When it comes to international environmental diplomacy, America has a chequered past. It stood at the forefront of the international battle to fix the ozone hole and has shaped many key international agreements.
Sadly, US positions are not always built on solid political ground at home. Twice, in the climate change process, this has led to the United States forging an agreement, only to then walk away.
This happened with the 1997 Kyoto Protocol which then Vice-President Gore flew to Japan to sign in the full knowledge that a Republican dominated Senate would never ratify the deal. It happened again five years ago, with former President Obama closing that landmark deal (and John Kerry signing at the UN), only for President Trump to tear it up a few weeks later.
With such a background the international community is a little nervous when a new Democrat administration takes the helm laden with robust statements and bold promises, as President-elect Biden is doing now. But, as is so often the case, the prodigal son will get the benefit of the doubt (again) and for good reason!
Let’s look at what those reasons are. No-one would argue the fact that the United States are a political powerhouse and an economic superpower. This makes having the US in the climate action tent critically important. But why? Is this about political posturing, or is there something more?
When the Biden administration chooses to take an ambitious lead on climate action, the world is wise to take heed. Clear signals from politicians on where the new administration plans to go, have an enormous power in the market. An example. Wind and solar energy made it to where they are today in a hostile economic environment where the playing field was everything but level.
Environmental cost is not internalised and fossil fuels are still subsidised to a huge degree. What helped to push wind and solar to the current competitive strength is the hope that, in the long term, things will change and new (climate) challenges be recognised, thus creating a viable market for these technologies.
If you are building things (powerplants, factories or refineries) with a technical lifetime of 40 years, you do well to think about how friendly or hostile the operating environment is likely to be over that time period. So a political statement sends strong market signals. Especially if it comes from a superpower and even more so when others are pointing in the same direction.
How the market responds to political signals has ramifications around the globe. Our economy is now truly global. This means that when key market players take a course, set an standard or make demands on their suppliers, this resonates around the world.
The EU agreeing auto standards with European manufactures immediately sets a trend that Japan and Korea must follow because the European market is so big. American companies like Wall Mart have hundreds of thousands of suppliers around the world. So a direction taken at a corporate HQ is delivered-on in pretty much every country on our planet. The standards the US and other major players set become imperatives, or things you choose to ignore at your own peril.
Another important point is that climate action has increasingly become a race to the top that is driven by innovation. Innovators smell a climate market and they are rushing to seize the opportunities. Opportunities around electric vehicles, energy efficiency, clean technologies, low-asset business models, you name it. America has long stood at the forefront of discovery and innovation.
Many of the key technologies we apply today have at least part of their roots in America. So the signals politicians send and how the corporate community responds, creates an innovation catalyst that will transform business opportunities both in the US and around the world.
America’s proud history in working together with other nations, providing them with the finance, technology and capacity support they need in order to climate proof their energy systems, industry and infrastructure. Reducing emissions in the economic powerhouses of today is obviously critical. But with much of future economic growth and population increase of the future set to happen in Africa and Southeast Asia, we need to fix the future, not only the past.
Five years after the Paris Climate Accord was reached, the international process is now in full implementation mode. The purpose of the negotiations will be to ensure that countries individually are delivering what they have promised and that the collective impact of their efforts is enough to keep global temperature increase below the agreed level.
The United States returning to the international process at this time is critical to ensuring that especially the major players show leadership, both at home and abroad. At the end of the day, ensuring this happens is in the US’s own interest for a number of reasons. First because the US has in recent years always considered action by others, especially China, as a precondition for its own engagement.
Second because bold global action will ensure all nations pull their weight toward a common goal. Third because that global action will create the opportunities for the innovation economy of the future President-elect Biden is seeking to deliver, as opposed to the manufacturing economy of the past.
The model outgoing President Trump held up is what should make America great again.