Trump’s Withdrawal from Paris Accord: A Blow to Climate Goals and a Boost for Fossil Fuels

US Withdraws from Paris Climate Agreement

US President Donald Trump has announced the country’s withdrawal from the Paris climate accord, a global treaty signed by nearly 200 nations to curb greenhouse gas emissions. The decision comes amidst a flurry of pro-fossil fuel policies and marks the second time the US has exited the historic agreement, having previously left under Trump’s first administration in 2017.

Trump described the accord as a “rip-off”, claiming it unfairly penalised US industries while allowing China to “pollute with impunity.” The move deals a significant blow to global efforts to combat climate change, especially after 2024 was recorded as the hottest year on record, surpassing the targets set by the Paris agreement.

Key Policies Announced by Trump

The withdrawal coincides with Trump’s broader agenda to promote “American energy dominance”, which includes:

• Declaring an “energy emergency” to roll back regulations on oil and gas companies.
• Appointing Doug Burgum, former North Dakota governor, as “energy tsar” to streamline oil and gas production.
• Curtailing leases for wind farms, which the administration claims “degrade natural landscapes.”
• Scrapping the role of a national climate adviser, introduced under Biden, to shift focus back to fossil fuels.

Trump’s administration aims to lower energy prices, refill strategic reserves, and expand American energy exports, dubbing oil “liquid gold.”

Implications for Global Economies

The US withdrawal from the Paris accord and its pivot to fossil fuels will have widespread implications:

1. Energy Markets: The focus on fossil fuels could lower global oil and gas prices in the short term but undermine long-term clean energy investments.
2. Clean Energy Innovation: With the US stepping back, leadership in renewables is likely to shift to nations like China and Europe, potentially accelerating their dominance in sectors like EVs and solar panels.
3. Trade Tensions: Trump’s rejection of wind farms and clean energy investments could create trade frictions with the EU, which is prioritising green technologies and carbon neutrality.

Speculation on Industry Impacts

1. Electric Vehicles (EVs):
   • China, the world’s largest EV producer, stands to benefit as US manufacturers lose ground in global markets.
   • European automakers may also increase their market share, leveraging subsidies and green policies.
   • Investors may shift focus to companies excelling in EV production, particularly in Asia and Europe.
2. Wind and Solar Energy:
   • Countries like Germany and the UK, heavily investing in wind and solar projects, could capture a larger share of clean energy financing.
   • US renewable energy companies may struggle to attract investment amidst regulatory rollbacks.
3. High-Polluting Nations:
   • Countries such as India and Russia may use the US withdrawal as justification to delay their own climate commitments, potentially worsening global warming trends.

Reactions from China and Other Nations

• China: Already the leader in renewable energy, China is likely to capitalise on the US retreat by expanding its exports of solar panels, batteries, and green technologies.
• European Union: EU leaders criticised the move but reaffirmed their commitment to the Paris agreement, with some pledging to enhance renewable energy targets to fill the gap left by the US.
• United Nations: UN climate officials expressed disappointment, urging the US to reconsider and emphasising the resilience of the Paris accord, even without US participation.

Conclusion

Trump’s decision to withdraw from the Paris climate accord signals a dramatic shift in US energy policy, favouring fossil fuels at the expense of green innovation. For investors, the move highlights opportunities in renewables outside the US, particularly in Asia and Europe, while raising risks in US-based clean energy sectors. Globally, the decision adds uncertainty to efforts to combat climate change, further underscoring the need for collective action by remaining signatories.

Source: (FT.com, BBC.co.uk)