Pulling out of Paris surrenders more than just climate leadership
One of the new U.S. administration’s first moves upon retaking the presidency was to withdraw once more from the Paris Climate Agreement, joining the United States with Iran, Libya, and Yemen as the only countries not party to the Agreement. This marks the United States’ second attempt to exit the Agreement, after Trump did so with just four months remaining in his first term, before President Biden directed the U.S. to rejoin. On top of withdrawing – which will take full effect in January 2026 – the administration has signaled an end to U.S. outward climate finance and adherence to previous financial commitments. There is no doubt that this will seriously dampen hopes for international climate action – but perhaps more saliently, it harms the United States’ geopolitical and economic interests.
Indeed, the biggest loser from withdrawing from the Paris Agreement and from international clean energy and climate efforts is the United States itself.
Has the Paris Agreement been hugely transformative or successful? Not necessarily. It is no solution in and of itself. In the decade since Paris, annual global emissions have increased by nearly 3 gigatons, and global average temperatures have already exceeded the Paris goal of 1.5 degrees C above pre-industrial averages. But the agreement and the UNFCCC remain a useful forum for technological and economic partnerships that have spurred progress. For example, recent UNFCCC Conferences of the Parties (COPs) have yielded commitments to triple nuclear energy and renewable energy, reduce methane emissions, and redouble investment in and growth of clean energy markets, creating not just clean energy momentum but also enormous new industrial opportunities around the world for U.S. exports. And the UNFCC has provided broader awareness to feed momentum and benchmark progress; even as emissions and temperatures have climbed, global investment in clean energy technologies has soared, the costs of renewable energy products have plummeted, and deployment continues to accelerate.
The U.S. leaving its seat at the table creates three major risks:
1. Geopolitical and soft power compromised
First, the United States’ withdrawal from Paris – and its pullback from major international partnerships and agreements more broadly – could compromise its diplomatic leadership abroad, its geopolitical standing and opportunities, and its soft power in key regions and international fora. Without the United States at the negotiating table, it loses its ability to shape international standards and markets, as well as to use the UNFCCC processes as a forum in which to build bilateral and regional partnerships that can strengthen security or economic opportunities.
Being a global agenda setter confers enormous benefits. The United States has held that distinction for decades, and the benefits may now be taken for granted. Ceding that role on climate could lead to less transparent energy markets, less interest in technological partnership with the U.S., and thereby compromise the United States’ ability to compete in the long term. Economic and diplomatic leadership have historically gone hand-in-hand, and ceding the latter will not resuscitate the former. Quite the opposite, possibly.
2. Economic opportunities lost
Stepping back from international climate collaboration could seriously compromise the United States’ ability to compete in some of the world’s fastest-growing industries. The clean energy technology market is expected to reach over $2 trillion by 2035, more than triple today’s market and about the size of today’s global crude oil market. Especially in recent years, the COPs and Climate Weeks that are organized as part of the Paris Agreement processes have become as much about private sector engagement as about government-to-government negotiation. While U.S. industry can – and certainly will – continue to engage, it will lack the support and representation of their government. It will have no voice at the table as countries come together to make decisions that will shape its future.
International leadership, collaboration, and financing all create new markets and access to key resources for U.S. industries. Despite rhetoric to the contrary, leadership abroad is not purely altruistic. Market security, transparency, and harmonization are critical to U.S. companies’ ability to operate and compete abroad. Without the U.S. government at the table to support those efforts, companies could lose access to burgeoning markets and struggle to compete in fragmented and opaque international market conditions. The maintenance costs of a leadership position and seat at the table – while not negligible – are dwarfed by the costs of stepping away.
Domestic policy changes threaten to make these lost opportunities into a lasting disadvantage for American companies. The cancellation of grants, dismantling of Department of Energy programs aimed at innovative new technologies, regulatory rollbacks, and potential loss of key Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) programs and incentives all worsen the business case for innovation in the United States. Long-term energy competitiveness, let alone dominance, is incompatible with ceding both innovation and international leadership.
3. A power vacuum in diplomacy, clean energy industries, and finance
Where the U.S. would lose, others would win. A U.S. withdrawal will not return the global energy system and market to 2015 – clean energy markets will continue to grow, and climate will continue to be a critical international issue, even if the United States closes its eyes and ears. A withdrawal will, however, create a vacuum in international diplomacy, finance, and clean technology development.
The most likely country to fill that vacuum is China, which is already far outpacing the United States in advanced technological industries. China dominates the supply chains for established clean technologies like solar, wind power, and batteries. It’s also leading on new nuclear power builds, electric vehicles, and artificial intelligence. Ceding leadership on climate is unlikely to reverse that reality. Dominance of an industry by any one country is bad for international security, and the U.S. throwing in the towel won’t help. U.S.-China collaboration served as part of the foundation for what became the Paris Agreement, and climate remains one of the key issues that has enabled U.S.-China diplomacy over the past three administrations – losing that channel creates myriad new risks as well for broader diplomacy.
Others that could fill the vacuum include Saudi Arabia, the United Arab Emirates (COP28 hosts and close partners with COP30 host Brazil), and the European Union and its major economies. Saudi Arabia and the UAE have both ratcheted up their clean energy investment abroad over previous years, with the UAE supplanting the U.S., China, and the European Union as the largest bilateral investor in Africa, and both countries have made ambitious commitments and investments in clean energy development and deployment. Europe has been a climate leader for decades, but its capacity will be constrained by security demands and by divisions with the U.S. on technology collaboration and trade.
Benefits outweigh costs – even setting climate aside
The benefits of international leadership on climate and of the Paris Agreement – even setting aside the climate benefits – far outweigh the costs to the United States. Stepping back will risk ceding the United States’ decades-long role as an influential shaper of the global agenda and broader markets, losing major economic opportunities and competitiveness, and concentrating geopolitical and market power even further in the hands of economic rivals. Putting U.S. economic competitiveness and security first does not require stepping back. Rather, it requires leveraging the country’s strengths and leadership to shape markets and drive technological progress forward. The benefits, though now taken for granted, are enormous. The costs are small. If the U.S. doesn’t pay them, someone else happily will.
