In the months since Donald Trump became President of the United States he appointed E. Scott Pruitt as head of the Environmental Protection Agency and announced that the United States would withdrawal from the Paris agreement on climate change.
Both political moves have played well with Trump’s supporters in the fossil fuels business, particularly the coal industry, and has caused outrage across the country and the world. What is true, however, is at least so far, little has actually happened and time will tell where all of this will lead.
Going slow at the EPA
As discussed in a post back in February, Mr. Pruitt strongly believes that EPA went too far under the Obama administration and is committed to rolling back key aspects of his legacy including the Clean Power Plan that effectively will phase out most of the U.S.’s older coal fired power plants.
Soon after taking office Trump ordered the EPA to review the Clean Power Plan and the that review is currently in process. The good news is that last month, Secretary Pruitt indicated publicly that the EPA may end up leaving the plan in place and that the administration had a number of other priorities.
The reality is that changing legislation is a complicated legal process and it will take this EPA months if not years to undo the work of the previous administration.
A Paris Time Line
It will also take time for the United States to leave the Paris accord.
According to website of the United Nations Framework Convention on Climate Change, countries can leave the agreement only after its first three years and then it takes an additional year. This means in effect that the earliest the U.S. would be able to withdraw is November 4th 2020!
This will actually be the day after the 2020 presidential election in the United States in which Trump will be running for re-election if he actually manages to avoid impeachment before then.
The world is not waiting.
While all of this plays out, other countries, cities and even state governments are simply moving ahead:
- On June 12th the environmental ministers of Canada, France, Germany, Italy, Japan, the United Kingdom, and the EU met in Bolgna and reaffirmed their commitment to the “swift and effective implementation” of the Paris Climate Change Agreement
California, like other states, has embraced the agreement and according to the LA Times, its governor, Jerry Brown, is committed to extending the state’s cap and trade program and even went to China to offer to continue the partnership began by Barak Obama on this issue with the Chinese
- Last Friday, the Mayors of 140 French speaking cities met in Montreal made a declaration stating that they “reaffirm our role and our determination to ensure the effective implementation of the Paris Agreement”
For a business, one of the most important issues is to develop a medium term view of where the world is going on critical topics that effects its customers and the markets it operates in.
On the issue of the transition to a low carbon economy, my advice is to ignore the current news cycle and focus on the underlying trends which appear to me to be very, very green.