The Paris Agreement was the capstone of President Obama's climate action plan, the political strategy by which he intended to give the Clean Power Plan and other legally dubious climate policies a treaty-like status, but without going through the constitutional treaty process.
By relabeling his domestic climate agenda as commitments America made to the world, he tried to dictate U.S. energy policy for decades to come regardless of the preferences of future presidents, Congresses, and voters. It was a climate coup of breathtaking ambition, and the treaty’s supporters at home and abroad did all they could to misdirect the debate and pressure Trump to break his campaign promise. President Trump kept an open mind, listened to all sides, and made the right decision for America and the world.
Exiting the Paris Climate Agreement overturns Obama's end run around the Constitution’s treaty process, safeguards American democracy from foreign interference, dispels the Agreement’s long shadow over the U.S. energy and manufacturing sectors, foils corporate schemes to enrich special interests at consumers and taxpayers’ expense, and helps ensure developing countries will have the access to affordable energy they need to lift people out of poverty.
That’s my take on the breaking news in a nutshell. I now offer a more detailed commentary explaining the case for withdrawal.
Preserve the Constitution
Before taking office, every U.S. president takes an oath to “preserve, protect, and defend the Constitution of the United States.” Remaining in the Paris Agreement would undermine the Constitution.
The Paris Agreement is a treaty by all reasonable criteria, such as its potential costs and risks, dependence on subsequent legislation by Congress, and past U.S. practice with respect to similar agreements. Yet President Obama enrolled the United States as a party without obtaining the advice and consent of “two thirds of the Senators present,” as required by Article II, Section 2 of the U.S. Constitution.
As a candidate, Trump criticized Obama for joining Paris “without the permission of Congress.” Obama’s negotiation of the treaty as an executive agreement made the United States an outlier. Even China’s rubber stamp parliament got to hold a vote, as did the legislatures of just about every other party with democratic features or pretensions.
However, scolding Obama for usurping the Senate’s authority is not enough to safeguard the Constitution. Obama’s evasion of the treaty process will set a dangerous precedent unless President Trump acts to nullify it.
Trump’s best option is to send the Agreement to the Senate, where it has no prospect of winning the requisite two-thirds support. That will stamp the Agreement as an unpopular, failed treaty, creating a formidable political barrier to any successor who might claim authority, as Obama did, to make America a party to major multilateral environmental agreements with the stroke of a pen.
Protect the U.S. Energy Price Advantage
Trump’s pro-growth energy agenda is poles apart from Obama’s “war on coal,” which was actually a war on affordable energy. Among other commendable actions, Trump rescinded Obama’s coal leasing moratorium, approved construction of the Keystone XL Pipeline, and directed the Environmental Protection Agency to review and, as appropriate, revise or repeal the Clean Power Plan. But the Paris Agreement was the capstone of Obama’s climate action plan. The Agreement was a political strategy to perpetuate Obama’s domestic climate policies by relabeling those initiatives as promises America made to the world.
The climate regulations the Trump team has rescinded or is reviewing are part of the first U.S. “nationally determined contribution” (NDC)—Obama’s pledge to reduce U.S. emissions to 26-28 percent below 2005 levels by 2025. Two facts are noteworthy. First, all of Obama's adopted and proposed climate policies would achieve only about 51 percent of the first NDC emission-reduction goal. Second, parties to the Paris Agreement are to submit more “ambitious” NDCs every five years. Clearly, the Agreement is incompatible with Trump’s goal of achieving “U.S. energy dominance” by lifting regulatory impediments to energy innovation, exploration, and development.
European Union environment minister Margot Wallström once said the “Kyoto [Protocol] is about the economy, about leveling the playing field for big business around the world.” That goes in spades for the Paris Agreement. As Stephen Eule of the U.S. Chamber’s Institute for 21st Century Energy observes, U.S. manufacturers today have “a huge comparative energy advantage in natural gas, electricity, and coal prices for U.S. industry compared to its OECD competitors, with prices for these energy sources in the United States often two to four times less.” The only way to impose European energy prices on U.S. firms is to pressure U.S. leaders to adopt European energy policies. Exerting such pressure is a core function of the Paris Agreement.
To persuade Trump that the Agreement poses no threat to his agenda, Paris advocates now claim the President is free to revise the first U.S. NDC any way he likes. More on that below. A key fact to bear in mind is that the Obama administration did not pick the U.S. NDC target out of a hat. Rather, they calculated it with a view to the Agreement’s central goal of holding global temperatures “well below 2°C above pre-industrial levels.”
Given the dubious, model-based climatology underpinning the Agreement, avoiding more than 2°C of warming will require a 40-70 percent decrease in global emissions by 2050. Accordingly, “developed” countries like the United States are supposed to cut their emissions by 80 percent or more. As the NDC states:
This target is consistent with a straight line emission reduction pathway from 2020 to deep, economy-wide emission reductions of 80 percent or more by 2050. The target is part of a longer range, collective effort to transition to a low-carbon global economy as rapidly as possible.
The bright future Trump envisions for America’s coal, gas, and oil producers, and energy-intensive manufacturers, simply has no place in a world organized by the Paris Agreement.
Trump’s resolve to fight regulatory excess on his watch is not the issue. What remaining in the Paris Agreement endangers is his policy legacy and America’s economic future after he leaves office. If Trump’s presidency is to actually change the direction of U.S. policy, he must ensure future presidents cannot pick up where Obama left off. Again, the best option is to send the Agreement to the Senate where it dies for lack of broad-based support.
Non-Binding Does Not Mean No Risk
Political Risk. The pro-Paris faction claim there’s no risk in remaining in the Agreement because America’s emission reduction and climate finance commitments are “non-binding.” To believe that, Trump would have to ignore what he has experienced and observed over the past several weeks. Progressive Democrats, establishment Republicans, corporate rent seekers, and European leaders have waged a full court press to keep him in the Agreement. That reveals the Agreement is far from toothless. The Paris coalition has already compelled Trump to expend considerable political capital just for the privilege of keeping his options open. Better not to belong to a club where the object is to “name and shame” you into submission.
The Paris Agreement is a global legal framework for mobilizing domestic protest and diplomatic blowback against any U.S. leader who fails to make and keep “ambitious” emission-reduction and climate finance pledges. It is especially averse to any U.S. leader, like Trump, who dares to champion the American people’s freedom to develop the nation’s energy treasure.
Under the Agreement, nations honor their non-binding promises by turning those into binding obligations—domestic laws and regulations. So the economic risk to America and political risk to Trump’s presidency are both immense and obvious.
Litigation Risk. The Agreement’s save-the-planet promissory language is music to the ears of the climate litigation fraternity and activist judges. If the United States remains a party, progressive attorneys general and trial lawyers will cite “America’s commitments” in court cases challenging Trump’s rollback of the Clean Power Plan and other elements of the U.S. NDC.
Naturally, they now deny that, but actions speak louder than words. Before the Paris Summit even began, when the U.S. NDC was still only an “intended” commitment, Obama climate negotiator Todd Stern pleaded with the D.C. Court of Appeals not to stay the Clean Power Plan because other prospective parties were counting on us to implement it.
Even green legal activists acknowledge the Agreement will fuel climate change litigation. As explained by the progressive Sabin Center for Climate Change Law in a report published last week by the UN Environment Program (UNEP):
The Paris Agreement by its own terms does not provide litigants with a cause of action or impose enforceable limits on member countries’ national emissions. But it makes it possible for litigants to place the actions of their governments or private entities into an international climate change policy context. Ultimately, while the Paris Agreement does not assign each country a carbon budget, it does offer a basis for deducing a budget from national commitments. It also makes clear that policies leading to net increases in emissions are disfavored.
For example, a few months before the delegates met in Paris, the Hague District Court ordered the Dutch government to cut emissions by 25 percent. On what grounds? The government had assumed an obligation to protect its citizens from climate change by virtue of numerous non-binding commitments, notably the 2009 Copenhagen Conference’s goal—now the central goal of the Paris Agreement—to hold global warming below 2°C.
As the saying goes, even judges read the New York Times. The U.S. government cannot remain a party to the Paris Agreement without implicitly affirming that “inaction” is a wrong crying out for a remedy.
This just in. More than 60 percent of ExxonMobil’s shareholders today passed a resolution requiring the company to explain how it plans to stay profitable in a world where governments commit to limit global warming to 2°C. “A similar resolution failed by almost the same percentage last year,” E&E News reports. The article continues:
The passage of the 2015 Paris accord to limit global emissions apparently swayed several big investors to change their opinions, said Pat Daugherty, director of corporate governance for New York State Comptroller Thomas DiNapoli. The comptroller's office oversees pension funds that own $957 million in Exxon shares. “The Paris Agreement was a sea change,” he said.
Since the early 2000s, so-called socially-responsible investors have introduced such resolutions at shareholder meetings of ExxonMobil and other large fossil fuel companies. The sponsors claim their goal is to “protect shareholder value” by informing stockholders how climate mitigation policies could affect the firm’s financial health. As if investors in ExxonMobil are unaware of the climate movement’s hatred of their company, or don’t see financial risk in policies designed to penalize fossil fuel consumption.
The sponsors of the resolutions are, of course, proponents of cap-and-trade, renewable energy quotas, and assorted “keep it in the ground” policies, helping to create the very risks on which they demand the companies report.
So here’s how they propose to “protect shareholder value.” First, lobby for policies that aim to bankrupt fossil energy companies. Next, demand company reports on the financial risks those policies entail. Third, use that information to scare away investors and depress stock values. Fourth, set the stage for litigation alleging the companies defrauded stockholders by hiding climate policy risks from them.
This litigation strategy is more credible if the world’s governments are actually serious about achieving the Paris Agreement’s 2°C warming limit. It is less credible if the nation that is both chief architect of the Paris Agreement and biggest market for ExxonMobil’s products decides to pull out.
Trade Risk. Finally, although the Agreement does not specify economic penalties for non-compliance, many proponents warn that America will be hit with carbon tariffs if we pull out. That implies, however, that America will also be vulnerable to trade sanctions if we remain a party but replace Obama’s NDC with “drill baby drill.”
Besides, as a general matter, if the Agreement is to achieve a low carbon economy, cajoling and browbeating so-called carbon polluters probably won’t be enough. Despite claims that green-energy mandates make countries wealthier (in fact, such policies lead to net job losses and unaffordable power), domestic manufacturers in carbon-constrained countries insist that their competitors also use high-cost energy. Politically, the Paris Agreement is a springboard for a global system of “border adjustments” based on the carbon content of imports and exports. Just ask former GOP Secretaries of State George Shultz and James Baker, and they will gleefully tell you!
It is, alas, dangerous nonsense. Calculating and taxing the carbon footprint of goods in trade would require a new IRS to manage it, dramatically expanding the administrative state, cautions AEI economist Ben Zycher. The best way to protect America from newfangled “green” carbon protectionism is to withdraw from, and thereby diminish, the Agreement that logically demands it.
Weakening NDCs Is Not Lawful
To persuade Trump that he risks nothing by staying in the Agreement, the Paris faction, led by Mr. Stern, now claims that each party has complete freedom to revise its NDC anyway it likes. Stern purports to find that flexibility in Article 4.11 of the Agreement, which states: “A Party may at any time adjust its existing nationally determined contribution with a view to enhancing its level of ambition.” According to Stern, the provision allows a party at any time to adjust its NDC with a view to decreasing the level of ambition—the very opposite of what it actually says.
How does he get that? First, he argues, the provision contains the permissive term “may” rather than the mandatory term “shall.” But if we try substituting “shall” for “may” Art. 4.11 no longer makes any sense.
Stern also notes the text doesn’t expressly prohibit parties from adjusting their NDCs to make them laxer. Well, two can play that game. Nor does the text expressly say parties may do opposite of what it says they may do.
Stern’s word game is an affront to the plain English meaning of words like promise, pledge, and commitment. Once you make a commitment, you can either keep it or fail to do so. If it’s a real commitment, you can’t rescind it just to avoid the dishonor of having broken it. In effect, Stern argues that all parties who join the Paris Agreement do so with their fingers crossed behind their backs. They are not really making commitments, only pretending to, which is absurd.
That’s not how Stern described the Agreement when he was still basking in the glow of the Paris Summit. In a briefing before the Brookings Institution on December 17, 2015, Stern made it quite clear that the Agreement is a one-way “ratchet.” Every five years parties “have to either revise [their NDC] upward or reconfirm it.” They have to “say, yes, I’m going to hold where I am or I’m going to increase where I am.”
Don’t Sacrifice the Poor on a Cross of Green
Some well-meaning people believe America should stay in the Agreement to help mitigate global climate change. But the treaty is at best all pain for no environmental gain. As environmental researcher Bjorn Lomborg points out, even if all Paris parties fulfill every promise contained in their NDCs by 2030, the total temperature reduction will be 0.048°C (0.086°F) by 2100. That change is less than the current margin of error (0.08°C) in estimates of annual average global temperature. The reduction in the policy-relevant future (the next quarter century) will be even more miniscule—too small to affect weather patterns, polar bear populations, or any climatic factor people actually care about.
“Yet U.S. GDP loss could be about $250 billion in 2025 increasing to about $420 billion per year on average and a cumulative loss of about $4 trillion between 2022 and 2031,” according to a study by NERA Economic Consulting. Such losses would mean hardship for millions of Americans, especially low-income households.
The biggest losers, though, would likely be the world’s poorest people. The Agreement’s mid-century emission reduction goal cannot be reached unless developing countries dramatically reduce their current consumption of affordable energy from fossil fuels.
Yet more than a billion people in those countries have no access to electricity and billions more have too little to support development. Forcing already energy-poor nations to go on an energy diet is a cure worse than the alleged disease and potentially a humanitarian disaster.
Eyes on the Big Picture
Only in Washington, D.C., where misdirection is rampant, would otherwise serious people pretend the meaning of “may” should determine whether America stays in or pulls out of the Paris Agreement. That is how clever lawyers try to dictate policy—divert attention from real issues to the alleged implications of textual minutia.
The disproportion here is breathtaking. Obama called the Paris Agreement “the most ambitious climate change agreement in history.” That is an understatement. Given the vast dimensions of the Earth’s climate system, the magnitude of the financial investments required to transform global energy infrastructure, and the magnitude of the political commitments required to push it through, decade after decade, despite changes in administrations, Congresses, and electoral majorities, the Paris Agreement is the most ambitious environmental treaty ever.
Whether participation in that treaty is good or bad for America cannot possibly turn on a single word in one sentence of a 3,700 word text.
Trump’s decision should instead be based on a thorough examination of these questions:
(1) Did President Obama set a dangerous precedent when he joined the Paris Agreement without obtaining the Senate’s advice and consent?
(2) Is the Agreement’s basic policy goal incompatible with the pro-growth energy agenda on which Trump campaigned?
(3) If America stays in the Paris Agreement, will U.S. leaders experience incessant pressure from foreign governments, multilateral bureaucrats, and their media and environmentalist allies to adopt the kinds of domestic climate policies the Trump team is currently rescinding?
(4) Will remaining a party to an Agreement based on the alleged urgent need for “climate action” increase litigation risk to the U.S. government and U.S. companies, especially if the Trump administration continues to upend elements of Obama’s NDC?
(5) Are current threats of trade retaliation a foretaste of the destructive protectionism Paris will unleash if we strengthen the Agreement by remaining in it?
(6) Is it the case that the Agreement will provide no detectable mitigation of climate risks in the policy relevant future while imposing enormous economic risks on the American people?
(7) Does the Agreement’s mid-century emission reduction goal require energy-poor countries to drastically reduce their peoples’ current consumption of affordable energy from fossil fuels?
If the President stays focused on the big picture questions, he should have no trouble making the right decision.