Grim implications for developing countries as U.S. withdraws from Paris Agreement

Donald Trump, president of United States, which is the world’s second biggest carbon emitter after China has pulled the country out of the Paris Agreement. As a result of this action, the United States will halt contribution of $100 billion to the Green Climate Fund set up to persuade developing countries including Nigeria cut their own emissions and reverse climatic change impacts.

“In order to fulfil my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord, but begin negotiations to re-enter either the Paris accord or an entirely new transaction on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers,” Trump said.

“So we’re getting out, but we will start to negotiate and we will see if we can make a deal that’s fair. And if we can that’s great, and if we can’t that’s fine.”

The United States has been contributing about $2.7 billion per year in climate finance to help efforts at cutting back on emissions of greenhouse gases. Some of these funds have been applied as loans, many below market interest rates to fund efforts in developing countries especially in the areas of renewable energy.

In 2015, the US contributed $53 million to the Least Developed Countries Fund, a contribution which helped some poor countries ramp investments in renewable energy and also gained the country significant goodwill from developing countries.

According to the Brookings Institute, a US-based non-profit public policy organization, some of the funds went through agencies like the U.S. Agency for International Development and the Department of Energy, while others were provided to the World Bank or through specialized United Nations funds and facilities.

Some support adaptation ($207 million per year), but most goes toward clean energy ($608 million per year) and “sustainable landscapes” ($208 million per year). Most of that last category goes to funding for protecting rainforests (and thus biodiversity) in the tropics.

These contributions also benefit the United States besides earning the country goodwill abroad. They create many American jobs as four-fifths of American contributions are made through their own agencies like USAID and the Export-Import Bank and American companies execute some of the projects abroad, creating jobs at home. Clean energy is now fastest growing sector of the US economy.

“If we stop or sharply reduce our funding to the world’s most vulnerable and poor nations as they struggle to cope with rising intensity of heat waves, sea level rise, strengthened hurricanes, and crop-withering droughts, we will be party to a preventable humanitarian crisis,” says the Brookings Institute.

Akachukwu Okafor, of the Initiative for Policy Research and Analysis (InPRA) told BusinessDay that this withdrawal means that “the chances of developing countries having finance to implement climate projects are further diminished. Nigeria is not likely to be affected by this as much as other developing countries. This is because Nigeria has failed (is yet) to activate access to GCF for over 3 years that countries such as Mali, Kenya, Senegal starting accessing GCF funds.

“While it will be difficult for developing to access climate finance from funds that United States contribute to, what will happen is that United States clean energy – renewable energy companies will be forced to look outside the United States where they will invest since the cancellation of Obama Climate Action Plan and Clean Energy Plan by Trump doesn’t favour RE companies.