Trump, Climate Change Law, and Global Market Needs

In 2015, close to 200 nations negotiated the Paris Agreement on climate change. Less than a year later, it was ratified by 113 nations. The agreement went into effect on November 4, 2016, a development so fast that it even caused surprise among the member nations themselves.

The agreement seeks to limit “the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.” In contrast to the now-defunct Kyoto Protocol, which operated with a top-down legally binding mandate, the Paris Agreement requires participants to develop “Nationally Determined Contributions” (“NDCs”) listing how they intend to contribute to reaching the overall goal of the agreement at the national level. The NDCs must be converted into action at the national level. Allowing for such bottom-up lawmaking was one of the reasons why formerly recalcitrant nations such as the United States finally agreed to a relatively specific framework for climate change action.

Then came the watershed U.S. presidential election. The Administration change signals immense national and international concern over whether the United States is willing to live up to our part of the agreement or even participate in the agreement at all. Before the election, Donald Trump famously declared that climate change was “created by and for the Chinese.” While markets and environmentalists around the world were despairing because of this seeming step back on climate mitigation action, Trump announced just after the election that he is “looking at it very closely. I have an open mind to it” and that he “thinks there is some connectivity" between humans and climate change. For those of us believing in the need to take urgent action against climate change in the United States as well as in other nations, that sounded like an appropriately evolving view on this issue by the President-elect. But not so fast!

First, Trump chose Scott Pruitt to head the Environmental Protection Agency (“EPA”) and Rex Tillerson to be Secretary of State; both known climate skeptics. Second, not only were references to climate change removed from the White House website, but the website also now plainly states that “[f]or too long, we’ve been held back by burdensome regulations on our energy industry. President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule.” This is apparently out of touch with Trump’s voters, as only 28% of them support the United States withdrawing from the Paris Agreement. Third, severe data doctoring such as the removal of key information about climate change on the EPA website (for example, information about Obama's Climate Action Plan, carbon pollution as a cause of climate change and the U.S. commitment to UN climate negotiations and the new legally binding treaty) is, by now, well known. Funding of scientific research into climate change – a basic necessity for sound new law- and policy-making – has also been called into severe doubt. The Trump Administration also has restricted scientific news being transmitted from the EPA and USDA to anyone outside those agencies.

These recent developments and uncertainty regarding American climate change law and policy has caused great anxiety around the world, not least in the energy sector. Markets want clear directions on which regulatory action to expect so that investments can be made accordingly. The United States is not sending clear signals. Our flip-flopping and potential backtracking from a global legal agreement that is less than a year old could, given our status as one of the world’s top economies, lead to severe economic issues.

However, within Congress, opinions on climate change are beginning to fracture. Just this month, the newly established “Climate Leadership Council”— a consortium of Republican Party stalwarts including officials from the Reagan and both Bush administrations—unveiled their plan for a gradually increasing, revenue-neutral tax that puts a price on carbon dioxide emissions. Under the plan, a $40 tax would be imposed on each metric ton of carbon dioxide emissions, with the tax steadily increasing on an annual basis. All proceeds—an estimated $200 to $300 billion per year—would be distributed back to American citizens in the form of dividend checks. In return for implementing the tax, the plan calls for cutting many current U.S. regulations on carbon emissions such as the Clean Power Plan, an EPA rule under Obama that aimed to slash CO2 from power plants, which generate 37% of the nation’s total carbon emissions. Trump allegedly does not support the proposed tax. However, the proposal does appeal to the business community’s desire for regulatory certainty. (Not to mention the fact that six out of ten Trump voters actually support taxing or otherwise regulating pollution that causes climate change.

Of course, federal and supranational regulatory action is only one facet in the government’s response to climate change. In our tripartite federal governance system, the Supreme Court reigns supreme (so to speak). Ample grounds for worry in that respect have also surfaced recently. In February 2016, the Court, in a 5-4 decision, halted the EPA’s Clean Power Plan until an appeals court has had a chance to review the Plan. Along with the Paris Agreement, the Clean Power Plan was one of the main aspects of Obama's climate change agenda. The plan is designed to cut carbon pollution from the electricity sector by 32 percent over 2005 levels by 2030 by assigning states individual reduction targets based on their energy mix. Previous Supreme Court cases such as Massachusetts v. EPA and American Electric Power Co. v. Connecticut had otherwise provided much hope for progress by holding that the EPA had the authority to and in fact must regulate carbon dioxide and other greenhouse gases. The Supreme Court will likely regain its judicially conservative majority with a Trump appointee no matter who that turns out to be. Just how the new justice will rule on environmental and climate change cases remains to be seen. The hope among those favoring environmental protections is that the progress gained in previous decades will not be rolled back. As mentioned, markets are looking for clear directions on climate change policy in the United States, even if it comes in the form of what may, to those taking a more conservative view on environmental law, be seen as negative rulings. What remains clear is that the Supreme Court may again – as when Scalia was alive – require Justice Kennedy to be the swing vote on some issues.

While the United States may withdraw from effective climate change mitigation law and policy at the federal level, state-level, “bottom-up” action is underway. For example, California is well underway to meeting its 2006 AB 32 goals of limiting the state’s greenhouse gas emissions to 1990 levels by the year of 2020, representing an approximately 30% reduction statewide. Measures were recently added to a legislative bill to increase renewable energy use, put more electric cars on the road, improve energy efficiency, and curb emissions from key industries. Another recent bill, AB 197, gives lawmakers more oversight of regulators and provides aid to low-income or minority communities located near polluting facilities such as oil refineries and factories.

In contrast, other states with a similar or even higher interest in preventing climate change choose to stick their heads in the sand. For example, Florida recently banned state workers from using phrases such as “climate change” and “global warming,” and “sustainability.”

Science does not stand still in this area and we are not on track to meet even a 2 degree goal. The November 2016 UNEP Emissions Gap Report, for example, underlines that, “collectively, [even existing carbon reduction] pledges are not ambitious enough to have a better starting point in 2020 to meet the 2030 levels of global greenhouse gas emissions consistent with the longer-term goals of below 2 or 1.5°C.”

In sum, we need to do more, not less. The world is still in grave danger of facing unforeseeably dire consequences caused by climate change. More action needs to come in the form of government action locally, regionally, nationally, and internationally. This will also help send a clearer signal to markets around the world that we need to urgently shift away from an oil and coal-based economy. In some geopolitical locales, this shift is already happening. In others, resistance is on the legal and political agenda. In the United States, just as we came to the realization that both law and policy had to change in relation to, for example, the use of tobacco, asbestos, and ozone-destroying chemicals, we need to more quickly move in relation to carbon usage. A lot of industry money is at stake in this area, but that ought not restrict our nation from living up to our proclaimed status as an economic and technological leader. The world is once again beginning to doubt our sincerity when it comes to climate change. That is not fruitful for our nation politically or economically. Winston Churchill once said, “You can always count on the Americans to do the right thing after they have exhausted all other possibilities.” Hopefully, the new administration will live up to its promises under the Paris Agreement and go even further in preventing dangerous climate change.

Professor Dellinger graduated at the top of her class from the University of Oregon School of Law (Order of the Coif). She is an Associate Professor of Law with the University of South Dakota School of Law where she teaches, among other things, Public International Law and International Human Rights. She researches and writes extensively on the intersection between international business and environmental law with a particular focus on climate change. Professor Dellinger is also the Chair of the International Environmental Law section of the American Branch of the International Law Association, a Fulbright Scholar, and a peer reviewer for the National Science Foundation’s Law and Social Sciences Program. She has visited 36 nations for business and pleasure.