Months of uncertainty surrounding the US administration’s position on the Paris Agreement have passed since the November 2016 election, culminating in yesterday’s announcement by Donald Trump that the US would prepare to exit the accord.
Remarkably, this uncertainty has not slowed the rapid progress and advancement of global renewable energy. If anything, we’ve observed that activity from our clients has intensified, with strong engagement around climate action and decarbonization in particular.
The decision to exit the Paris Agreement has been highly controversial and hotly contested. As one of the largest global carbon emitters, the US plays a key role in the achievement of the goals established by the accord, namely to limit global warming to no more than 2 degrees Celsius by century’s end. The impacts of warming beyond this threshold are expected to include extensive flooding, crop failure, and massive human migration and resettlement impacts, all of which threaten both US security and the global value chain.
Withdrawal from the Paris Agreement will have far-reaching and global economic implications. Only two other nations (Nicaragua and Syria) are not participants in the accord. The other 196 countries are already moving towards embracing a low carbon economy. Economists fear that by leaving the Paris Agreement the US will be left behind in this transition and weaken its bargaining power in other matters of state. Additional economic risks include potential job loss and “brain drain” of top US climate scientists—particularly to clean energy leaders China, India, and the EU—alongside export tariffs and likely inevitable carbon regulations or taxation.
The US’s leadership in the Paris agreement also had the potential to stabilize and reinforce commitments made by the other 196 participants. There are concerns that US withdrawal may result in a slow down or even stagnation in the development of global renewable energy markets, outcry over US inaction (particularly in the face of the US’ considerable historical contribution to the current climate crisis), and insufficient funding for developing nations to leapfrog fossil fuels, a cornerstone of the agreement.
However, it is also likely that the announcement will spur continued innovation and growth in the areas of renewable energy, energy efficiency, and new energy technologies. The news has catalyzed an already passionate marketplace, and will create additional opportunities for corporations, municipalities, governments, and schools to head the clean energy transition.
The highly public entreaty from corporations—even fossil fuel giant Exxon Mobil—that the US should remain in the accord was striking. 25 corporations, including Pacific Gas & Electric, one of the country’s largest energy companies, made media pleas via The New York Times and Wall Street Journal that Trump maintain US involvement, while many others (including our parent company, Schneider Electric) signed letters of support and engaged the administration in communicating their positions via NGOs, television campaigns, and Twitter.
“The path has been set and momentum is now on the side of sustainability. Businesses investing in sustainability and carbon-reducing initiatives find it helps the bottom line and customer loyalty, while also reducing emissions.” – Schneider Electric
The historic leadership already demonstrated by the private and public sectors has gained clear momentum in recent years. As we have previously shared in our blog, renewable energy has reached a global tipping point and shows signs of acceleration, not retreat, thanks in no small part to the institutional buyer.
Moreover, rapid advancements in technology continue to drive down price and improve accessibility, addressing the most common arguments for not making the transition to renewable energy. We recommend a portfolio approach, combining energy attribute certificates, onsite generation, and offsite power purchase agreements with energy efficiency to reduce electricity and fuel consumption, and battery storage to balance intermittency issues. The right strategies allow organizations to reach ambitious 100% renewable energy commitments, while simultaneously reducing costs and increasing reliability. New energy opportunities like blockchain, microgrids, printable solar panels, and more will increasingly transform the electricity grid, and with it, the economy. Jobs in new industries are being created, and the transformational opportunity is clear.
By taking bold action on climate—setting ambitious goals, improving efficiency, and procuring renewable energy—organizations can ensure the US maintains a position of leadership in the clean economy and can spur others to act. History will not forget this moment as an opportunity for the business community to rise–and the audacious accomplishments that are possible as a result.
In times of uncertainty, it’s important to have a partner you can trust. Learn more about Schneider Electric’s commitment to the power of business to transform energy in this CNBC video with our CEO, Jean-Pascal Tricoire.