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Trump exits Paris Agreement, investors pour scorn

Channels: Investors, Policy

President Donald Trump followed through on his threat to pull the US out of the Paris Climate Accord, despite howls of protest that the US would surrender its leadership on climate action.

In a half-hour speech, Trump argued that the deal struck in December 2015 with the support of the Obama administration was unfair to the US and would damage its competitiveness, costing 2.7 million jobs.

Trump said the US, the world’s biggest economy and second biggest emitter of carbon dioxide, was willing to renegotiate the deal or be involved in striking a new deal.

He also said he would scrap funding for the Green Climate Fund (GCF), which has been set up to help distribute funds from the developed to the developing world, and Trump said “is costing the United States a vast fortune”.

The GCF currently has received $10.2 billion in funding, with the US the biggest contributor, having agreed to put in $3 billion, of which $1 billion has already been paid. It is doubtful as to whether Trump will honour the commitment to pay the remaining $2 billion.

“The Paris Climate Accord is simply the latest example of Washington entering into an agreement that disadvantages the United States, to the exclusive benefit of other countries, leaving American workers, who I love, and taxpayers to absorb the cost in terms of lost jobs, lowered wages, shuttered factories and vastly diminished economic production,” said Trump. “Thus, as of today, the United States will cease all implementation of the non-binding Paris Accord and the draconian financial and economic burdens the agreement imposes on our country.”

Trump added that he hoped the rest of the world would no longer be laughing at the US.

He went on to assert that “under the Trump administration, [the US] will continue to be the cleanest and most environmentally friendly country on Earth”.

Trump had promised to exit the agreement during his campaign for election, and ignored impassioned pleas from business and investors not to follow through with the threat.

Tesla founder Elon Musk said he would quit the three White House advisory panels on which he sits if Trump exited the Paris Accord.

“I was elected to represent the citizens of Pittsburgh, not Paris,” said Trump in his speech. Bill Peduto, the mayor of Pittsburgh, responded by tweeting that his city would continue to follow the guidelines of the Paris Agreement “for our people, our economy & our future”.

Matt Christensen, global head of responsible investment at AXA Investment Managers, said the details of the withdrawal would be worked out by a small team including Environmental Protection Agency Administrator Scott Pruitt.

He said a full, formal withdrawal from the agreement could take place from 4 November 2020, or they could decide to exit the United Nations Framework Convention on Climate Change, which would take one year but would be “more extreme”.

“We think that most of the negative impact from this decision will be on the US itself and not so much on global climate action, which should keep its momentum regardless,” he said. “The US may be surprised to find trade negotiations more difficult as an outcome of this action.”

REACTION:

Barack Obama: “The nations that remain in the Paris Agreement will be the nations that reap the benefit in jobs and industries created.”

Lisa Woll, CEO of US SIF, The Forum for Sustainable and Responsible Investment: “The exit of the United States from the Paris Agreement is unequivocally the wrong decision and may lead to catastrophic harm to the environment, our country’s international reputation, and progress towards a vibrant, innovative and low-carbon economy. We urge the administration to reconsider its decision, which is certain to damage the US economy, the health and safety of the American people and America’s standing in the world.”

Michael Bloomberg, the UN Secretary-General’s special envoy for cities and climate change:  “Americans are not walking away from the Paris Climate Agreement. Just the opposite – we are forging ahead. Mayors, governors, and business leaders from both political parties are signing onto to a statement of support that we will submit to the UN – and together, we will reach the emission reduction goals the United States made in Paris in 2015.”

Jeff McDermott, managing partner at Greentech Capital Advisors: “Because coal mining is largely mechanised, those jobs are not coming back even if we burn more coal. Wind and solar are where the jobs are, and if we don’t have to reduce emissions, they won’t grow as fast.”

Steve Waygood, chief responsible investment officer at Aviva Investors: "As a global investor and insurer, we urge governments to look forwards to a carbon neutral economy and not backwards to a fossil fuel past. President Trump's decision to withdraw is hence troubling, and implies financial and economic loss for the international community, as well as the US. But crucially, it does not equate to the unravelling of the hard-won accord. Initiatives that bring investors and companies closer together, such as the Financial Stability Board’s Task force on Climate-related Financial Disclosure, will be even more important in the wake of the US withdrawal."