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Can the Paris Agreement withstand U.S. withdrawal?

June 5, 2018

 

The landmark Paris Agreement (“Agreement”) was passed by the United Nations Framework Convention on Climate Change (“UNFCCC”) in 2015 with 195 signatories, which increased to 197 last year with the additional signatures of Nicaragua and Syria. On the 1st June 2017, U.S. President Donald Trump officially announced the U.S. withdrawal from the Agreement. This article considers the magnitude of the threat U.S. withdrawal poses to the Agreement and global climate change mitigation and adaptation efforts. 

 

 

 

1. Why did Trump withdraw from the Paris Agreement?

 

In accordance with his ‘America First’ presidential campaign, Trump announced U.S. withdrawal from the Agreement and an immediate halt to the implementation of the U.S.’s nationally determined contribution (“NDC”). This came as no surprise, together with the Environmental Protection Agency (“EPA”) budget cuts, the repeal of Obama’s Clean Power Plan and the revival of the Dakota Access and Keystone pipeline projects, the Trump Administration had already fostered a reputation of antipathy towards environmental issues. Trump justified his decision to withdraw based on the economic, energy security and equitable injustice of the Agreement. From an economic perspective, Trump argued that the Agreement placed a “draconian” economic and financial burden on the U.S., predicting that by 2040 the economy would have lost approximately $3 trillion in GDP and 6.5 million industrial jobs. Additionally, Trump called for the termination of funding towards the GCF, which he reasoned would cost the U.S. “tens of billions of dollars”. From an equity perspective, Trump challenged China and India’s right to emit, directly questioning the principle of Common but Differentiated Responsibility (“CBDR”) enshrined in Article 3 of the UNFCCC and upheld in Article 2 of the Agreement (UNFCCC, 2015; UN, 1992). Finally, from an energy security perspective, Trump maintains that without a substantial increase in fossil fuel capacity the U.S. will be prone to significant blackouts.

 

Whilst these are the key reasons advanced by the Trump administration, there are also specific political, social and personal interests at play. Firstly, many Republican senators have interests in oil, gas and coal and twenty-two of them, whose campaigns allegedly collected more than $10 million from the fossil fuel industry, jointly wrote a letter to Trump urging him to abandon the Agreement (see Gambino and McCarthy, 2017). In 2001, Republican President George Bush refused to ratify the Kyoto Protocol, highlighting the Republican aversion towards multilateral climate change agreements. Moreover, Trump’s campaign was founded on social and political polarisation and this rejection of the Agreement is emblematic of his “disruptor” persona. Personally, Trump has repeatedly and publicly demonstrated his scepticism towards climate change.

 

2. Procedure and timings of the withdrawal

 

Article 28 of the Agreement stipulates the procedure for withdrawal from the Agreement. Article 28 (1) mandates that any Party may withdraw from the Agreement by providing written notice to the Depositary any time after three years from the date the Agreement entered force, which was the 4th November 2016. Article 28 (2) states that the withdrawal process will take one year from the date of notice. Therefore, the earliest the U.S. can officially withdrawal from the Agreement is the 4th November 2020, the day after the next U.S. presidential election. With regards to timing, the Trump Administration made it clear that the U.S. needed to withdraw before the compliance mechanism, as mandated under Article 15 of the Agreement, was implemented (UNFCCC, 2015). Their reasoning behind this was to avoid any ‘massive’ future legal liability as the Agreement becomes more ambitious.

 

This timing gives rise to uncertainties as to whether the withdrawal will in fact proceed. First off, the Trump Administration has significant time to change its position on the withdrawal, for instance the upcoming mid-term elections in November 2018 will dictate and may shift the ‘political script’ for the remainder of Trump’s term in office. Additionally, as Trump alluded to in his withdrawal speech, they could attempt to renegotiate their position in the Agreement. Moreover, the Republicans may lose the next presidential election in 2020 and the future ruling party might decide to remain in the Agreement. To facilitate this, unlike the Kyoto Protocol that required consent from the U.S. Senate to be joined, the Agreement merely requires executive action from the President (UNFCCC, 2015). However, it must be recognised that whilst the official withdrawal won’t take place for another two years, U.S. non-compliance has already begun. Accordingly, if the Trump Administration continues to rescind domestic mitigation efforts, a return to the Agreement in 2020 becomes less appealing for any party coming into power.

 

3. The potential collapse of the Paris Agreement?

 

i. An obstructive role in negotiations

 

The timing of the U.S. withdrawal and their continuing membership to the UNFCCC allows the U.S. to remain involved in multilateral climate change negotiations (UN, 1992). This permits the U.S. to protect their interests and continue to participate in meetings, including the Ad Hoc Working Group on the Paris Agreement’s (“APA”) negotiations on the modalities and procedures for the ‘Paris Rulebook’. One concern is that the U.S. will block and hamper negotiations from moving forward. This risk is increased because key modalities and procedures of the Agreement have still not been decided on, including the decision-making process. Currently decisions are made by consensus, following the principle decision-making process of the UNFCCC (UN, 1992). This consensus-based decision-making approach makes the Agreement particularly vulnerable to blocking by any one signatory. This is why certain Parties to the Agreement have proposed that decisions should be executed by a two-thirds or three-quarter majority vote (UNFCCC, 2017).  The U.S. made its position clear in November 2017 at the 23rd Conference of the Parties (“COP”) in Bonn. At Bonn, the U.S. hosted a forum entitled ‘The Role of Cleaner and More Efficient Fossil Fuels and Nuclear Power in Climate Mitigation’, exhibiting their continuing commitment to fossil fuels and significantly provoking climate advocates (Harvey, 2017). Despite this, feedback from the APA negotiations at Bonn suggested that the U.S. either played a constructive role or stayed neutral within the negotiations (see Milman and Watts, 2017; Appunn at al., 2017). It is premature to tell if this will be the position maintained by the U.S. in negotiations going forward, however, it is likely that any progressive propositions, particularly regarding CBDR, will be blocked. In short, the U.S. could play an obstructive role in the Agreement, stalling it from moving forward and ratcheting up ambitions.

 

ii. The vulnerability of Multilateral Environmental Agreements

 

The Paris Agreement is one of many Multilateral Environmental Agreements (“MEA”). MEAs depend on collective participation to work effectively, therefore, their value increases as the number of parties participating in the agreement increases. Furthermore, soft law often forms the basis of MEAs, with non-binding resolutions amplifying the importance of voluntary compliance. Bryan Druzin (2017a) maintains that MEAs are an archetypal example of the ‘network effect’. Michael Katz and Carl Shapiro explain that the network effect concept is when the “value of membership to one user is positively affected when another user joins and enlarges the network” (1994: 424). Therefore, MEAs depend on getting all members on board through positive ‘bandwagons’, also referred to as positive ‘tipping’, however, correspondingly this makes MEAs very susceptible to negative bandwagons. In other words, to guarantee the effectiveness of an MEA policy-makers must ensure that it gains positive traction to inspire legal coordination. The vulnerability of this reliance on coordination is that any regime shift, such as withdrawal of a certain member or members, can have catastrophic effects and may lead to the collapse of the agreement. This inability to successfully coordinate the use of a common resource for the long-term benefit of the greater good is referred to in social science as a tragedy of the commons (Hardin, 1968). Hardin explains that this concerns a shared-resource situation where individuals, acting rationally per their self-interest, damage or deplete the shared- resource, ultimately undermining their own and the whole group’s long-standing interests. In 2014, the Intergovernmental Panel on Climate Change recognised the risk of countries ‘free-riding’ off the investment in mitigation made by other Parties, arguing that this was due to the “public good characteristics of climate protection” (IPCC, 2014: 1008).

 

iii. Potential implications for the Paris Agreement

 

Article 2 of the Agreement requires Parties to collectively work together to ensure that the global average temperature remains well below 2°C above pre-industrial levels, whilst striving to limit it to 1.5°C (UNFCCC, 2015). Implementing this is in the long-term interest of all signatories to the Agreement, however, the U.S. has decided to act in their own domestic self-interest. The fear now is that the U.S. withdrawal will create a negative bandwagon towards further non-compliance or withdrawals, resulting in a tragedy of the commons. It is argued that the U.S. will be free-riding on the costly sacrifices other countries will be making to reduce global emission, undermining the soft law and collaboration of the Agreement. Countries are essentially stuck in a prisoner’s dilemma and no one wants to receive the unfair burden, the “sucker’s payoff”, in this strategic game. This could result in a domino effect of countries reducing their emission reduction ambitions, rather than ratcheting them up, or even exiting the Agreement entirely. It must be noted that due to the non-punitive nature of the Agreement, as stipulated in Articles 13 and 15, the U.S. is not the only laggard in the group (UNFCCC, 2015). Australia has received widespread criticism as a report by the Climate Council in 2016 revealed that their emissions are on the rise as they continue to open new coal mines (Climate Council, 2016). Additionally, rising right-wing parties, such as the Alternative for Germany (AfD), share the Trump Administration’s aversion towards multilateral climate change agreements, posing a direct threat to the Agreement.

 

Robyn Eckersley (2007) argues that it is unconvincing to assume that reputational incentives will override a country’s domestic interest, as seen with the U.S. withdrawal. On the other hand, it is a generalisation to assume that it is in all countries’ economic and energy security self-interests to free-ride, whilst other countries continue to mitigate climate change. Fergus Green reasons that it is not in most countries self-interest to free-ride, as decarbonisation can be achieved in a manner that is nationally net-beneficial to countries, even when disregarding the climate benefits. Furthermore, in response to the U.S. withdrawal numerous countries, such as China and the EU, have publicly reaffirmed their commitment to the Agreement. President Emmanuel Macron has even appealed for a European carbon floor price, requiring a new border tax to prevent carbon-intensive imports from non-EU countries. Nonetheless, for Bryan Druzin (2017a) this is merely ‘political theatre’ as no tangible commitments have been made. Only time will tell if this is the case, however, so far no other countries have faltered from the Agreement as they seemingly remain united against the U.S.

 

iv. Relative strengths of the Paris Agreement

 

Previous MEA’s have adopted a top-down approach, with centralised authorities declaring principles that are applied to individual Parties. This was the formalised approach used in the Kyoto Protocol and is put forward as one of its fundamental failings. The rigid, top-down approach of the Kyoto Protocol failed to encourage participation from all UNFCCC Parties, making it much less effective. Resultantly, there appears to be a shift in environmental law towards agreements that favour bottom-up, ad hoc approaches and try to involve both non-state and state actors.

 

The Agreement was heralded as a ‘ground-breaking’ MEA because of the large number of Parties, with seemingly unresolvable differences, that ratified it. To achieve this positive bandwagon, the flexible design of the Agreement is a careful mix of soft and hard law measures and recommendations (Rajamani, 2016). Furthermore, it employs a bottom-up approach, allowing governments to formulate their own NDCs (Article 4.2) per their individual institutional capacities (UNFCCC, 2015). This poses less of a threat to the individual sovereignty of different Parties, therefore making the Agreement more resilient to a negative bandwagon. This flexible, bottom-up structure was pushed for in the Paris Agreement negotiations, particularly by the Obama Administration to avoid it being rejected by the U.S. Senate, and is what ultimately enabled the Agreement to achieve such a high level of commitment (Bodansky and Diringer, 2014). The Trump Administration declared that the Agreement was unfair as it infringed on U.S. sovereignty. This entirely overlooks this the bottom-up approach that forms the basis of the Agreement.

 

A further vital part of the Agreement, that increases its resilience, is its “fully transparent approach” (Article 7(5)), with the creation of a framework to enhance the transparency of the Agreement (UNFCCC, 2015). This includes but is not limited to ensuring countries’ NDCs are made publicly available, which holds governments accountable to their pledges, making it harder for Parties to become laggards with a fear of being named and shamed. Furthermore, the Agreement explicitly mandates Parties to “incentivize and facilitate participation” of public and private entities (Article 6 (4b), UNFCCC, 2015). Actors such as civil society, private enterprises, NGOs and city mayors, have become increasingly relevant, evidenced by their growing contributions at COP21, COP22 and COP23. This greater decentralisation increases the resilience of the Agreement, giving it the potential to withstand a possible negative bandwagon and ultimate collapse. The vast movement from U.S. state and non-state actors against Trump’s decision to withdrawal from the Agreement has sent a powerful message to the World that the U.S. is “still in the game” (Bainimarama, 2017). The same day as Trump announced the U.S.’s withdrawal, 16 states and one territory, equivalent to approximately 40.66% of the U.S. population and holding 46.46% of U.S. GDP, joined together to form the United States Climate Alliance (BEA, 2017). The United States Climate Alliance is a bipartisan coalition of States that will uphold the U.S.’s NDC commitment to ‘achieve an economy-wide target of reducing its greenhouse gas emissions by 26%-28% below its 2005 level in 2025’, within their borders (UNFCCC, 2015b). Additionally, a group of over 2,600 leaders ranging from city mayors to CEOs have also joined together to pledge their commitment to the Agreement in the ‘We Are Still In’ campaign.

 

This decentralised commitment lessens the blow of the U.S. withdrawal and reassures other Parties that at least part of the U.S. will continue to strive towards carbon abatement. Moreover, it may discourage other Parties from jumping on the negative bandwagon, with the fear of significant pushback by state and non-state actors. Overall, this demonstrates the resilience of the flexible, bottom-up Agreement and the potential for it to withstand the short-sighted actions of the Trump Administration (Deese, 2017). Michael Bloomberg, the current U.N. Special Envoy for Cities and Climate Change, declared that:

 

"Americans will honour and fulfil the Paris Agreement by leading from the bottom up — and there isn't anything Washington can do to stop us." - (Bloomberg cited in Chappell, 2017)

 

4. The impact of the U.S. terminating funding to the GCF

 

A central part of the UNFCCC (Article 4) and the Paris Agreement (Article 2) is the principle of Common but Differentiated Responsibility (“CBDR”) (UNFCCC, 2015; UN, 1992). The principle establishes a shared responsibility for countries to collectively address climate change. However, building on the polluter-pays principle, it also acknowledges that developed countries must take responsibility for the substantial pressure they have already placed on the global environment (Rajamani, 2000). A central part of this responsibility is to provide technology, finance and capacity building assistance to developing countries as stipulated in Articles 9, 10 and 11 of the Agreement (UNFCCC, 2015). The GCF, created at COP 16 in Cancun (Decision 1/CP.16, para.102), is an operating entity of the UNFCCC’s financial mechanism (Article 11 UNFCCC, 2010). The GCF is essentially a vehicle for developed countries to fulfil their commitments to developing countries, in line with the principle of CBDR.

The GCF has set itself the goal to ‘mobilise’ $100 billion a year by 2020. The Obama Administration pledged an initial $ 3 billion towards the fund, of which $ 1 billion has already been paid. Despite the U.S. being the largest historical emitter of greenhouse gases, the Trump Administration, as mentioned in Section 1, believe the principle of CBDR to be inequitable, ‘very unfair’, with the likes of India and China and ‘many other examples’ being allowed to increase their emissions. Consequently, Trump announced that the further $ 2 billion of the U.S. pledge has been cancelled and no further financial commitments will be made towards the fund. This means that developed countries will fall significantly short of their initial commitment of $10.29 billion to the GCF, which they were already struggling to reach due to exchange rates. This decision by the Trump Administration will have extremely damaging ramifications with regards to mitigation and adaption efforts.

 

i. Mitigation

 

This cut in funding could potentially be significantly detrimental to mitigation efforts. As mandated by Article 6 of the Agreement, it is voluntary for developing countries to implement their NDCs (UNFCCC, 2015). Many of their mitigation targets are contingent on developed countries meeting their requirement of providing sufficient technical, financial and capacity building assistance (UNFCCC, 2015). As an illustration, in Namibia’s NDC they voluntarily committed to reducing their GHG emissions by 89% by 2030 (UNFCCC, 2015c). Yet, the NDC explicitly states that this goal is fully conditioned to the ‘provision of finance, technology transfer and the associated capacity building from Annex 1 Parties’ (UNFCCC, 2015c). Therefore, without sufficient assistance from the GCF there is considerable concern that these developing countries will not meet their mitigation ambitions. Accordingly, making it greatly challenging to keep emissions well below 2°C above pre-industrial levels (UNFCCC, 2015).

 

A further potential long-term effect is that the U.S. withdrawal will make developing countries question whether developed countries are committed to achieving global carbon abatement. This could result in a tragedy of the commons as developing countries, with less responsibility to reduce emissions from an equity perspective, halt mitigation and continue along a high carbon industrialisation pathway.

 

ii. Adaptation

 

Recent events, such as the devastating Hurricanes Irma and Maria that hit the Caribbean in 2017, have demonstrated to the World that adaptation is critical. Moreover, it is predominantly developing countries that are the most vulnerable to significant climate threats (IMF, 2017). Therefore, it is critical from an equity perspective that the developed World provide finance to reduce these potentially devastating threats. This urgent need for adaptation, as set out in Article 7 of the Agreement, has increasingly gained recognition and was brought to the forefront at COP23 (Hall and Persson, 2017; UNFCCC, 2015). Led by Fiji and branded the ‘Island COP’, COP23 laid bare the desperate need for adaptation funding. Despite this, adaptation efforts are already significantly underfunded by the GCF. By 2016, it was estimated that only $ 4–8 billion of the $ 11–21 billion spent by the GCF was used for adaptation purposes (Oxfam, 2016). The U.S. currently has the largest economy in World and their decision to withdraw funding is particularly damaging at a time when an absence of adaptation could be life- threatening. The Ethiopian government, current chair of the Climate Vulnerable Forum (CVF), released the following statement subsequent to Trump’s announcement to cut GCF funding:

 

“this signifies an endangerment of the more than one billion people our Forum represents in Africa, Asia, the Caribbean, Latin America and the Pacific... the Paris Agreement is our lifeline.” - (CVP, 2017)

 

iii. Filling the gap?

 

It has been suggested that other developed countries will have to fill this financing gap (Zhang et al., 2017). However, Barbara Hendricks, the German Minister for the Environment, made it clear that this would not be the case and rather they will attempt to fill the gap by mobilising funds from the World Bank and development banks (Hendricks cited in Deutsche Welle, 2017). There has also been suggestion that Trump’s funding cuts will spark private investment, providing new opportunities for financing of adaptation and mitigation projects, however, an essential role of the GCF is to motivate private investment, for instance by de-risking investment through the provisions of loan guarantees and other types of insurance mechanisms or by facilitating the development of public-private partnership (GCF, 2017). Therefore, a cut in GCF funding is likely to reduce rather than stimulate private investment. Moreover, even if private investment does increase, without the aid of the GCF there is no requirement for this investment to be equitable. Consequently, it is likely that the countries that will be hit the hardest by climate change may not be the most favourable investment opportunities for private investors and therefore will miss out on critical funding.

 

5. Conclusion

 

A conclusive answer as to whether the Paris Agreement can withstand U.S. withdrawal is hard to provide at this point. The actions of other Parties to the Agreement, the ‘Paris Rulebook’ negotiations and U.S. and international politics will have significant consequences on the future of the Agreement. As outlined in Section 2, there is still uncertainty as to whether the U.S. withdrawal will even proceed. Despite this, U.S. non-compliance poses a considerable threat to the Agreement. MEAs are particularly vulnerable to non-compliance, resulting in justified hesitation that U.S. withdrawal will create a domino effect, a negative bandwagon, with additional countries withdrawing from the Agreement or become laggards within the Agreement. However, the Agreement’s bottom-up, flexible design, encouraging broad public and private participation, renders it more resilient than other MEA’s and therefore more likely to survive U.S. withdrawal. Nonetheless, U.S. termination of funding to the GCF will have significant implications for international climate change mitigation and adaptation. Annex I countries need to rapidly decide how they are going to fill this considerable funding gap if they want to prevent the Agreement, and global coordination towards a low-carbon economy, from collapsing.

 

 

 

 

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