US Exit from Paris Climate Agreement Changes Very Little

Pavel Molchanov, Senior Vice President and Energy Analyst, comments on the United States’ announced withdrawal from the climate change agreement.

June 2, 2017

President Trump yesterday announced – confirming press leaks from earlier in the week – that the U.S. will withdraw from the Paris Agreement on climate change, which was signed in December 2015 and took effect in November 2016. What does the decision to exit mean in economic practice, separate from the PR and diplomatic consequences? Here is the short answer: It means virtually nothing.Press coverage of this issue has (incorrectly) portrayed the president’s decision as an impactful and even pivotal policy step. But it is purely a matter of political symbolism, with no substantive read-through in terms of how energy is produced or consumed in the U.S. market. In particular, we would underscore that the trend visible across the U.S. power sector (coal losing share, natural gas and wind/solar gaining) will not be affected in any sense by the Paris withdrawal.

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