Ethical Corporation is now Reuters Events - LEARN MORE
Nine state governors, 125 mayors and and 903 companies have vowed to honour US promises to cut CO2 emissions. As Diana Rojas reports, they see that green growth is good for business
In the hours following President Trump’s pull-out from the Paris climate agreement last week, the state governors of California, Washington and New York announced they would form an alliance to honour US commitments to cut CO2 emissions 26% below 2005 levels by 2025.
Twitter lit up, with major corporations promising to continue to march in step with the Paris Agreement, while billionaire philanthropist Michael Bloomberg said he would stump up the $15m the UN climate secretariat was due to lose from the US withdrawal.
“The American government may have pulled out of the agreement, but the American people remain committed to it – and we will meet our targets,” Bloomberg declared.
The United States Climate Alliance was quickly joined by six other US states, while 211 cities, members of the Mayors National Climate Action Agenda, pledged to “intensify efforts to meet each of our cities’ current climate goals, push for new action to meet the 1.5 degrees Celsius target, and work together to create a 21st century clean energy economy.”
By Monday support had snowballed, and Bloomberg, the UN Secretary-General's special envoy for cities and climate change, submitted a letter to the UN climate secretariat signed by 125 cities, nine states, 903 businesses and 183 colleges and universities, pledging "We are still in" the Paris Agreement.
If the administration’s announcement to quit Paris was not exactly a surprise, neither was the defiant response. A January Pew Research Center report noted that 65% of Americans prioritise developing alternative energy sources, while only 27% want expanded fossil fuel production. On the corporate front, some 48% of Fortune 500 companies now have clean energy goals, and that number continues to grow, said Marty Spitzer, senior director of climate change and renewable energy at the World Wildlife Fund.
“The number of companies aligning their bottom lines with the best available climate science and committing to power their operations with 100% renewable energy is seeing an incredible uptake,” he said, noting that clean energy investments are saving public reporting companies $3.7bn a year. “The proof is in the numbers: clean energy is good for business.”
The profitability of renewable energy and other low-carbon investment strategies ensures that US business will remain engaged, said Jay Koh, managing founder and director of The Lightsmith Group, a global investment platform focusing on climate finance.
Although a policy pause on the Paris Agreement certainly won’t help American business, Koh said it won’t necessarily mean a permanent loss of US leadership on climate.
“Because US companies, entrepreneurs, innovators and workers continue to drive the low carbon transition forward, I think business and investor leadership from the US can continue,” he said.
No going back
Despite Trump’s well-flagged threat to leave the Paris Agreement, so far no company has announced it will backtrack on its clean energy or sustainability commitments, noted Edward Cameron, managing director at BSR, a non-profit sustainable business strategies organisation. That’s because they face pressure from shareholders, investors and activists, as well as their bottom lines, to stay the course. The Paris accord, he noted, anticipates some $13tr in potential new assets and investments in clean energy.
“There is a realisation [among companies] that climate leadership is good for growth, competitiveness, risk-management. It’s sensible business,” said Cameron. Some of these businesses had met privately with the Trump administration to drive home the idea that such leadership is “vital for competitiveness, vital for jobs, vital for profits,” he noted. “Investors see the cavalcade around the globe: investments in fossil fuels are no longer guaranteed.”
Profitability of the clean energy sector and growing demand from consumers has also led to an uptick in jobs in those fields. A March report by the Sierra Club based on the Department of Energy’s job data for 2017 noted that clean energy jobs outnumber fossil fuel jobs by more than two and a half to one, and all jobs in coal and gas by five to one. Additionally, the data shows that 41 states and Washington, DC have more clean energy jobs than fossil fuels jobs.
Regardless, starting with the deletion of all references to climate change from the White House website on day one, the Trump administration has spent much energy proving its commitment to “reviving America’s coal industry” and “embracing the shale oil and gas revolution,” according to its America First Energy Plan. In March it ushered what it called "a new era in American energy" by rolling back Barack Obama's Clean Power Plan. By April, the Administration had already deleted funding for the Green Climate Fund, a multilateral mechanism to assist developing countries in climate change adaptation and mitigation practices.
The US has paid only $1bn of the $3bn it pledged. And the 2018 budget, due out in October, threatens deep cuts to the Environmental Protection Agency, the State Department and other government agencies engaged in climate change work.
Brendan Shane, regional director for North America for C40 Cities, a grouping of 91 large cities that are working together on climate around the globe, predicts that the clean energy market “is going to turn around and realise that we’re losing out, that we’re losing jobs because of this position. I think they’re [the Trump Administration] are going to have to change their minds,” he said.
However, both Koh and Spitzer say the demand for investments in clean energy continues to grow and green banks – which are state and locality based in the US – will still flourish because they are not dependent on the vagaries of the White House. Spitzer believes their growth might even be accelerated in reaction to the administration’s clean energy and climate counter-efforts.
Although it’s too soon to say if investment trends have shifted since the Trump administration took charge, anecdotally Stacy Swann, CEO of Climate Finance Advisors and vice-chairperson of the board of the Montgomery County Green Bank, said her group is “still getting a lot of requests” from people looking to pursue climate projects. While the bank is still at its inception, the county is already an active place for clean energy and climate-related activity.
“I’m trying to stay optimistic because I do see a lot of progress in a lot of places,” she said, noting that Montgomery County, in suburban Washington, DC, is the kind of place where people see clean energy and climate change mitigation as not only good for sustainability, but also “good for investment”.
‘All hands on deck’
Although that might not be the case nationwide, several states have also taken the lead on legislation aimed at mitigating climate change beyond the establishment of green banks. California and Massachusetts, for example, both introduced bills mandating 100% renewable energy by 2045 and 2035, respectively. And New York’s Clean Energy Standard is requiring 50% of the state’s electricity to come from renewable energy sources like wind and solar by 2030.
“In an ideal world, we would have federal leadership because each state now has different regulations and circumstances. But state leadership now is becoming very important because of the lack of federal leadership,” said Suzanne Hunt, president of HuntGreen LLC, an environmental consulting company in New York.
“Every time we have an abysmal government [for the environment and clean tech], you have to focus on state and local initiatives because that’s where the progress is. The Trump administration is outright hostile to the environment, so you look at where you can make progress. And right now, that’s in leading states, cities and at the grassroots in a lot of places,” said Hunt, a self-described hybrid of grass roots organizer and state/national mover, who has been working with rural and low-income communities to put up shared solar. “It’s all hands on deck!”
New York’s decision to create a grant fund for community solar projects, for example, did not spontaneously erupt from the state house, she noted: it was driven in part by pressure from citizens and business leaders.
Such impact can be huge. The states forming the United States Climate Alliance represent 25.7% of the US population and 31% of its GDP while the 211 cities in the Mayors National Climate Action Agenda claim to represent some 54 million Americans.
Shane said American cities were already ramping up their climate mitigation efforts before the announcement of a withdrawal. In fact, C40 decided this year to develop a US-specific strategy because the American impact on carbon emissions is so great. That strategy will be shared with non-member cities. But despite the movement already in play, he believes the withdrawal from the Paris agreement is a “huge setback”.
“Some people say it’s not going to slow progress at all, but I kind of doubt that,” he said. “There is a huge price we’re going to pay on the world stage. These kinds of things are going to come back and bite us.”
This article is part of a four-part briefing that will appear in Ethical Corporation magazine later this month on US sustainability in the Trump era. See also Why mayors must lead on climate change from last month's briefing on cities and climate action.