Thursday 02/04/2020

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Trump weakens the fight against global warming

Responsible Investment Strategist

The announcement was made while the 22nd UN Summit on Climate Change (COP 22) in Marrakech was in full swing: Donald Trump won the race for the White House. The fears of the impact of Brexit on the ratification of the Paris agreement might have been quickly dispelled, but this victory is another threat to the success of the agreement now in force.

The United States account for 16.4% of global emissions and have a major role to play in climate change and air quality. Moreover, as in any international negotiations, the United States is a major player in the negotiations on climate policies.

The outcome of the US elections is therefore important for the implementation of the Paris Agreement.

The Paris Agreement entered into force on November 4, following ratification by at least 55 parties representing 55% of global emissions. The COP 22 conference held in Morocco until November 18 is primarily to define the implementation of the Paris agreement. It is indeed time to define the measurement framework and implementation of the different climate plans of each party involved before 2020, which are difficult to compare to the current state of affairs. The ratification by a country means that the national contributions that were determined to be "intentional", become the actual objective.

The structure of American power, with Congress and the House of Representatives, leaves some room to positive and negative forces and assures somewhat that Donald Trump is not the only one on board.

If he said the United States would get out of the Paris Agreement, the implementation would not be obvious. Indeed, in order to get out of the ratification of the agreement, the country must introduce a notice period of 3 years, which will be effective the following year – a total of four years. In other words: if Trump introduced his notice on the first day of his presidency (20 January 2017), the United States would remain bound to the agreement until January 2021, namely during the abatement period (2020-2030) and after the next presidential elections. The risk is therefor limited. However, technically Trump could decide to have the United States leave the United Nations Framework Convention on Climate Change (UNFCCC) where the notice period is only one year, which would allow him to break free from all UNFCCC-related obligations including the Paris agreement. It goes without saying that such a move would be strongly criticized by international diplomacy.

Beyond the withdrawal of the Paris Agreement, Donald Trump defends a deregulated energy market, affordable energy for consumers and US industries, and energy independence for the United States. His support for fossil fuels is explicit, so renewable energy, unless it is economically competitive, will be negatively impacted.

Trump aims to increase coal production, to review the operation of the oil pipeline Keystone XL and the exploitation of oil and gas in Alaska and the Gulf of Mexico.

It would of course be an unfortunate and substantial step back after substantial progress by Obama on this matter. Indeed, while the United States used to be a laggard on climate change, both Obama mandates have enabled the adoption of several major environmental plans such as the Clean Power Plan, the Climate Action Plan, Clean Water Rule or bilateral climate deal with China that allowed for the success of COP 21.

The appointment of the 9th vacant seat at the Supreme Court could be key to Donald Trump’s plans. The Supreme Court indeed has the power to block legislation passed by Congress if its’s deemed unconstitutional. The candidate proposed by Obama has not been retained because it was too close to the elections. We’ll have to wait and see if Trump manages to place one of his protégées.

And lastly, the implementation of the Paris agreement requires substantial funding. Trump's announcement to stop US financial support for United Nations programs is therefore also an important risk. In 2014 the US spent 11.6 billion dollars on R & D for the climate. Under the American Recovery and Reinvestment Act of 2009 they spent 26.1 billion dollars on climate programs. They also made an initial deposit of 500 million dollars for the Green Climate Fund to which they have pledged 3 billion. If the figures may seem weak against the country's GDP, they are important given the scale of needs.

The rapid ratification of the Paris Agreement proves the seriousness of the awareness of the climate problem. Eighty-two parties that ratified the agreement are currently discussing its implementation modalities. Trump’s victory undeniably weakens the fight against global warming. Let’s hope that his announcements remain hot air.