon footprint and investment in clean energy. Therefore, the decision by Trump is actually quite surprising.

What happens to clean energy?

If you go by the initial reaction of alternate energy stocks, the reaction was negative. It is feared that Trump’s focus on fossil fuels may negatively impact the thrust on alternate energy. Nothing of that kind will happen. China and India, the two major emitters of carbon gases, have both agreed that the move towards clean energy is inexorable. In fact Modi has also affirmed in Germany, his commitment to the Paris Accord and to clean energy!
A Double-whammy for the US?

If India, China, the EU and Russia decide to go ahead with the Climate deal, then it is likely to go through even if the US is not a party to it. But the US could miss out on the big clean energy opportunity in terms of manufacturing and execution. That is where the US and Germany were building leadership positions. Secondly, rejecting the Paris Accord may be akin to the Suez Canal Blockade for UK. After the blockade in the late 1950s, the scales of power clearly shifted in favor of the US and the UK ceased to be a superpower. It is expected that with the climate accord, the US could clearly cede global leadership to China. That, of course, only time will be able to tell!

First, ask the American states…

Donald Trump may be in for a big embarrassment as states like California, New York and Washington are planning to go ahead with the Climate Accord implementation in their states. California is already the world’s 6th largest economy and its aspirations cannot be legitimately ignored. Most of these states have invested considerable resources in moving towards clean energy and may consider Trump’s move back towards fossil fuels as a retrograde step. The next few days will be crucial but it does look like that Donald Trump may have bitten more than he can chew; at least this time around!