US exits Paris pact, again: In Trump’s playbook, climate change is earth’s problem not his or America’s

President Donald Trump has once again pulled the United States out of the Paris climate agreement on Monday, removing the world’s largest historic polluter from global efforts to tackle climate change. This marks the second time in a decade that the US has stepped away from the accord.

This decision leaves the US in a small group of nations outside the 2015 pact, and interestingly, Trump has put America in the club of Iran, Libya and Yemen — countries he is not particularly fond of. The agreement aims to limit global temperature increases to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels to prevent the worst consequences of climate change.

Trump’s withdrawal aligns with his scepticism about climate change, which he has previously referred to as a hoax. It also reflects his broader agenda to free US oil and gas companies from regulations, allowing them to maximise production. He signed the executive order to withdraw at the Capital One Arena in Washington, surrounded by supporters.

Although the US withdrawal is immediate, the process to fully exit the pact will take a year. In the meantime, the White House has declared a “national energy emergency” and introduced measures to roll back climate regulations and increase oil and gas production. This decision comes at a critical time as global temperatures in 2024 have already exceeded the 1.5°C threshold above pre-industrial levels for the first time in a calendar year.

While the Paris Agreement is not legally binding, it serves as the foundation for international collaboration to combat global warming. The US’s involvement—or lack thereof—highlights the broader challenges climate change policies face on the global stage.

Signed in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC), the Paris Agreement is a cornerstone of global efforts to limit warming to below 2˚C, with a goal of staying under 1.5˚C. As a major global player, US participation or withdrawal has significant repercussions for international climate efforts.

The Paris Agreement: Goals and challenges

Before the Paris Agreement, the world was headed towards a dangerous rise in global temperatures, with an increase of 3.6˚C expected by 2100. The Paris Agreement aimed to change this by working together globally to keep global warming well below 2˚C and ideally limit it to below 1.5˚C. To reach this challenging goal, all countries would need to drastically reduce their greenhouse gas emissions. To ensure progress, the agreement required countries to share their climate action plans, called Nationally Determined Contributions (NDCs), and to update these plans every five years.

A key part of the Paris Agreement was providing financial help to developing countries to manage and adapt to climate change. In 2010, the Green Climate Fund was created to receive donations from wealthier nations to support smaller and developing countries in reaching their climate goals.

Developed countries, including the US, promised to raise $100 billion every year by 2020 for this cause. However, by the end of 2020, only $7 billion had been raised, showing a large gap in climate funding.

US withdrawal under Trump

The biggest change in the US stance on the Paris Agreement happened in 2017 when President Trump announced he wanted to pull out of the agreement during his first presidency. Although he made this announcement in June 2017, the Paris Agreement rules meant the US couldn’t officially start the withdrawal process until November 4, 2019.

Once the withdrawal was official, it took effect on November 4, 2020. This decision was widely criticised by other countries, who saw it as a setback for global climate efforts. However, the withdrawal also highlighted tensions within the US as several states confirmed their commitment to the Paris Agreement goals and promised to take action on climate change even without federal support.

The financial impact

Previously, the US withdrawal from the Paris Agreement had a significant impact on global climate finance. The Green Climate Fund, created to support developing nations in addressing climate change, was severely affected as the US—one of its largest contributors—stopped its funding.

While the Paris Agreement set a goal of raising $100 billion annually by 2020, only $7 billion was raised by the end of that year. This lack of financial support from developed countries, including the US, placed heavy burdens on poorer nations already struggling with the effects of climate change.

The withdrawal also influenced investment patterns, particularly in Europe. A study on ScienceDirect explored how the Paris Agreement and the US’s exit affected investor behaviour toward high-carbon companies.

After the Paris Agreement was adopted, European investors increasingly saw high-carbon businesses as risky leading to a decline in investments in those sectors. However, the US’s withdrawal introduced uncertainty about the future of the agreement, temporarily making high-carbon investments more attractive again.

This shift in investment behaviour exposed a critical issue: doubts about the Paris Agreement’s credibility and long-term stability created a ripple effect in global financial markets.

According to the study, investors began to reallocate their climate-related risks, shifting investments to BRIC nations (Brazil, Russia, India and China). These countries increased their holdings in high-carbon firms, effectively moving some climate transition risks from highly regulated European markets to less-regulated regions. This reallocation reflected investors’ efforts to protect their portfolios amid the unpredictability caused by the US’s decisions.

Biden’s reentry

The election of Joe Biden in 2020 marked a major change in US climate policy. On his very first day in office, Biden rejoined the Paris Agreement, showing a renewed commitment to global climate efforts. Beyond rejoining the accord, his administration took several executive actions to reverse Trump-era environmental rollbacks. These included strengthening methane emissions standards, revising fuel economy regulations, and restoring environmental protections that had been weakened under Trump.

Biden also announced an ambitious $2 trillion climate and clean energy plan. This plan aimed to eliminate greenhouse gas emissions from the power sector by 2035 and achieve net-zero emissions across the entire US economy by 2050.

However, these bold goals faced significant challenges, particularly due to a politically divided Congress. With narrow majorities in both the House and Senate, Biden’s administration faced an uphill task.

Global and domestic impact of US climate policies

With Washington opting out of the Paris Agreement again, the US’s inconsistent stance on the accord has had significant global and domestic effects. Internationally, the withdrawal weakened global confidence in the agreement, as many countries see the US as a key player in the fight against climate change. This back-and-forth on climate policy has made it harder for other nations to commit to long-term climate goals, given the uncertainty surrounding US leadership in this area.

Domestically, Trump’s decision to withdraw from the Paris Agreement was part of a larger pattern of reducing environmental protections. Under his leadership, the US tried to weaken rules on methane emissions, fuel economy standards and other climate-related policies.

At the same time, the Trump administration promoted fossil fuel development by speeding up the approval of oil and gas pipelines, allowing more offshore drilling and reducing protections for national parks and monuments. These actions not only weakened the US’s own climate strategy but also sent a message to the world that the US was less committed to global climate cooperation

What’s next?

Now that the US has once again withdrawn from the Paris Agreement under President Trump, the question remains: what will heat up more—climate or politics?