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Trump and the Paris Agreement

Trump and the Paris Agreement

No. 3, Jan.-Feb. 2017 » ecON/OFFice

The negotiations for the Paris Agreement were concluded at the 21st Conference of Parties of the UN Framework Convention on Climate Change in December 2015, and it entered into force in October 2016. It has been signed by 195 countries and ratified by 144. President Trump has repeatedly spoken out against the Paris Agreement and the “climate change industry” and made it a campaign plank to exit the Agreement. For all of its apparent randomness, there is one obvious trend in his Cabinet appointments, past and present, which is to appoint people who exhibit an ideological break from the policies of the past Administration or who are skeptical of the worldview of their respective agencies. Naming a “climate change skeptic” and pro-business advocate, Scott Pruitt, to the Environmental Protection Agency was one such move. Naming a China and free trade skeptic, Robert Lighthizer, to be US Trade Representative (a Cabinet level appointment) was another. And there are still more examples, such as the failed nomination of fast-food CEO Andrew Puzder as Secretary of Labor.

“The Paris Agreement reflects global solidarity in addressing a collective action problem that is without precedent”.

The Paris Agreement is an interesting example of the “sound and fury” of many global initiatives, in the end “signifying nothing”. It was heavily criticized among specialists even as the victory champagne was being poured, especially by the environmentally minded, but it has been lionized by those very same groups once Donald Trump adopted his voters’ disapproval of it. The still-ongoing hysteria over the recently installed Trump Administration has an equal, but opposite, effect on almost anything President Trump rails against, provided he does not fit the establishment view on it. With his campaign promise to exit the Paris Agreement, Trump has armored it against any legitimate criticism, despite it being emblematic for the weaknesses of the climate change movement and its multilateral initiatives. Scott Barret, an expert on international cooperation for environmental issues, wrote that:

“The Paris Agreement’s assessment and review framework is unlikely to create strong incentives for countries to reduce their emissions relative to the levels that would have resulted without the Agreement”.

He contrasted it with the success of the Montreal Protocol on the reduction of CFCs, another greenhouse gas that also damages the ozone layer (something we do not hear very much about today).

President Trump has repeatedly spoken out against the Paris Agreement and the “climate change industry” and made it a campaign plank to exit the Agreement.

Two things stand in the way of Trump actually exiting the Paris Agreement. The first is the exit procedure, which would place the withdrawal immediately after the end of Trump’s term, leaving an incoming Democrat with the option of reversing the decision completely, to wide acclaim. The second is the likely political cost for the embattled President, as his opposition in US politics, in the media and in international community would pounce on such a move to exert significant pressure, if only with the goal of undermining him, rather than protecting a flawed Agreement. The way in which Trump can turn such opprobrium to his advantage is by rallying his political base, which has stuck with him through the media storm. At the same time, the vitriol against Trump works against his detractors, as their incessant attacks makes it less likely that he would compromise to gain their approval. To the unease of his supporters and the relief of others, Trump has been the very opposite of dogmatic in his approach, borrowing policy positions from both sides of the spectrum. However, he responds well to the carrot, not the stick, which is all his opposition seems to resort to. Secretary of Defense James Mattis, along with National Security Adviser H.R. McMaster, disagreed with Trump’s non-interventionist stance and worked behind closed doors to change his mind and not create a security void. Publicly, they supported and defended the President in every matter, as is proper for their positions. As I have argued repeatedly during his campaign and early days, critics of the Trump Administration must work with it, not against it, if they want to have a chance at influencing policy without setting themselves up for a political confrontation. And, for the establishment supporters, coopting Trump, to the extent that it is possible, is a more likely course than marginalizing or eliminating him.

The Paris Agreement is an interesting example of the “sound and fury” of many global initiatives, in the end “signifying nothing”.

Moving back to the Paris Agreement, its structural flaws make it unlikely to achieve its goals and its persistence makes it unlikely that a better accord can be crafted to replace it. At the same time, the environmental movement is facing a crisis of its own making. Even as new technology holds significant promise for environmental concerns, the movement itself is increasingly mired in inadequacy and irrelevancy and its few victories are likely to turn hollow. At the international level, it is stymied by Great Power politics and the divide between the developed and the developing world. At the national level, “green” politicians forfeit important opportunities for coalition building that see their interests sacrificed in the basket of -isms. And, at the local level, climate change has displaced important other indicators of environmental health and preservation in the public consciousness, leaving overpopulation and urban sprawl to permanently disrupt fragile ecosystems and reduce the land’s carrying capacity. That is not to say that things are not improving, but they are due to other factors, whether it is new technology, economic patterns like increasing urbanization or the gradual shift from coal to natural gas or the middle-class Chinese citizen who wants to breathe clean air, having reached the point where the environment grows in importance over fast and dirty economic growth. 

The exit procedure would place the withdrawal immediately after the end of Trump’s term, leaving an incoming Democrat with the option of reversing the decision completely, to wide acclaim.

We will never have Paris 

Around the time of the entry into force of the Paris Agreement, Harvard University published a report called “The Paris Agreement and Beyond: International Climate Change Policy post-2020”, featuring contributions from numerous experts, whose opinions tended to be critical, praising the accord in abstract (“the Paris Agreement reflects global solidarity in addressing a collective action problem that is without precedent”) and damning it in the details.

Donald Trump responds well to the carrot, not the stick, which is all his opposition seems to resort to.

Most criticism centered on the inadequate target setting and enforcement mechanisms, as well as the immense exceptions carved out for polluters in the developing world. Firstly, each country proposes its own target reductions and there is no mechanism to penalize failure or inadequate efforts. Rather, the Agreement punishes over-ambitious countries (like the US, where the Obama Administration set a target to reduce emissions by 26-28% below 2005 levels by 2025), by contrasting their inevitable problems reaching the targets with the easy successes of countries that link targets to their pre-existing emissions estimates. The toothless nature of the Agreement is one of the reasons cited for not withdrawing from it, as there are no penalties for non-compliance and there are diplomatic advantages to being at the table and influencing the other parties. However, there have been credible scenarios of the US Government opening itself up to internal litigation on the basis of its stated targets, even if the Agreement is silent on the issue, further complicating internal politics. Whether from outside or from within, this sort of “lawfare” can be used to harass and hinder the Administration for years to come, though a withdrawal’s aftershocks would be just as noisy.

The Paris Agreement’s structural flaws make it unlikely to achieve its goals and its persistence makes it unlikely that a better accord can be crafted to replace it.

The exemptions carved out for certain countries are also quite extraordinary. India does not have to reduce its emissions, just the carbon intensiveness of its economy. China must start reducing emissions by 2030. In the meantime, the need to fuel its growing economy and also accommodate the intermittent nature of its massive renewable energy investments is leading China down the road to more coal powered plants. In addition to the existing 920 installed GW of coal producing power, the Chinese intend to add another 330 GW over the next few years as “the price of being green” (in the meantime, 120 GW under construction have been postponed). Logic would have dictated that nuclear power be scaled up rapidly to meet new demand, which is already happening at a certain level, in China (half of all new reactors) and a few other countries, if not the world. However, the current enthusiasm for renewables does not take into account the issue of intermittency, that can be solved either with expensive or environmentally damaging storage facilities, or with fossil fuel plants that can be turned on and off at a whim. This has led China to invest massively in such energy to build up industrial capacity to corner the global export markets. It has done so already in the area of solar panels and is an important player in wind turbines, aided by its (incredibly polluting) industry for Rare Earth Metals extraction and refinement.

The Paris Agreement succeeded diplomatically because it relied on consensus and its ambitions were toned down to the point where a consensus could be achieved.

The Paris Agreement succeeded diplomatically because it relied on consensus and its ambitions were toned down to the point where a consensus could be achieved. The very universality it trumpets is its undoing. It is like an examination where everybody gets a maximum score – it does not distinguish between different levels of merit, it does not adequately gauge progress and its does not incentivize pouring effort into it. 

Moral arguments 

Donald Trump was, in his hyperbolic manner, correct about the use of environmentalism as a cudgel in the Great Games between global powers, though reality is not as one-sided as he suggested it to be. When convenient, the West uses environmentalism as a rhetorical weapon against China and other countries, despite much of the pollution being due to a transfer of polluting industries from the West to these places. Within living memory, a river in the US caught fire from its pollution and the single worst day of smog in London in 1952 killed 12,000 people. China and other developing countries, especially those with particular heft, use climate change to impugn the West for hypocrisy in having polluted its way to the top and now seeking to remove the ladder for other countries to do so as well. The countries claim a moral debt from the West in the form of technology, preferential access to markets, financial aid for development and, not too far into the future, they will also claim migration rights for “climate refugees”, a very dangerous formula if accepted, since it created incommensurable obligations with little threshold for proof.

The Montreal Protocol created mutually reinforcing incentives.

However, the truth of the matter is that, unless the West is content with enforcing global poverty, development is the only way in which environmental issues will be addressed, even if the transition phase of development may require further pollution as a cost. Modern environmentalism was born in the West and its ebb and flow correspond with that of prosperity. A reasonably prosperous population will demand a cleaner environment for its health, natural beauty for its enjoyment, and the protection of wildlife and biodiversity for its moral and status consumption. The faster China grows, the louder the grumbling from its middle class population about the smog, the high level of pollution related disease and the consequences on their standard of living. This is one of the reasons for China’s Westward Development Policy, which aims not only to develop the poorer and restive Western provinces, but also to move some of the pollution sources from coastal cities where they are less price competitive and impose ever greater marginal costs and negative externalities.

Most likely, when it comes to climate change, there will be no grand global effort to avert the projected increase. Rather, the world will muddle through, adapting and changing as it goes along.

This is also one of the glaring omissions in the voluntary scheme promoted by the Paris Agreement. The countries most likely to propose and implement reductions are the most likely to have done so anyway, in the absence of the Agreement. This is because, just like with people, countries have multiple sources of motivation, beyond top down pressure. The US, the UK and other countries, no matter how recalcitrant they may be in their moment-to-moment politics, have a host of internal factors that inevitably push them towards environmentalism:

  • A population which has internalized the logic and ideals of environmentalism, which also permeate entertainment and other forms of popular culture;
  • This population also translates into environmentally conscious consumption, which opens up new avenues for creating added value for companies, such as investment in green products;
  • Even shareholders of corporations like Exxon are pressuring the company to plan its research around climate change;
  • Readymade political parties and factions with an environmental bent;
  • NGOs and other political pressure groups;
  • Research entities with budgets for environmental studies;
  • Readymade regulatory entities with their own political clientele for added political pressure.

Of course, none of these is a guarantee of success or of efficacy in environmental efforts, but it is a self-sustaining force in that direction. The developing countries do not have these factors, or are just now seeing their emergence. Therefore, purely from the perspective of emissions’ reduction, they are the more likely target for pressure from above to reduce emissions, since they lack the requisite pressure from within. The Paris Agreement, however, does the opposite. 

A more effective agreement 

Climate change mitigation is a global public good, but, according to authorities in the field like Carlos Carraro from the University of Venice and Scott Barrett, “the theory of global public good provision provides a clear message: an effective and global agreement on climate change mitigation is very unlikely”[1]. Therefore, a global coalition like the Paris Agreement, but one which is also effective at reducing greenhouse gas emissions, is very unlikely. It is either one, or the other.

The solution that has been explored in specialty literature is the “climate club” model. According to Carlo Carraro:

“Climate clubs, namely subgroups of countries implementing more ambitious and effective climate policies than others, may be the only practical approach to address the lack of incentives to reduce GHG emissions on the part of most, if not all, countries.”

Climate clubs do not appear “in the wild”, however, unless there are clear benefits that accrue to members, but not non-members (the benefits of ameliorating climate change are a classic free rider problem) or unless non-members are punished somehow for not being in the group. Both of these conditions would satisfy Donald Trump’s underlying demand for fairness in adopting an emissions’ reduction program which, according to a Heritage Foundation report, would cost the US by 2035:

  • An overall average shortfall of nearly 400,000 jobs;
  • An average manufacturing shortfall of over 200,000 jobs;
  • A total income loss of more than $20,000 for a family of four;
  • An aggregate gross domestic product (GDP) loss of over $2.5 trillion;
  • Increases in household electricity expenditures between 13 percent and 20 percent.

And this is without an expectation of reciprocity in order to register environmental benefits at global levels.

The most likely way of rewarding the in-group and punishing the out-group is to impose trade sanctions outside the group. The threat might have psychological value in convincing others to join up, so long as the initial group is intransigent enough. However, it is very unlikely that effective and credible, yet non-self-harming, trade sanctions may be implemented.

Positive reinforcement may be necessary, as opposed to negative incentives, through access to technology, common R&D, preferential access to aid and finance and so on.

Another model is to not rely on the Paris Agreement, despite the false sense of accomplishment that such a global and enthusiastic initiative has inspired, and instead focus also on complementary agreements for individual classes of greenhouse gases and industrial sectors. This must offset the disappointing results predicted for the Paris Agreement by a study modelling the results. There is an example in this regard, the Montreal Protocol, which was more successful than the larger and better known Kyoto Protocol, having reduced greenhouse gases 4 to 5 times more than its larger counterpart could.

No solution makes do without inflicting some sort of costs and the ultimate stakes of all politics is who gets the bear the costs and who enjoys the benefits.

Scott Barrett listed the sources of success for the Montreal Protocol. It created mutually reinforcing incentives, by limiting both the consumption of CFCs, as well as their production, while also banning trade in these gases and associated products between members and non-members. The equivalent for the Paris Agreement would have been to limit not just emissions, but also the production of fossil fuels, while penalizing trade with other countries based on the carbon footprint of the product. The trade dynamics created demands for CFC substitutes and reduced the returns to CFC productions, while the expected sanctions induced full participation and compliance, despite the benefits of free riding. By changing incentives, Montreal managed to almost entirely replace or eliminate ozone depletion gases, while the classes of GHG not covered by it have increased tremendously.

Such accords can be pursued in varied areas, from metallurgy to aircraft manufacturing, centered on using trade incentives to induce small changes in behavior with important results in emissions. 

New horizons for environmentalists 

Finally, one of the problems of the modern environmental movement is the degree to which it has latched on to climate change, to the exclusion of other environmental concerns. 2 degree growths in average temperature are not very rousing, when compared to the destruction of natural beauty in one’s proximity. On the way, the environmental movement has lost adherents, which it now lumps into a heterogenous mass of “climate change deniers”, people who have sinned against the new secular religion, which combines actual scientific fact with the pseudoscience of manufacturing consensus out of favorable models. Climate change, if well managed, can be a big business and, prior to the Paris Agreement, environmentalists like Al Gore would jet in and out of exotic conference locations to explain the solution is to place a non-trivial part of world GDP under their control for the laundry list of investments that will take care of things. It might work, but it is definitely a recipe for accumulating power and influence, which is why this has not happened yet. Most likely, when it comes to climate change, there will be no grand global effort to avert the projected increase. Rather, the world will muddle through, adapting and changing as it goes along, barring some actual disruptive event or catastrophe.

In their quest to play in the big leagues, the environmentalists have forgotten about subjects which had been part and parcel of environmentalism for over 100 years. One of these is population control as a way of protecting the environment by reducing pressures on it. Ever since Paul Ehrlich’s apocalyptic prediction in “The population bomb” panned out on account of new plant strains to feed the multitudes, population control has fallen by the wayside, even as Africa’s population, along with that of India, Bangladesh and others, has exploded into unsustainability. Without commensurate economic increase, well distributed, each new generation leads a more precarious life than the previous one, especially when it comes to disasters like droughts and famines. Having abandoned population control in Africa to billionaires and feminist empowerment specialists, the continent grew to 1.3 billion people today and, according to the latest population estimates by the UN, it will reach 4.5 billion by 2100, with Nigeria replacing the US as the third largest country in the world long before that.

“The theory of global public good provision provides a clear message: an effective and global agreement on climate change mitigation is very unlikely”

Such an impoverished population, practicing subsistence agriculture and aggregating into shantytowns, will put important pressure on woodlands, animal life and the other aspects of the natural balance. But at least their carbon footprint is very small! At the same time, the West has very large carbon footprints, despite efforts to reduce intensiveness. While the overpopulation scares of the 1970s caught hold of Western imagination, contributing to a crash in fertility, the environmentalists have forgotten about their own arguments and are now silent about the movement of surplus population from the third world into the first world. There, carbon emissions converge, meaning that a Nigerian emitting 2 tons of Carbon per year becomes an American with 16 tons emitted.

By selectively ignoring real causes for environmental decay and focusing on the worthwhile but distant concept of climate change, environmentalists have scored an own goal.

While this is a subject fit for a separate article, the conclusion is that environmentalism has forgotten, or been persuaded to forget its roots (as the famous Sierra Club dropped overpopulation from its litany of ills, after Silicon Valley became one of its main benefactors). By selectively ignoring real causes for environmental decay and focusing on the worthwhile but distant concept of climate change, environmentalists have scored an own goal. They are increasingly satirized among their purported audience as “watermelons”, green on the outside, but red on the inside. As Romania’s forests dwindle, Western nations commit to sprawling urban areas to accommodate the population excess of other countries under a flawed economic and moral argument, and developing countries are given license to pollute and propagate beyond the carrying capacity of the land, a little global warming will likely be the least of our worries. 

Conclusion 

The Paris Agreement is a flawed construct whose very success in attracting support indicates its failure to enforce meaningful change. Whether the US exits the Agreement or muddles through, we can be certain that both developed and developing countries are wed to their respective courses. The former are committed to reductions, but from a high base, while the latter will let nothing stand in the way of growth and will increase emissions from a small per capita level. At most, the Paris Agreements is an opportunity for all sides to signal politically to their respective supporters, as European nations and individual American states and towns beat their chests about respecting the Paris Agreement. The noise of the posturing passes, but the problem of reconciling environmental protection with economic growth remain. There are theoretical solutions and past examples, but none make do without inflicting some sort of costs and the ultimate stakes of all politics is who gets the bear the costs and who enjoys the benefits.

 

[1] Carlo Carraro, “Clubs, R&D, and Climate Finance: Incentives for Ambitious GHG Emission Reductions”, http://www.belfercenter.org/sites/default/files/legacy/files/2016-10_paris-agreement-beyond_v4.pdf

 
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OEconomica No. 1, 2016