On June 1 President Donald Trump announced that the US would withdraw from the Paris climate accord, sparking probably the biggest global debate on the issue to date.
Outrage from all quarters ensued. Several heads of state protested, US corporate executives such as Tesla’s Elon Musk and Disney’s Robert Iger withdrew from White House advisory councils and governors from various states protested vociferously on TV.
The strong reactions following Trump’s withdrawal demonstrates three things: A global climate change consensus, business rationale behind the consensus and the question of America’s leadership position.
Over the past decade a global consensus had emerged that climate change mattered. Looking back in history, the global debate began in earnest with the ratification of the Kyoto Protocol in 1997. At that time many nations were not yet in agreement with the agenda of the UN’s Framework Convention on Climate Change (UNFCC). The US did not sign, neither did China or India.
A lot has changed since then. Pollution has become a real issue for the Chinese leadership. Air quality is so bad that one cannot see the sun for days on end in many of the country’s mega cities. Pulmonary disease has emerged as one of the major causes of death. The very existence of some small island nations is threatened by rising sea levels. Melting glaciers endanger the ecological balance in the Himalayas. These are just a few examples which helped build global consensus that climate change was real and posed environmental, societal, security and economic risks.
The international community had come a long way when the Paris accord was reached in 2015. Several earlier attempts to get a full global consensus had failed. The US, China and India joined the Organization for Economic Cooperation and Development (OECD) countries and emerging nations alike in signing up to the agreement. The US was front and center in helping to construct the framework enabling the agreement to be signed. It was not easy to get China (the world’s largest CO2 emitter) and India to agree. A Green Climate Fund needed to be created to entice developing nations to join. It came down to the wire, but in the end the Paris accord was signed. Its goals and milestones are non-binding. The emerging global consensus means, however, that there is significant peer pressure to adhere to the goals.
Following Trump’s decision to withdraw from the agreement, China is emerging as leader of the pack — something that will be seen as an irony of history.
The green agenda was initially driven by subsidies, mainly in Europe. In the meantime going green has become a major business. Tesla is now worth more than General Motors on the stock exchange. Manufacturing windmills and solar panels is big business. The West Coast of the US has seen a boom in all things environmental. China has emerged as a leader in the manufacturing of solar panels and its research institutions are at the forefront of environmental research. The Gulf Cooperation Council (GCC) is also taking part in these developments. The UAE is home to the International Renewable Energy Agency (IRENA), Abu Dhabi’s Masdar leads the way in research on “clean cities,” and a planned 9.5 GW of renewable power generation capacity is part and parcel of Saudi Arabia’s Vision 2030.
The momentum behind the climate agenda generated big business opportunities and many jobs. GE’s CEO Jeffrey Immelt shared his disappointment with the administration’s withdrawal from the Paris accord. He declared that that “industry must now lead and not depend on government.” This has to be seen in the context that one of the world’s leading and most profitable companies does not want to be left out, neither when it comes to business opportunities nor when it comes to innovation.
Trump’s announcement has further deepened the rift between the US and its European allies. Earlier in the week German Chancellor Angela Merkel stated that Europe could no longer fully rely on its US and UK allies. She was referring to Donald Trump’s remarks at the NATO summit and to the UK leaving the EU. The leaders of France and Italy also criticized the US president after his announcement regarding the Paris agreement.
When the Chinese Premier Li Keqiang met with Merkel on the day of Trump’s announcement, he stressed that China fully intended to stay in the Paris agreement no matter what. It will be seen as an irony of history that China is emerging as the leader of the pack, as it took real effort to convince it to join the agreement.
Many OECD countries feel a sense of unease over the apparent US withdrawal from its leadership position, the shifting alliances and the emergence of China as a strong leader. Countries in other parts of the world may be more ambivalent. Whichever way we see this, the climate change train is on the rails and it will power on.
• Cornelia Meyer is a business consultant, macro-economist and energy expert. She can be reached on Twitter @MeyerResources.