Trump’s exit from Paris accord is no big deal

Media outlets around the world have come down harshly on President Trump’s decision to pull the United States from the Paris climate agreement.

Critics are somehow implying that Trump is taking the US back to the age of belching smokestacks, unclean air and dirty water — a criticism which is inherently dishonest and not rooted in reality. The truth is that Trump’s decision is not quite so apocalyptic, and may even have a more positive overall impact to climate change than if the US stayed in the Paris agreement.

First, Trump is not against the environment. A lifelong businessman who has built the world’s most luxurious resorts, golf courses and clubs knows better than most people that clean surroundings are essential to attracting a steady clientele — and that this can only happen if the environment is regulated. Let us not forget that all the expansive environmental laws in the US are still very much in place.

The main problem with the Paris accord is it has several flaws. Two years ago, delegates could not agree on how soon each nation should cut greenhouse gas emissions, so they decided to cut them “as soon as possible”, with no fixed date set.

Further, commitments made by each country in the 195-member agreement are voluntary and non-binding. But pledges without enforcement are meaningless. If a country fails to meet its goal, it is not punished but is simply allowed to restate its new goal the next time the elite club meets in some other world city five years hence. And even then, the new goals are voluntary. This is an accord?

The Paris deal was a mirror reflection of the hubris of its leaders. If it was that critical to humanity, why did Obama not deem the accord as a treaty and submit it for formal ratification by the US Senate which would have then bound the US and Trump to the agreement? The simple reason was that Obama knew he could never obtain the 67 votes to get the accord ratified, with many senators in his own party opposed to the deal. The accord’s language is so unserious, so non-binding and so kid-gloved that it could never pass muster as a crucial international treaty, such as the Nuclear Non-Proliferation Treaty. Even under President Clinton, an avowed environmentalist (Al Gore was his Vice-President), the US Senate never ratified the Kyoto protocol.

Finally, the agreement required rich countries like the US to subsidise other countries with technology and financing to limit GHGs with direct cash contributions. Trump won in coal country, and promised that he would help revitalise this region by opening up export markets and creating jobs.

Why would he help shut the US coal industry down by authorising American tax dollars to be given to China so that it would burn less coal, when the US is $20 trillion in debt already?

Google’s Pichai, Facebook’s Zuckerberg and Microsoft’s Stone all issued statements criticising Trump, and asserting that their companies would do what it takes to combat climate change.

This is the key part of the story that is not being reported. The private economy, driven by free-market spirit, will do excellently well where governments cannot.

Consider the Boeing 787 aircraft, the world’s most advanced, environmentally friendly, lightweight, fuel-efficient plane ever built. With over 1,200 orders to date, the model has outsold every other wide body model in aviation history. Boeing’s success preceded Paris and was not because of the accords. Market forces nudged Boeing to offer such a product because the world’s airlines demanded it, and not doing so would mean ceding its leadership to Airbus.

Already, US emissions from both static and mobile sources have been going down significantly because of innovation. Facebook and Google operate zero energy data centres. Hybrid cars and improved engine designs have greatly helped improve fuel economy rates of the US’ automobile fleet. Technological advances in alternate forms of energy such as wind, solar and wave have made them cost competitive with traditional fossil fuels, certainly coal. The US’ abundant natural gas supplies — unlocked due to fracking technologies, another American innovation — are creating so much pressure on the price of coal that there is no meaningful future for the US coal industry, anyway.

Climate change is of course real. But countries and their private economies can fight this largely on their own because the benefits are immediate, significant and local. We do not need a colourful global agreement, with clinking champagne glasses, to guide our way forward.

The writer is the managing director of Rao Advisors LLC, Texas