President Trump’s decision to withdraw from the Paris Climate Agreement was widely criticized as abandoning the United States’ leadership role in climate change policy and the global transition to a clean energy economy.
But that begs some fundamental questions: What does it mean to have the climate leadership role? Did the United States ever have it? If it lost it, who will take over?
There are two types of leadership at play. One is moral. The other is economic.
Moral leaders set an example that cajoles or inspires others to follow. The United States got props for its part in making the Paris Agreement a reality. Whether the hero status was deserved is a matter of debate. After all, we are the largest polluter in history. We better lead the charge. Still, the historic agreement probably wouldn’t have happened without the leadership of the United States, in the form of President Obama.
Walking away from the agreement ignited a firestorm of dissent. Critics denounced Trump’s decision as a moral failure.
“The United States risks losing any mantle of leadership and moral authority on climate change,” said Kofi Annan, former Secretary-General of the United Nations, and Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change 2010–2016, writing in Time, June 3.
"... many may well claim that June 1, 2017, was the day that America's global leadership ended."—Simon Reich, Rutgers University—Newark
One of the more damning quotes came from Simon F. Reich, a political science professor at Rutgers University Newark. Writing in U.S. News on June 2, Reich said, “Historians decades from now will no doubt debate the issue of if and when America abdicated from its role as ‘the indispensable nation.’ But, looking back, many may well claim that June 1, 2017, was the day that America's global leadership ended.”
Economic leadership—in industrial-age technology
Economic leaders set the business standards for others to follow. They innovate, attract investment, and create jobs and wealth. Yet, over the long term, withdrawing from the Paris Climate Agreement will hurt American jobs, investment and, especially, international business prospects.
Why would an American president who purports to be a pro-business job creator want to kick American businesses in the shins? It may have something to do with making good on campaign promises, as many observers have surmised. It clearly was a victory for his nationalist and anti-multi-lateralist chief strategist, Stephen K. Bannon. And it helps the president’s friends in the fossil fuel industry.
In the short run, Trump’s fossil-first, climate-be-damned approach may slow the loss of jobs in the coal industry. The U.S. coal industry employs about 160,000 American workers. But coal jobs have been shrinking in the face of competition from natural gas and renewables.
American businesses employ 2.2 million workers in energy efficiency, 374,000 in solar and 102,000 in wind, according to the U.S. Department of Energy. Moreover, solar and wind jobs grew by 25 percent and 32 percent, respectively, in 2016. That’s a lot of jobs related to reducing carbon.
“Why would you try to help the coal industry while reducing investment in future energy such as solar, wind and storage? This is crazy,” Mike Phillips, CEO of Sense, a maker of a high-tech power-measurement device for smart homes, told USA Today.
Long-term, international business at jeopardy
The U.S. withdrawal from Paris may not rock the domestic cleantech business boat immediately. Shayle Kann, head of GTM Research, points to market and local political forces as two reasons why.
“Cleantech growth in the U.S. is unstoppable from an economic perspective, partly because you'll likely see continued support (of such companies) on a state level,” Kann told USA Today. “You'll see continued growth in this area because it'll be the cheapest energy available.”
But as the U.S departure reverberates, the ripple effect may sink international prospects for American cleantech business over the long haul.
“As a business mistake, the decision means the U.S. will miss out on some of the $1.4 trillion global business opportunity that the global low-carbon economy represents,” Mark Muro, a senior fellow and policy director, Metropolitan Policy Program at the Brookings Institute, said at the Brookings website.
“As a business mistake, the decision means the U.S. will miss out on some of the $1.4 trillion global business opportunity that the global low-carbon economy represents.”—Mark Muro, The Brookings Institute
The fallout could take a number of forms, from trade retribution to diminished competitiveness.
Kann of GTM Research said the biggest long-term risk to the United States will be the consequences of losing its seat at the negotiating table for future climate talks. “If you're not able to negotiate bilateral agreements,” Kann said, “that can impact U.S. exports of our own leading-edge technology.”
The pullout also could amplify the risk of a trade war. Unhappy with having to clean up their act while the United States does business as usual, countries could slap U.S. products with retaliatory tariffs. And the decision could dampen enthusiasm for investment and sales.
“An international race is on to lead the effort to build robust renewable energy systems and negotiate support for addressing the threat of climate change,” Phillip Bump wrote in the Washington Post. “Trump essentially just announced that the United States was stepping away from that competition.”
And the winner is … China?
China, the world’s largest emitter of greenhouse gases, is also poised to become the global leader in clean energy. The country recently halted construction on 103 new coal-fired power plants. Already the largest producer of renewable energy, China has announced plans to invest more than $360 billion and get more than 50 percent of its energy from renewables by 2020.
"China ... would like nothing more than to see the Trump administration take action to undercut the U.S. clean energy sectors just as those global markets are really taking off.” —Melanie Hart, Center for American Progress
By turning away from its promises to cut emissions, the United States would also be handicapping its ability to compete internationally, Jules Kortenhorst, chief executive officer of the Rocky Mountain Institute, told National Geographic. “That is a decision you can only make once,” he said. “If the U.S. backs out of the energy transition, China will think, ‘It’s time to double down,’ because the market opportunity has just fallen even closer into their lap.”
“[China wants] to dominate global clean energy markets,” Melanie Hart, director of China Policy at the Center for American Progress, told ThinkProgress. “Paris nations are going to be rolling out new energy projects, and imports [of clean energy technology are] expected to be around $13 trillion. China will be delighted to sell as much of that $13 trillion as it can, and they would like nothing more than to see the Trump administration take action to undercut the U.S. clean energy sectors just as those global markets are really taking off.”
U.S. cleantech will succeed despite Trump
Ironically, the nation responsible for bringing 195 countries together under the banner of global climate action is now threatening the demise of this historic agreement. But if the response from U.S. companies, universities, states, cities and local governments is any indication, Trump’s decision, so out of step with the wishes of most Americans, will go down as a historic failure. We can hope that the impact on U.S. cleantech and clean energy businesses will amount to a ripple instead of a tsunami.