The Ramifications of a Paris Exit

Monday, May 15, 2017

The U.S. must stay in the Paris Accord to help combat the clear and present danger of climate change. If the U.S. does not act, how can we expect others to address the problem? The U.S. Senate did not ratify the Kyoto Protocol 20 years ago because the Protocol did not include goals for developing countries. Now the U.S. is threatening to be a “free rider,” but in reality it would be a “big loser.”

The Nationally Determined Contributions (NDC) pledged by the U.S. would reduce emissions by 26% to 28% below 2005 levels by 2025. This is doable at no net cost to the U.S. economy; indeed, it is likely that the net impact would be job creation because of the opportunities offered by the clean energy economy. And it puts in place a system that can be strengthened over time to achieve deeper decarbonization.

It’s not like we’re standing still. In the near term, U.S. companies and consumers are making a lot of progress, encouraged by existing policies and current market forces – especially cheap natural gas. For example, the Tennessee Valley Authority (TVA), the nations’ largest public power provider, is on a path to reduce its CO2 emissions to 60% below its 2005 level by 2025 while also keeping rates low.

But not every region has large quantities of coal generation that can be converted to gas. Some of them already operate under carbon standards and goals (including California, the Northeast, and Hawaii); they have already weaned themselves from coal years ago and are are now turning to zero-carbon resources. It’s not rocket science. The technologies and solutions are here already. In particular, there is a considerable amount of low-hanging fruit in the energy efficiency field, and solar and wind costs continue to decline.

Still, climate policy nationwide needs to be clarified, and staying in the Paris Accord would help with this. Canada’s provinces have jurisdiction over environmental policy, but Prime Minister Justin Trudeau has, in addition, set a minimum carbon tax of $10 per ton of carbon. In contrast, the U.S. patchwork of policies is confusing and causes market uncertainty. Businesses need predictability so that they can better plan their investments and minimize risks. Long-term sensible policies aligned with the U.S. NDCs would provide the certainty companies and consumers seek and would underscore our climate leadership.