Does a US exit really matter?

By Somit Dasgupta

With the change in the United States (US) administration in January 2025, there is apprehension that efforts to tackle climate change will take a beating. The reason for this fear is the past action of the Trump regime when the US formally pulled out of the Paris Agreement (PA) in 2017. What the US will do now when the new regime comes to power is yet to be seen. For the present, the US is represented by a member of the Biden administration and he has the unenvious task of just sitting in the proceedings without making any commitments.

One wonders why there is so much of fear about the return of Trump as far as climate change is concerned. Has the Biden administration done wonders in the past four years? Before delving into this, it would be useful to study a few hard facts about the attitude of the US on climate change right from the first international treaty, the United Nations Framework Convention on Climate Change declaration of 1992 (Rio de Janeiro). Despite being the largest cumulative emitter of carbon dioxide (25% of the global emissions), the US has always repudiated the concept of “common but differentiated responsibilities” (CBDR). The meaning of this term is that while all countries have the obligation of reducing carbon emissions, there are some (implying the developed nations) whose responsibility is higher because they have been the primary emitters in the past.

In the Rio de Janeiro document, they have been called the Annex I countries who were given targets for reduction in carbon emissions. The concept of CBDR was reiterated in the Kyoto Protocol document (1997) and here again, those who were to reduce emissions were identified and called Annex B countries. The list of countries identified in Annex I and Annex B were almost identical but not entirely. CBDR was again mentioned in the PA (2015) but it had lost its significance. For all practical purposes, it’s no more “differentiated responsibilities” and instead, all countries are treated at par and each has to prepare its nationally determined contributions (NDCs) based on its “fair share”. The PA also does not single out developed nations, as it was in Annex I or Annex B. Though this turnaround may seem unfair from the standpoint of the developing world, emissions have reached a stage in which laying down targets just for the developed nations will not suffice in meeting the goals of the PA.

The Biden administration has taken certain decisions to tackle climate change, such as laying a target reduction of emissions by 50% by 2030, requiring new passenger vehicles to be emission-free by 2035, framing regulations to phase down hydrofluorocarbons, etc. These are all measures whose effect would be seen in the medium to long term, if at all. But for the immediate, three instances are being quoted which indicate that the Biden administration has either done a volte-face, has not been transparent, or has shown utter disregard for lives and livelihood of people adversely affected by climate change. First, the Biden administration has ensured the US enhances its production of oil and gas, despite his earlier announcements that fossil fuels shall not be promoted. The US is the largest producer of crude oil today. There are estimates that in 2023, the US produced 13 million barrels, which is the highest ever. It is said that the Biden administration permitted more drilling for oil and gas on public land compared to the preceding Trump regime. The profits of the top five publicly traded oil companies saw a 100% increase under Biden compared to the previous administration. The number of US jobs in oil, gas, and coal rose by 11.3% during the first two years of Biden’s presidency while the corresponding growth in the renewable sector was only 8.8%. In absolute numbers, the total jobs in fossil fuel industry grew by about 80,000 compared to about 38,000 in renewables.

Second, one of the biggest policy decisions of the Biden administration was the formulation of the Inflation Reduction Act (IRA) in August 2022. Though this piece of legislation was dubbed as one that would encourage transition to clean energy, critics say that the actual objective was to protect domestic industry by doling out subsidies which would only be available if purchases are made from US firms. It has a huge budget of $750 billion, out of which about 53% would be spent on energy security and climate change. The subsidies would be financed through a levy of 15% corporate minimum tax apart from some other measures. Some of the areas which are covered through subsidies include purchases of heat pump water heaters, biogas stoves, and new or old electric vehicles (EVs), and production of clean qualified hydrogen. The subsidies are quite liberal. For example, a tax credit of $7,500 is given for purchasing a new EV, whereas it is about $4,000 for the purchase of a used EV. The European Union (EU) retaliated by its own Net-Zero Industry Act of March 2023 since it apprehended that the IRA would lead to the relocation of industries from the EU to the US.

Third, US contribution to funding climate change activities in developing countries has been abysmal. To quote a recent case, the US has committed $17.5 million to the Loss and Damage Fund, which is a mere 2.5%. The total committed kitty of this fund is about $660 million and the main contributors are Italy, France ($108 million each), Germany and the UAE ($100 million each).

If the US finally pulls out of the PA as it did before, it is a matter of concern, but the fact is that the role of the Biden administration has not been inspiring either. So, when one gets down to the brass tacks, it may not really make any difference with or without the US. Of course, if the US withdraws from the PA, it may have a demonstration effect and will encourage other big polluters to go easy on carbon emissions.

The writer is senior visiting fellow, ICRIER.

Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.