No stopping good business

Anger and scorn continue to pour out of the universal consternation over US pulling out of the Paris Agreement, but is it such a great damage? Not really.

The over-hyped Paris Agreement was never truly one that would deliver the targeted results — it wasn’t much more than a loosely-worded statement of intentions. Columbia University professor, James Hansen – a man regarded as the father of climate change awareness – had two words for the Paris accord when it was signed: fake and fraud.

The accord was not an agreement in the legal sense of the word, it depended singularly on moral suasion for implementation and there was nothing anybody could do legally in case of a breach by any country. Further, many of the ‘nationally determined contributions’, or pledges by each country of what it would do to help the climate cause, hinged on assumptions. Even India has said it would keep its commitment but only with the help of overseas technology transfer, which means ‘if no technology, then bets are off’.

As such, the accord, much on the contrary to the global euphoria around it, wasn’t anything great to start with. Then came the Emissions Gap Report, 2016, of the United Nations Environment Programme, which said that even if all the countries kept their word they gave at Paris, global temperatures would rise by 3.2 degrees over the benchmark levels, way higher than the Paris target of 2 degrees and the “ambition” of 1.5 degrees.

The irrelevance of the Paris Agreement can be gauged by the pittance of funds transferred from the developed to the developing countries. For instance, the Green Climate Fund had, by March, barely financed $ 2.2 billion for 43 projects. The Fund’s target is to secure annual contributions into the pool of $100 billion by 2020 and the $2.2 billion of cumulative financing in early 2017 shows the yawning gap between ambition and reality.

What big damage could the US pulling out of such an agreement do? The perils of Donald Trump’s action are bigger in perception than in reality. The blow is more psychological than material.

The real solution to climate change mitigation is to get the action anchored in good economics, which is happening. The fight against global warming is happening because it is good business, not by the force of the Paris Agreement.

No wonder then that in the wake of Trump announcing a pullout, billionaire Michael Bloomberg, former New York City mayor, along with several US cities, States and companies have come together to consider filling the gap. A report in the New York Times said that “representatives of American cities, States and companies are preparing to submit a plan to the United Nations pledging to meet the United States’ greenhouse gas emissions targets under the Paris climate accord, despite President Trump’s decision to withdraw from the agreement.” Bloomberg, who is coordinating the effort, said in an interview, “We’re going to do everything America would have done if it had stayed committed.”

As is seen all over the world, renewable energy prices have fallen drastically and are set to fall further, winning over fossil fuels. It costs Infosys only ₹2.85 to produce a kWhr of electricity from a solar plant of its in Andhra Pradesh. In Karnataka, energy companies such as CleanMax Solar have begun selling solar power at prices between ₹4 and 5, and consumers are lapping it up. India has cancelled 13.7 GW of coal plants because renewable energy is cheaper than coal, especially if all coal is costed realistically. The Central Electricity Authority has predicted that India would need no new coal power plants until 2027. Energy companies such as Tata Power and NTPC are rapidly building up their renewable energy assets, reading the writing on the wall for coal. Globally too coal plants are going bankrupt, and will continue to struggle against renewable energy’s assault, Trump or no Trump. Incandescent lamps are making way for energy-efficient LED lamps, not because governments think of it as a way to keep their Paris commitment, but because saving energy is good for the economy. Electric vehicles are on the rise for the same reason.

There is an apprehension that the US action could precipitate a spate of follow-suits by many other governments, but early indications suggest that the opposite is more likely to happen. US’ exit is more likely to strengthen the resolve of all other countries to fight climate change and bind them closer in the effort. Its effect can already be seen in the US by the resolve taken by Bloomberg and American cities to come together. EU and China have explicitly said they would work closer against climate change, in the wake of US’ exit. In fact, some welcome the emergence of clarity on US’ position — it is better to have the US out than have its filibustering negotiators at the tables.

Further, it is evident that Corporate America remains committed to fight climate change, recognising the economic value of it. If anything, the shame that the United States has been put into – it has been bracketed with Nicaragua and Syria, and been described as an environmental vandal – is only likely to galvanise non-government players to higher levels of work.

Look at it any way, US pulling out of Paris Agreement is hardly likely to make a dent, mainly because the agreement itself is not really core to the climate issue.

The bigger threat to the fight against climate lies not in what goes on inside President Trump’s head, but elsewhere — such as China’s duplicity. Even as it is shutting down coal plants on its soil, China financed $77 billion worth of coal-fired power plants elsewhere in the world between 2007 and 2014, according to a 2016 report of the Boston Institute. As part of the CPEC project in Pakistan, it is building several coal plants in the country.

Diplomatically, the US move reinforces India’s position as a leader in fighting global warming, as all eyes turn towards the world’s largest democracy.

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