Climate change: opportunities despite Trump threat to Paris Agreement
Delegates at the November global climate change summit (COP22) in Marrakesh presented a united front in response to Donald Trump's election as the next US president. Trump's victory cast a shadow over the conference, which commenced with a celebration of the Paris Agreement entering into force just days beforehand.
Trump has stated he would 'cancel' the US's participation in the Paris Agreement, which commits nations to the goal of limiting the global average temperature rise to 2°C above pre-industrial levels; defund international climate change initiatives; and undo President Obama's Clean Power Plan, the most effective lever to meet US emission reduction pledges.
With other member states confirming their commitment to the pact in Marrakesh, the global business community faces a mixture of opportunity and uncertainty.
Business ready to capitalise on emerging opportunities
Business reaction to Trump's victory indicates a large contingent has embraced climate change action and is positioned for the transition to a low-carbon economy.
During COP22, over 300 US companies, including prominent corporations such as Mars, Kelloggs, Hewlett Packard and Levi Strauss, signed an open letter to Trump confirming their commitment to assist in meeting the Paris objectives and calling on him to do the same. The letter acknowledges the business sense behind climate action, pointing to the economic benefits of incorporating energy efficiency and low-carbon solutions into the US's development.
Furthermore, developments at Marrakesh indicate that clean technology providers and investors will have plenty of opportunity to turn words into action.
During the summit, 48 of the nations most disproportionately affected by climate change vowed to achieve 100% renewable energy production by 2050. This ambitious and high-profile action represents a valuable opportunity for investors to capitalise on the falling costs of renewables and the emerging appetite for the expansion of this sector in developing countries: in 2015, developing economies committed US$156 billion to renewables, a 19% increase on 2014 levels.
Additional opportunities for business leadership surfaced during COP22. The roadmap tabled by Australia and the UK highlighted the role of private financing in achieving developed countries' pledge to mobilise a climate action fund of US$100 billion per year by 2020 and represents an unprecedented opportunity for impact investment from responsible funders.
Paris breakdown remains a possibility
Despite the determination at COP22 to proceed irrespective of Trump's actions, it would be unwise to overlook their potential to result in significant negative outcomes.
Regardless of whether or not the US decides to formally withdraw from the Paris Agreement, or even the overarching UN convention, once he is president Trump will be able to take immediate action domestically that delays carbon reduction strategies in the US.
Even if his presidency lasts for just one term, such actions would make it extremely unlikely the US could meet its commitment to reduce greenhouse gas emissions by 26-28% below 2005 levels by 2025.
Policies that leave the US's emissions unchecked will increase the burden on other nations to make further reductions, with possible regulatory consequences for multiple business sectors. More fundamentally, this could induce waning commitment to targets in other member states.
Such disintegration of the hard-won global commitment to decarbonisation would represent the ultimate failure of the Paris Agreement, and leave an unpredictable energy landscape in its wake. In Marrakesh, member states issued a one page statement of resolve, the Marrakesh Action Proclamation, re-affirming their commitment to Paris in response to Trump's victory.
However, despite this show of defiance it is difficult to predict the actual behaviour of the parties should Trump's threats become a reality.
Dangerous levels of warming increasingly likely
The Paris Agreement's objective of limiting temperature rise to 2°C was chosen to avoid 'dangerous' levels of warming, with implications ranging from reduced crop outputs, to increased energy requirements for cooling, to defunct coastal infrastructure submerged by rising sea levels.
The 2°C target is already a huge challenge for the member states, with only a small window available to act and current carbon reduction pledges estimated to achieve only a 2.9°C limit on warming at best, according to a recent UNEP study. Information from COP22 indicates that at current emissions rates, it is more than likely the 2°C limit will be exceeded by 2037. The US accounts for 15% of global CO2 emissions: even if the rest of the world's resolve to reduce emissions remains on track, there is a rapidly diminishing prospect of limiting warming to 2°C without its timely participation in emissions mitigation.
Mixed messages from the president-elect
Proceedings in Marrakesh suggest the immediate influence of Trump's election on global climate action may not be the fatal blow once feared.
However, despite professing an open mind towards the Paris Agreement in a recent post-election interview, Trump's apparently oscillating stance does nothing to diminish his ultimate capacity to undermine the objectives.
So, while business can seize the opportunities presented by the tenacious tone of COP22 to progress with climate objectives, future planning should remain wary of the potential consequences of the Trump presidency further down the road.