Trump Pulls Out of Paris Climate Agreement: My Take

President Trump announced earlier that the U.S. will be pulling out of the Paris climate agreement.  Passed via executive order from the predecessor, President Obama, the agreement was considered by many to be his crown jewel in foreign policy.  Let’s take a look into the agreement and what this departure could mean for America.

Overview

On December 12, 2015, representatives from 196 countries agreed to a monumental deal to combat global climate change.  The agreement builds upon a previously enacted treaty from 1994, the United Nations Framework Convention on Climate Change (UNFCCC).  The main goal of the UNFCCC is to control greenhouse gas emissions, which are funded through the Global Environment Facility and the Green Climate Fund.  The Global Environment Facility funds climate and environmental initiatives everywhere and the Green Climate Fund specifically sponsors projects in developing nations.  The Paris agreement requires countries to contribute money to the two funds and also requires independent spending to combat climate change within their own countries.

Here are some of the key features of the agreement:

  • Limiting the increase in global average temperature to 2˚ C above pre-industrial levels, although the agreement also insists pursuing the lofty goal to limit the increase in temperature to 1.5˚ C.
  • Limit greenhouse gases emitted via human activity to a level which can be absorbed naturally, by the second half of the century. This portion effectively pledges zero net emissions of GHG’s.
  • Each country is subject to review every five years
  • Consistent with the UNFCCC statutes, rich countries will help poorer nations by assisting in financing their anti-climate change initiatives, mostly the conversion to renewable energies.

Problems

The only mechanism the agreement proposes to reduce emissions is voluntary national caps.  The U.S., for instance, pledged to cut emission to 26%-28% below 2005 levels by 2025.  There is no true benchmark for how strict the caps must be, and the caps aren’t legally binding.  This raises two key questions for me.  Due to the free-for-all nature of the emissions caps, how difficult would it be to ensure countries will meet the goals?  Even if some unwritten standard becomes adopted, what punitive measures could be taken to ensure countries hold up their end of the deal?

Opponents of the treaty have also taken issue with the funding.  The U.S. pledged $3 billion to the Green Climate Fund, and has contributed $500 million thus far.  Through loans and grants, the U.S. has essentially pledged a $3 billion dollar subsidy to developing nations to combat climate change.

Normally I’m against subsidizing anything in other countries.  However, the developing nations will only increase their emissions as they continue to industrialize, so it would be in the world’s best interests to attack the problem proactively.  I’m indifferent towards this part of the agreement.

I do take issue with the funding of the Global Environment Facility.  In the latest funding round, the U.S. contributed nearly 15% ($651 million) of the total.  China contributed 0.54% ($24 million), Russia contributed 0.4% ($17.7 million), and India gave 0.32% ($14 million) of the total fund.  Japan contributed the most, with 16.34% ($724 million).

These are the 5 countries with the most GHG emissions in the world.  In my opinion, there is no reason for such a disparity in funding, even when accounting for per-capita emissions.  The other nations simply aren’t pulling their weight in this fund.

Domestic Economic Impact

Research from the Heritage Foundation (http://thf-reports.s3.amazonaws.com/2016/BG3080.pdf) concluded that regulations put forth by the Obama administration to achieve the domestic goals stated earlier will negatively impact the economy.

The researchers estimated the effects of a carbon tax, which was set equal to the Environmental Protection Agency’s estimates of the social cost of carbon.  The manufacturing industry would be hit the hardest due to rising operating costs, losing an estimated 206,104 jobs nationwide by 2040.  For the average 4 person family, electricity costs would rise by an estimated 13%-20%.  An estimated $2.5 trillion in GDP would be lost by 2035 as well.  These impacts are probably understated because although most efficient, the carbon tax will be immensely unfavorable (as any new tax is).  The government would most likely impose a less efficient and significantly more costly method.

I think this research had somewhat of a narrow scope though.  It’s feasible that the renewable energy sector could create more jobs than were lost in the manufacturing industry.  Plus in the long run, competition (unless government becomes too involved) and innovation would drive down operating costs and consumer costs.

Final Thoughts

Contrary to what the mainstream media and these garbage “news” sources that have permeated social media would like you to think, rejecting the Paris agreement and supporting initiatives to combat climate change are not mutually exclusive.

I am completely in favor of the Trump Administration for pulling out of this deal and seeking renegotiation.  The agreement is flimsy and the disparity in funding stated earlier is too great for me to support.  If other leaders aren’t willing to come to the table then they’ll simply lose 15% of the budget.  Their loss.

We should still be investing in renewable energies domestically, but the last thing we need is more government sponsored corporatism.  Investment must be done in a way that champions the competitive process.

Even Tim Kaine gets it.

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