Quitting Paris likely to have muted effect in key industries
In this Dec. 16, 2009 file photo steam and smoke is seen over the coal burning power plant in Gelsenkirchen, Germany. (Martin Meissner / AP Photo)
DALLAS -- U.S. President Donald Trump's decision to withdraw the United States from the Paris climate accord may have only limited immediate impact on many U.S. companies, according to analysts.
In part that is because the Paris agreement only went into effect last year, it's voluntary, and doesn't carry penalties for countries that fall short of emissions-cutting targets.
"What you have is a president making a nonbinding withdrawal from a nonbinding agreement," said Kevin Book, an analyst with ClearView Energy Partners. "And that's not likely to change fundamentals very much at all."
Many big companies in industries such as autos and aviation have already committed to reducing emissions and are spending billions to do it. They aren't likely to change course.
A study mentioned by Trump estimated that if the U.S. meets its Paris goal for reducing carbon emissions it will cost 2.7 million U.S. jobs by 2025. The study, commissioned by a pro-industry group, projected the sharpest declines in coal, cement, and iron and steel, and the loss of 440,000 manufacturing jobs.
Coal and cement producers say the Paris accord would put them at a competitive disadvantage and that they too are taking steps to cut emissions.
The American Coal Council said more than 90 per cent of U.S. coal plants are equipped with advanced emissions controls, and that advances in technology will lead to further improvement. Cement makers say they use alternative fuels for 15 per cent of their power needs.
However, many economists think Paris would be roughly a trade-off -- fewer jobs in polluting industries would be offset by more in renewable energy. The chief economist of business-research group The Conference Board said the potential number of jobs that might be created in fossil fuels is limited, while the potential for job growth in green technologies is much greater.
There are already more than twice as many U.S. jobs in solar energy than coal, about 374,000 to 160,000, according to the Energy Department.
Some corporations that had supported the Paris agreement were quick to signal that Trump's decision would not change their plans.
"Our position on climate change has not changed ... we publicly advocate for climate action," said General Motors. The company reiterated its support for various climate pledges, and it boasted about its Chevrolet Bolt EV, an electric vehicle priced under $30,000.
Rebecca Lindland, an executive analyst with Kelley Blue Book, said Trump's decision won't have an immediate impact on automakers, who had no specific targets to meet under the Paris agreement.
Separately, the Trump administration is reviewing fuel-economy standards that were reaffirmed in the final days of President Barack Obama's tenure. A weakening of those standards might help sell more SUVs to U.S. consumers, but automakers still have to design and build electric and other fuel-efficient cars to meet mileage standards in California, China, Europe and elsewhere, Lindland said.
Oil prices fell Friday on concern that the U.S. exit from Paris could lead to increased production and a continuation of the glut of crude. Several large oil companies including Exxon Mobil and Royal Dutch Shell had urged Trump not to withdraw.
In a statement, Exxon stressed that the accord included emissions-reduction pledges from China and India, developing countries that are major polluters. The company said the U.S. is in good position to compete internationally because of an abundant natural gas supply.
New drilling methods have made gas cheaper, allowing it to replace coal in many U.S. power plants. Now, Exxon and others are gearing up to export more liquefied natural gas.
Exxon also faces pressure from shareholders, who voted this week for more disclosure about the impact of climate-change regulation on Exxon's business.
Jason Bordoff, an energy-policy expert at Columbia University, said withdrawing from the Paris agreement would make no difference to the U.S. energy outlook or economy.
"The outlook for U.S. energy production will be determined far more by market conditions, like the price of oil and gas, than by scrapping the Obama-era environmental regulations," Bordoff said.
The president's decision should have very little impact on airlines because it's still in their financial interest to fly cleaner -- lower emissions are the result of burning less fuel. Airlines have been spending billions on new, more fuel-efficient planes -- fuel is an airline's second-biggest expense after labour.
"No one is going to go back to (Boeing) 707s that leave a big smoke trail in the air just because you can," said Robert Mann, an aviation consultant and former airline executive. "The (financial) objective is to be efficient."
Whatever the industry, companies will be reluctant to change plans based solely on the withdrawal from the climate agreement because the pendulum could swing back.
"It's easy to imagine a future administration that wants to re-engage in an activist role on climate," said Book, the energy analyst. "Any long-term investment is going to have to consider the world after Trump."
Dee-Ann Durbin in Detroit, Paul Wiseman in Washington and Ken Sweet and Paul Harloff in New York contributed to this report.