(MENAFN- Live Mint) Donald Trump on Monday pulled the US out of the Paris Agreement on climate change-just as he did in 2016 during his first stint as president – citing Chinese carbon emissions.
The move is particularly worrying for developing countries in the UNFCCC (United Nations Framework convention on Climate Change). Countries need to set their action plans for the next round of nationally determined contributions (NDCs) to enable the world to restrict global temperatures to 1.5°c above the pre-industrial average.
The Paris Agreement, an international treaty on climate change that was signed in 2016, covers climate change mitigation, adaptation, and finance. As many as 196 countries have signed up to it.
“I'm immediately withdrawing from the unfair, one-sided Paris climate accord rip-off,” Trump said on Monday at a downtown Washington arena ahead of his inauguration.“The United States will not sabotage our own industries while China pollutes with impunity,” he added.
The US president has signed the relevant executive order.
Global climate action at risk
Experts said the developed world may find it difficult to plug the gap left by the US withdrawal.
Read more: Adapt to a Trumpian world order in a way that makes India great
“Today the European economies are not in good shape. Europe and its populations are facing a certain fatigue with green climate sustainability, etc., but that doesn't mean that they are backing down from their own commitment. However, their ability to plug the gap left by the world's largest economy not participating in the global compact may not be there. And so therefore this is a matter which is of global concern, and it impacts developing countries which rely on global collaboration and global support,” said Manjeev Singh Puri, distinguished fellow at Teri.
At the COP 29 meeting in Baku, the overall outcome in terms of the new cumulative quantified goal (NCQG) on climate finance left many countries, particularly India to state that $300 billion is far short of what is required.
“Now when the world's largest economy says it's not participating in the fundamental agreement which resulted in this outcome, where the world would raise these resources is significantly diminished. It becomes more difficult for the developing countries, particularly small island developing states, LDCs, smaller countries, etc. The pool from where you can draw the funds is greatly reduced and secondly, the ability is to be able to use market mechanisms, etc. all becomes diminished. This is quite apart from what happens on the mitigation and adaptation front,” Puri, who is also a former ambassador to the European Union, explained.
The US is the largest economy in the world, with a share of 25%. It is also the second largest greenhouse gas (GHG) emitter.
According to climate finance experts, the move also creates several uncertainties.
“The impact of US's withdrawal from the Paris Agreement could be felt on three fronts: climate actions within the US, the implications of finance for supporting the transition in the developing world given the US's important role in it, and on the global narrative on climate action,” said Vaibhav Chaturvedi, Senior Fellow at CEEW.
“On the global narrative front, we can expect the EU to take lead in keeping the rest of the countries together at least for the next four years. Action on the other two fronts, however, would face challenges. We shouldn't expect the growth in RE to slow in the US given the market realities, but we could see some resurgence in the oil and gas sector. Most importantly, a hit on the climate finance front and reform of multilateral institutions would indeed be a blow to mitigation and adaptation actions in the developing and vulnerable economies,” Chaturvedi added.
Meanwhile, India must remain steadfast in its commitment to climate action - to capitalize on the strategic opportunities in technology, investment, industrial development, green livelihoods, and greater resilience for the economy, according to other experts.
The move comes at a time when UNFCCC countries are scheduled to submit their third round of NDCs, critical to reduce greenhouse gas emissions and adapt to climate change. Countries may rethink their ambitions before submitting their next round of NDCs, which is due in February, finance experts said.
Read more: India's farm sector grapples with falling yields to climate change
NDCs are a key part of the Paris Agreement, which aims to limit the global temperature rise to 1.5°C above pre-industrial levels, which was breached last year. 2024 recorded a global average temperature of 15.1°C, 1.6°C above pre-industrial levels, driven by record-high greenhouse gas emissions.
“There's a possibility that countries may say that we are not getting the capital we were expecting. So, they may scale down on the NDC, but that will not happen immediately because of existing commitments. They will scale down because they will not get the consistent capital as there is a time lag between commitment and the prospect of capital,” said Labanya Prakash Jena, Sustainable finance expert.
“For example, the World Bank two years ago might have committed money which might be flowing right now. So, it will not have an immediate impact, but you'll notice that after 1-2 years.”
Climate risks are now macroeconomic risks - and climate policy is now industrial policy. Meaningful collaboration opportunities still exist on adaptation, resilience and insurance against climate shocks on one hand, and development and diversification of clean tech development, manufacturing and supply chains, on the other, according to other climate finance experts, adding that many countries are likely to stay the course on renewable and other climate change policies irrespective of changes at the federal level.
"It's still too early to know how this will play out. We have already seen the US walk out of the Paris Agreement once earlier and this was widely expected. Also, many states are likely to stay the course on renewable and other climate change policies irrespective of changes at the federal level,” said Vinay Rustagi, Director, Premier Energies.
“One key development to look out for is any changes proposed by the new administration to the Inflation Reduction Act, which could have an immediate and tangible impact on the sector overall. Such changes could also adversely impact US manufacturing investment plans of Indian companies, who would need clarity on the way forward. All other major economies like India, China, Japan and Europe are unlikely to change their stance on climate change and to that extent, this move won't have a major material impact in terms of global energy transition plans,” Rustagi said.
Subrahmanyam Pulipaka, CEO, National Solar Energy Federation of India, said, "The US is the largest export market for Indian module makers. Now the industry is waiting to see how the US market shapes up going ahead. However, given the robust demand for modules within India, not much of an impact is expected."
MENAFN21012025007365015876ID1109114875