On January 20, US President Trump issued an executive order, “Putting America First in International Environmental Agreements,” withdrawing the United States from the Paris Agreement and other climate-related financial commitments. Companies and other stakeholders should evaluate the potential implications for their own climate commitments, as well as climate-related funding for energy projects in other countries.
The executive order directs the US Ambassador to the United Nations to submit formal notification of withdrawal from the Paris Agreement. The UN Ambassador is also directed to immediately submit formal written notification to the United Nations withdrawing from any agreement, pact, accord, or similar commitment made under the United Nations Framework Convention on Climate Change. The executive order states that these decisions, effective immediately upon notification, are based on a broader policy stance that international environmental agreements should not unfairly burden the US economy.
The executive order also immediately revokes and rescinds the US International Climate Finance Plan and requires the Office of Management and Budget to issue guidance for the rescission of frozen funds.
The executive order requires the secretaries of various federal agencies to submit a report within 30 days detailing their actions to revoke or rescind policies that were implemented to advance the International Climate Finance Plan.
Going forward, the Secretary of State, the Secretary of Commerce, and the head of any department or agency that plans or coordinates international energy agreements are required to “prioritize economic efficiency, the promotion of American prosperity, consumer choice, and fiscal restraint in all foreign engagements that concern energy policy.”
This executive order marks a pivotal shift in US international environmental policy, underscores the Trump administration’s intent to depart from multilateral climate change cooperation, and may impact international relations and the viability of global climate initiatives. Companies with commitments linked to goals established by international climate agreements may need to consider potential effects from this change in US climate policy.
It is unclear today how the withdrawal by the United States from the Paris Agreement might impact participation by other nations, or how state and local governments will address the withdrawal. For example, when the United States withdrew from the Paris Agreement in 2017, a few countries (including Germany and France in Europe) indicated at the time that they would seek to increase their sustainability and emission reduction efforts because of the United States’ decision to withdraw. However, considering the current geopolitical and economic landscape in Europe, it is uncertain whether other countries will step up their efforts this time around and how the withdrawal might impact ongoing initiatives, particularly in climate finance.
We will continue to monitor the impacts of this executive order and related executive action.
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