Although the Paris Agreement was adopted in 2015 and later signed in 2016, when it actually goes into effect in 2020, it will do so with at least one notable exception: the United States.

On June 1st, President Trump announced that our country would withdraw from the Paris Agreement. While Article 28 states the country cannot abandon the agreement until November 4th, 2020, many people – especially renewable energy developers – are worried about what the implications of this decision could be.

"Renewable portfolio standards (RPS) are state-specific regulations. They require that a certain percentage of a state’s energy comes from renewable sources by certain dates."

Which Climate Policies Remain in Place?

It’s important to understand that the Paris Agreement was just that: an agreement. This means that states are free to continue following its guidelines. In fact, after President Trump said that he was “elected to represent the citizens of Pittsburgh, not Paris”, the mayor of Pittsburgh was quick to respond that he still intended on holding his city to the original agreement.

Nearly 300 mayors have since decided to do the same thing.

Of course, without a federal mandate, that commitment is less binding. Other states may follow Hawaii’s lead, though, and enact actual laws that align with the Paris Agreements’ intentions. Nonetheless, with so much uncertainty at the moment, many renewable energy developers are wondering which climate policies remain in place.

State-Level Renewable Portfolio Standards

Renewable portfolio standards (RPS) are state-specific regulations. They require that a certain percentage of a state’s energy comes from renewable sources by certain dates.

For example, the current goals in California look like this:

  • 33% by 2020

  • 40% by 2024

  • 45% by 2027

  • 50% by 2030

However, these are not set by a federal mandate. Therefore, leaving the Paris Agreement will have no effect on them unless states decide adjustments should be made.

The Corporate Average Fuel Economy Standards

Corporate Average Fuel Economy (CAFÉ) standards were created by the Obama administration in an effort to reduce carbon emissions caused by vehicles. The goal is to reach 54.5 MPG by 2025. While President Trump did announce back in March that he would have the EPA review the CAFÉ standards, this doesn’t have anything to do with parting from the Paris Agreement. For the moment, these standards remain in place.

 The Federal Tax Credits for Solar, Wind, and Electric Vehicles

Again, these cuts are unaffected by the Paris Agreement. While one could argue that President Trump’s position on the Paris Agreement may betray his eventual intentions for these programs, they currently remain as secure as ever.

"the market is clearly moving in a green direction. While renewable energy developers may now have a few more hoops to jump through, their services are definitely growing in demand."

How Will This Affect Low-Carbon Technologies?

Another issue many renewable energy developers are concerned about is low-carbon technologies. Without the Paris Agreement in place, what will happen to these industries?

Potential Effects on the Future of Low-Carbon Technology

The obvious consequence is that much of this field may be stalled. Markets could be slower to adopt low-carbon products and services, so their prices will remain high. This would probably include slower deployments for renewable energy generation sites. Therefore, companies specializing in low-carbon technology would most likely have a harder time attracting investors.

How the Loss of Low-Carbon Technology in America Might Play Out on a Global Scale

Many companies might be forced to relocate to other countries where their products and services will find higher demand. However, if the many low-carbon technology companies that stay in America are eventually forced out of business, other countries – those that are still part of the Paris Agreement – may struggle to meet their obligations. In that case, other countries would eventually become the new launching pad for these types of companies. That could greatly hurt America’s global standing as an economic superpower.

The Loss of Local Low-Carbon Jobs

Many jobs in the low-carbon industry cannot be exported, though. Renewable energy developers may soon be without a sizable workforce that can handle local jobs like installations and maintenance. China already surpasses us in the production of solar panels and wind turbines. Without the Paris Agreement to continue the growth of our low-carbon industry, that gap is only going to grow.

Plenty of Reason to Be Optimistic

All that being said, there is plenty of reason for renewable energy developers to be optimistic, too.

First of all, the Obama administration’s Clean Power Plan (CPP) is still in litigation. Unlike the Paris Agreement, it’s not a set of guidelines but actual laws. While President Trump may also decide to do away with it, we don’t know what he’ll do yet. Furthermore, technology seems to have overtaken policy in terms of driving the low-carbon industry. As its performance continues to improve and its prices drop, the popularity of this technology will grow whether or not laws are made to enforce its use or not. In fact, if stock prices for solar companies are anything to go by, the market’s reaction to the recent news about the Paris Agreement has been largely positive.

Possible Retaliation from Other Countries

Still, it’s worth thinking about how the rest of the world may react to the U.S. leaving the Paris Agreement. One important scenario would be countries that are still a part of it retaliating against us for our exit. For example, it’s easy to imagine a country like China – or any other that imports large amounts from the U.S. – charging a carbon tax on those exports. This would help them make up for the economic disparity caused by our country not having to spend money on enforcing the agreement’s terms.

This is apparently a serious enough threat that ExxonMobil and other companies have urged the President to rethink his decision.

Should Renewable Energy Developers Worry About a Future Without the Paris Agreement?

There are plenty of obvious reasons people should be concerned about America being one of the few countries to decide not to stick with the Paris Agreement.

Yet, it’s worth restating that the agreement is only a set of guidelines – not rules. No country that is a part of it is going to face serious ramification from the United Nations if their efforts fall short. So even before President Trump walked away from it, there was a possibility the U.S. wouldn’t have reduced greenhouse emissions.

That said, the market is clearly moving in a green direction. While renewable energy developers may now have a few more hoops to jump through, their services are definitely growing in demand.