Latin America Advisor

Energy Advisor

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How Will the U.S. Split From the Paris Deal Affect Latin America?

U.S. President Donald Trump fulfilled a campaign promise to withdraw from the Paris Agreement on climate change, saying he wanted to make U.S. workers his first priority.

President Donald Trump announced June 1 that he was withdrawing the United States from the Paris Agreement on climate change. Trump said his decision is based on his campaign promise to make U.S. workers his first priority. Was this the right move for the United States? How will the decision affect signatories from the Western Hemisphere—which include all but Nicaragua—as they work to cut carbon emissions? How will Trump’s decision affect renewable energy initiatives in the region?

Ethan G. Shenkman, partner at Arnold & Porter Kaye Scholer in Washington and former deputy general counsel at the EPA, and Erika Norman, associate at Arnold & Porter Kaye Scholer in Los Angeles: "First, withdrawal from Paris won’t be effective until November 2020 at the earliest because of the terms of the agreement, and it is reversible by a subsequent administration. Second, Trump’s decision is unlikely to change the fact that Latin America is a leader in renewable energy: Latin America produced 53 percent of its electricity from renewable sources (including hydropower) in 2014, while the global average was 22 percent. Chile, Mexico and Argentina have all set goals of producing approximately 20 percent of their electricity from non-hydro renewable sources by 2025. Other Latin American countries have already exceeded that goal. Nicaragua, which refused to sign the Paris Agreement because it didn’t go far enough, already gets more than half of its energy from renewable resources and plans to grow that number to 90 percent by 2020. Third, with countries such as Mexico reaffirming their ‘unconditional support for the Paris accord,’ Trump’s decision is unlikely to weaken efforts across the region to fight climate change. Although the United States is unlikely to meet its nationally determined contribution goals in the face of a continuing roll-back of Obama-era environmental policies, the fall off may not be as significant as would be expected given the efforts of states, localities and businesses to combat climate change. The impact of terminating contributions to the Green Climate Fund—which is currently funding 43 climate-related projects in developing countries including in Latin America—remains to be seen."

Arturo Sarukhan, former ambassador of Mexico to the United States and board member of the Inter-American Dialogue: "As has been the case now with so many other policy issues that profoundly affect the Americas—whether migration flows, border security or trade—President Trump’s argument for withdrawing from the Paris Agreement is fact-free and not supported by evidence. The narrative underpinning the decision is the strengthening of U.S. sovereignty and protecting U.S. jobs, but the likely outcome will threaten U.S. jobs and impair U.S. clout and influence. Trillions of dollars will be invested in new energy systems in the coming years, and the United States may have just ceded to other countries both economic leadership and new job opportunities in these budding industries. It’s therefore unsurprising that U.S. corporations—and governors and mayors—overwhelmingly support the United States remaining a party to the agreement. The president’s deplorable decision to denounce the agreement is an own-goal for U.S. soft power (and smart power for that), public diplomacy and nation-brand footprints abroad. It’s also a self-inflicted wound that could have far-reaching consequences for U.S. geostrategic interests and international leadership on many issues, not just on efforts to reduce greenhouse gas emissions and mitigate the national security effects of global warming and climate change, particularly if the world recommits itself, under European and Chinese leadership, to the Paris Agreement. I have always believed that nations usually face two options in a fully globalized world: you either sit at the table or you’re on the menu. That’s the conundrum Washington faces today. And for nations across the Americas—many of them biologically megadiverse countries and directly affected by climate change—that believe in the importance of this agenda, bypassing Washington and working directly with governors and mayors in the United States, just like Mexico did in 2008 by signing agreements directly with California, will be a strategy of paramount importance."

Remi Piet, senior director at Americas Market Intelligence: "Trump’s decision to withdraw from the Paris Agreement will prove to be a major blunder that benefits a short list of mature industries with little future growth potential against the interests of U.S. consumers, high-growth tech industries and the global leadership status of the United States. While Nicaragua did not sign the text because it was not constraining enough, the United States rejects the deal, refuting overwhelming scientific consensus and becomes the only other member, along with Syria, that is outside of the agreement. Though this decision favors the short-term interests of the coal and oil industries, two powerful campaign donors, it also limits future job creation. The solar and wind industries both create jobs at a rate 12 times faster than the rest of the U.S. economy. Leading companies from Shell to IBM and Nike to Disney criticized the decision as a setback that inhibits the ability of U.S. companies to lead tomorrow’s carbon-neutral economy. The decision will have little impact on other Western Hemisphere countries. Several of them, among the most affected by climate change in the world, reaffirmed their commitment to the Paris Agreement. Chinese and Indian investments in alternative energy technology will race ahead of the United States—China intends to spend more than $360 billion through 2020—and will gladly service Latin American market needs at the expense of American companies, whose reputations are once again sullied by a leader who is well on his way to destroying the enviable position of authority and leadership that the United States has enjoyed for more than a century."

Nick Loris, research fellow in energy and environmental policy at The Heritage Foundation: "Sometimes the road less traveled is less traveled for a reason. Other times, it is important to blaze a new trail. President Trump chose the latter when he announced the United States would withdraw from the Paris climate agreement, and for good reason. The accord is a bad deal, economically and environmentally. Though foreign leaders and U.S. businesses condemned the decision, withdrawal protects all of the people who didn’t have a seat the negotiating table, such as Americans who pay taxes and depend on affordable, reliable energy sources. If the United States fulfilled its nationally determined contribution by over-regulating energy, higher prices would harm families multiple times over, particularly affecting low-income families that spend a higher percentage of their budget on energy bills. In total, the regulations would have destroyed hundreds of thousands of jobs and would have caused a typical family of four to lose $20,000 in income by the year 2035. All of that economic pain would translate to a change in the Earth’s temperature that’s almost undetectable. Even if all of the countries followed through with their commitments, an unlikely scenario given that the commitments are nonbinding and many are tied to receiving billions of dollars, Paris would moderate the Earth’s temperature by a few tenths of a degree Celsius by the year 2100. There is nothing about leaving the agreement that prevents Americans from continuing to invest in new energy technologies. The United States will remain an important player in climate change discussions. But it signals they will not be contributors to a costly non-solution."

Amanda Maxwell, Latin America project director at the Natural Resources Defense Council: "President Trump’s decision to pull out of the Paris Agreement was reckless and goes against the best interests of the United States. As it stands, 70 percent of Americans want the United States to stay in the Paris Agreement, and hundreds of businesses and mayors across the country also support it. The decision to withdraw will not help protect the U.S. economy and workers. In fact, it dampens investments in the United States. Clean energy jobs are the fastest-growing in the energy sector, employing three million Americans and potentially many more if we stick to the Paris Agreement’s goals for low-carbon growth. The good news is that the rest of the world is showing leadership in taking on the challenge of climate change. Latin America in particular is moving ahead with urgency and finding innovative, proactive ways to make progress toward this global crisis. Every country in the region is participating in the Paris Agreement, except for Nicaragua. It is worth mentioning that Nicaragua didn’t join because it thinks the agreement is not ambitious enough. Latin American countries have proposed robust targets which they are already on the road to achieving. Renewables in the region are competing head-on with any other fuel source. Countries are launching emission mitigation plans, boosting regional collaboration on climate change policy and employing innovative finance tools to fund sustainable projects. President Trump’s decision will set the United States on the wrong path. Fortunately, cities, companies and other countries—especially in Latin America—are stepping up to the challenge."

The Latin America Energy Advisor features Q&A from leaders in the energy sector, politics, economics and business every week. It is available to members of the Dialogue's Corporate Program and others by subscription.