Explainer: The Paris Agreement

Joe Biden recommitted the United States to the Paris climate accord on Wednesday in one of his first official moves as president.

The order attracted the praise of world leaders and climate hawks alike but drew criticism from some Republicans in Congress. Sen. Marsha Blackburn said that the decision would “cost American jobs and force households and small business to pay higher utility bills,” and Sen. Ted Cruz claimed that Biden was “more interested in the views of the citizens of Paris than in the jobs of the citizens of Pittsburgh.” 

What is the Paris Agreement?

Contrary to Cruz’s assertion, the Paris Agreement doesn’t have much to do with Paris at all, other than serving as the location where world leaders convened to negotiate the terms of the pact. 

Adopted by consensus in 2015 and and ratified by nearly 200 signatories in 2016, the agreement aims to keep the increase in global temperatures to well below 2 degrees Celsius above pre-industrial levels, with an aspirational goal of limiting the rise to 1.7 degrees Celsius through a worldwide effort to reduce emissions. 

Nationally Determined Contributions (NDCs) are voluntarily set by each country and are required only to be “ambitious,” to “represent a progression over time,” and to be set “with the view to achieving the purpose” of the agreement. 

As of November 2020, 194 states and the European Union had signed the agreement, with Iran, Turkey, Eritrea, Iraq, South Sudan, Libya, and Yemen being the only countries to abstain from ratification. 

Why did Donald Trump withdraw?

In August of 2017, the Trump administration gave formal notice of its intent to withdraw from the agreement as soon as legally eligible, citing unfair restrictions on American job and economic growth with few tangible returns.

Trump, who has regularly called global warming a hoax, claimed that the agreement disproportionately hobbled the United States, stating, “I was elected to represent the citizens of Pittsburgh, not Paris. I promised I would exit or re-negotiate any deal which fails to serve America’s interests.”

is the agreement unfair to america?

Donald Trump argued at the time that the deal was one-sided and that it placed few restrictions on countries like India and China while crippling the American economy. As previously noted, however, restrictions are voluntary and self-imposed, so it is not entirely clear how the deal could be viewed as “one-sided,” at least amongst countries of like stature.

Per contra, the deal placed a responsibility upon developed nations to mobilize $100 billion a year in climate finance in order to aid developing countries in adopting adaptation and mitigation efforts. Indeed, in 2016, the Obama administration offered a $500 million grant to the Green Climate Fund in its first installment of a $3 billion pledge, and John Kerry committed the U.S. to doubling its grant-based adaptation finance by 2020.

Thus, it is true that the United States stood to contribute more than many, but it is untrue that they were being disproportionately disadvantaged compared to similarly situated nations. China, for example—though considered a developing country under the terms of the agreement—also pledged $3.1 billion in 2015 to help developing nations combat climate change worldwide. And on a per-capita basis, Sweden, the U.K., and Luxembourg were pledging roughly $60, $94, and $19 per citizen, respectively, as compared to America’s $9. And regardless, contributions to the climate fund, like NDCs, were and continue to be voluntary.

That being said, the deal wasn’t unduly inequitable, and to the extent that Donald Trump or any other president felt that it was, our contributions were/are able to be adjusted accordingly.

How does this stand to Affect our economy?

As of October 2020, the coal-mining industry employed approximately 44,600 Americans and the fossil fuel industry on the whole, around 1 million. And a transition to clean energy would doubtless threaten the livelihood of these workers.

The decline of the coal industry, however, is not simply a result of climate-related regulation but rather one of simple economics, as well. Thanks to a number of factors—including automation, mechanization, and digitization—building new renewable energy sources is now cheaper than running existing coal plants, fueling an acceleration in plant closures and reduced utilization. So, even dismissing the pressures of climate change, the transition seems all but inevitable.

And that’s not necessarily a negative thing. There are nearly 3.3 million Americans working in clean energy, and these jobs tend to be safer and higher paying, on average, than their coal equivalents. What’s more, of those currently working in clean energy, 45% of them possess only a high school diploma, and they, too, earn higher wagers than those with high school diplomas in other sectors.

And not only is it a desirable industry, it is one of the fastest growing industries, as well. In fact, according to the International Labour Organization, 24 million new jobs could be created in service of green initiatives by 2030, easily offsetting the 6 million that would be lost in competing markets.

Still, NERA Economic Consulting has estimated that, in addition to the loss of 6 million jobs, the U.S. could suffer a corresponding $3 trillion decline in GDP, should we continue on course. Those oft-cited figures, however, do not factor in the offsetting job growth and GDP gains that would result from a renewable energy transition, nor does it factor in the growing cost of climate-related disasters, so it is not—nor was it ever intended to be—a weighing of pros and cons.

“NERA’s study was not a cost-benefit analysis of the Paris Agreement, nor does it purport to be one,” the firm said in a statement. “The objective of the study was to estimate the range of cost sensitivity associated with meeting deep U.S. emissions targets under alternative implementation approaches affecting U.S. industrial sectors. NERA’s study does not provide any recommendations regarding any specific international agreements.” 

Indeed, while the U.S. could, in fact, suffer $3 trillion in losses by 2035, reports aimed at measuring potential gains, such as a 2018 report by the Global Commission on the Economy and Climate, estimate that the transition could generate $26 trillion in benefits and 65 million new jobs across the global economy by 2030—a large percentage of which would likely be enjoyed by the U.S., as we currently employ more than 27% (3 million out of 11 million globally) of the world’s renewable energy sector. This would likely result in a net economic gain, even in the face of the aforementioned losses.

So what is the best path forward?

97% of scientists agree that climate change is, in part, a man-made issue and that we are in trouble if we fail to act. And even absent the incentives of climate change, the transition seems inevitable, regardless.

Yes, that will displace a number of workers, which will cost the economy in some ways, but those losses are projected to be easily offset by the gains that would result from the transition.

That being said, we at The Middle endorse the World Resources Institute’s plan for adapting to our changing environment, which includes a mix of proactive planning, subsidies for companies that invest in new skill building, the use of stimulus funds, the leveraging of procurement power to invest in companies that commit to hiring displaced workers, the establishment of unions, and bottom-up approaches to funding that prioritize local needs.

We believe that the United States would not only survive but thrive under such a framework.

Because, ultimately, our cities are already proving that it’s possible. Pittsburgh—the city invoked by both Donald Trump and Ted Cruz—has already met its 2030 goal of 100% renewable energy for city operations. And this move did not come with catastrophic economic losses; instead, it will result in savings of approximately $100,000 in energy costs for the city and $670,000 for Western Pennsylvania Energy Consortium members on the whole.

Said Mayor Bill Peduto via tweet, “If we can do it in a city that is/was fueled by coal/nuclear, you can, too.”

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