How the Paris Agreement offers $8 trillion a year in business opportunities
Despite Trump's withdrawal, business groups have identified significant benefits from the climate change accord.
Blake Goud, OpinionIndustry ExpertBlake Goud has been the CEO of the RFI Foundation since the organizations incorporation in 2015. The RFI Foundation works to connect responsible finance and Islamic finance together, and to support its members' adoption of responsible finance practices and their integration into the global responsible finance industry. Blake has more than a decade experience researching Islamic finance and working in the finance industry. He received his B.A. in Economics from Reed College in 2003.
The announcement by President Donald Trump that the U.S. will withdraw from the Paris Agreement is a wake-up call about the true challenge the world faces in meeting the 2°C target to avoid the worst effects of climate change. The reaction to the U.S. withdrawal from other nations and from companies, including U.S. states and companies, was one of resignation not of despair.
Google’s CEO Sundar Pinchai said it was “disappointed” and reiterated its goal of 100 percent renewable energy this year. Apple’s CEO Tim Cook highlighted his company’s work towards a closed-loop supply chain that aims to eliminate demand for new materials. Goldman Sachs’ CEO Lloyd Blankfein called the decision a setback for U.S. leadership and highlighted that environmental leadership by the U.S. was one factor helping its economy.
If the Paris Agreement were, as its critics allege, a negative for the global economy and for companies affected by it, the response from around the world, and especially from U.S. companies would have been far more subdued. They may not have wanted to raise their heads above ground to celebrate their future profitability at the expense of future generations but they would be unlikely to complain en masse as they have done.
In contrast, business groups like the Business Commission, have identified significant benefits from the Paris Agreement, as well as other sustainable development goals which are intricately linked with climate change. In January 2017, they estimated that the annual business opportunity connected to the sustainable development goals was $12 trillion through 2030. If just the areas of cities and energy, which have the most direct connection to climate change are considered, there is an $8 trillion annual business opportunity. 195 countries signed the Paris Agreement, including the United Arab Emirates, which also declares its achievements in the green economy every year at the World Green Economy Summit held in Dubai.
Ultimately, the business opportunity is created by the development of better products, less waste and accessibility of products into markets where there is limited activity. For example, the revolution in energy production from solar power has transformed past idealism about alternative energy into a reality. The United Arab Emirates, for example, is home to multiple large-scale solar projects where the cost per kilowatt-hour is lower than US coal-fired power plants. Some more achievements and developments are scheduled to be announced in this year’s edition of the World Green Economy Summit taking place in Dubai in October 2017.
The U.S. withdrawal from the Paris Agreement is surely a speedbump that undermines the near-unanimity that this agreement represents between governments, businesses and people. Americans are also split over Trump's decision to reject the Paris climate agreement – see poll.
However, the global consensus that solving climate change is an economic opportunity will continue, with US companies and states, even if the federal government is not a party to the Agreement. The earliest possible effective withdrawal date for the United States is November 2020.
