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The Arc de Triomphe in Paris, France, is illuminated in green to celebrate the entry into force of the Paris Agreement, November 4, 2016 (U.S. Department of State)
U.S. Department of State

Trump's Opening Bid on Paris

Irwin M. Stelzer

We’re out. But we might come back. That’s what President Trump has decided to do about the Paris climate accord. We’re out because the accord is unfair: It allows China to pollute while we can’t. It kills millions of jobs. It requires us to pay tens of billions of dollars to foreign countries. And no wonder foreign lobbyists love it, because “they have long sought to gain wealth at America’s expense . . . while they laugh at us.” In short, our withdrawal from the agreement represents a re-assertion of our sovereignty and control over our own domestic economic agreement. Besides, the accord can’t have much effect on global climate.

But the president offered to work with Democrats and those who believe in the accord to negotiate a new agreement that is fair to the United States. So we have issued ourselves a rain check, and the first daughter Ivanka a consolation prize. She, along with most of the business community, argued vigorously for Remain, but lost to the Leaves (to borrow the labels used in Britain to describe the two sides of the Brexit debate).

The Leave camp held a trump card: the president’s campaign promise to withdraw because he represents Pittsburgh, not Paris. (Which prompted the mayor of Pittsburgh to announce that his city, which voted 80 percent for Hillary Clinton, will behave as a signatory to the accord. Proof that the old steel mills are gone from his city.)

But the most important event of this week may be that the president never said that climate change is not real—only that the deal struck in Paris to slow it is unfair to the United States.

The president also put the accord into the broader context of his goal to step up economic growth. He said that renewables could provide the energy we need only if we continue to grow at our current annual rate of 1 percent. But if we grow at his target rate (between 3 percent and 4 percent) we will need to use all the resources we have.

What Trump didn’t say—probably because he doesn’t know—is that serious environmentalists have had little use for the Paris accord. The emissions reduction promised by the 190 signatories is too little to prevent serious warming, all of them are free to adopt weaker plans, and the non-enforceability makes it unlikely any of them will redeem even those inadequate promises.

Trump claimed that America will remain a leader in reducing emissions. This, despite his plan to continue rolling back Obama-era regulations. One reason is that presidential executive orders are hardly as durable as treaties (which require the consent of the Senate) or legislation (requires congressional action). Some Trump-haters believe (hope?) that he will be a two-year president, soon impeached and removed from office; Trump-dislikers put that at four years, until the 2020 elections; Trump lovers say he will be around for eight years. But industrial facilities are built to last decades; coal-fired generating stations 40 years. The average age of vehicles on our roads is almost twelve years and they have long lives ahead of them here and abroad.

Businessmen are not going to scrap their long-run plans because Trump has taken us out of the Paris deal when his successor might well uncap the presidential pen to put us back in. (Or draft regulations with that effect.) Just last week, shareholders of Exxon, the world’s largest listed oil and gas group, defied the company’s board and called for the company to publish an annual assessment of the impact of climate change on its operations so that it will be forced to make changes if necessary to reduce that risk. Many companies already include a cost of carbon emissions when they allocate capital among the their various divisions. Private capital is preparing to build a high voltage transmission line to move wind power from Wyoming to Nevada, and then on to California and Arizona. Bill Gates and his billionaire friends (combined wealth: $170 billion) have put together a $1 billion fund to reduce climate change by investing in clean energy innovation.

The sum total of these and other private-sector efforts leads some environmentalists —people who regret Trump’s decision—to believe that even having withdrawn from the accord, America is likely to meet the Paris emissions-reduction target to which Obama agreed.

All of which leaves three problems to be solved by the United States. The first is the threat of some of our trading partners to impose a border tax on American exports. Since we run trade deficits with most countries, and Trump would immediately retaliate, he would be tempted to request that they make his day so that he could impose tariffs that might otherwise violate World Trade Organisation rules.

The second is the incredible claim by the European Commission’s Jean-Claude Juncker that America is not free to leave the agreement:

“This notion, ‘I am Trump. I am American, America First and I’m going to get out of it‘—that won’t happen. . . . We tried to explain that to Trump in clear German sentences. It seems our attempt failed. . . . Not everything . . . in international agreements is fake news.”

The audience laughed, and laughing at Trump is not a good idea. Juncker, whose goal in life is to make it as difficult as possible for the United Kingdom to Brexit, apparently believes that once a member of an organization, always a member.

The third problem is the moral high ground assumed by German chancellor Angela Merkel, as she vies for the hypocrite-of-the-month award. Merkel is highly critical of Trump’s decision. Never mind that pursuant to its Energiewende, Germany is replacing its nuclear plants with wind and solar-powered facilities. But there are days when the sun don’t shine and wind don’t blow. So Germany is backing up these intermittent sources of electricity with . . . new coal plants. Why not a massive switch to natural gas, a cleaner fuel? Because Germany and other European countries have banned fracking, denying themselves an American-style, market-based shift to natural gas.

Merkel has also ordered the closure of her country’s nukes, leaving only coal, imported oil, and natural gas (the largest portion from Russia, the gas via Ukraine) to back up wind and solar. Last year Germany relied on fossil fuels—coal and natural gas—for over 50 percent of its power. About half of that fossil-fueled power is based on lignite, which is indigenous to Germany and perhaps the dirtiest of all fossil fuels. And, ever eager to use its undervalued currency to stimulate exports, coal-fired power not used domestically is exported to Austria, the Netherlands, France, and Switzerland.

As the non-profit Institute for Energy Research reports, “Despite the large increase in solar and wind power, Germany is likely to miss its 2020 target to reduce its greenhouse gas emissions . . . In fact, its carbon dioxide emissions increased last year [2015] by 0.8 percent.”

So: countries needing our markets might put a tariff on our goods; a Juncker backed by the Luxembourg army of 900 brave souls is going to prevent America from exiting Paris; and the chancellor of a country increasingly dependent on coal says the Paris accord “cannot be renegotiated.”

How do you say “Wanna bet” in French and German?

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