In a decisive move from the second Trump administration, the United States has exited the Paris Agreement, a significant global climate accord initially embraced by 193 countries and the EU in 2015. This action, anticipated during Trump’s election campaign, was among the administration’s first initiatives and underscores a retraction from international climate commitments.
This decision echoes Trump’s first-term actions but occurs within a more intricate international framework characterized by geopolitical tensions in Ukraine and the Middle East. Over the past decade, substantial progress has been made toward energy transition, propelled by hefty investments from governments and the private sector in green technologies. Climate change-induced extreme weather events have escalated, compelling early investors like China to secure a competitive edge in renewable industries. In 2024, China surpassed the combined energy transition expenditure of the US, EU, and UK, as reported by Bloomberg New Energy Finance. Albert Cheung, a noted analyst, remarks, “Despite the absence of the United States, many leading economies continue to pursue ambitious climate goals.”
Global investments in renewable energy have surged dramatically, rising from $426 billion in 2016 to over $2,100 billion in 2024. The U.S. withdrawal from the green technology sector opens lucrative opportunities for other nations. “There is substantial market potential available, and many countries are keen to capitalize on it,” notes Cheung. Historically a major emitter, the U.S. has struggled to lead in climate action. Despite a temporary re-entry into the Paris Agreement under Biden and increased investments in renewables, the U.S. remains the world’s largest crude oil and gas producer.
Paradoxically, Trump’s climate policy retreat adversely impacts U.S. firms, specifically large oil companies his “drill baby drill” rhetoric sought to bolster. These firms, having invested in energy diversification, now face hurdles in the expanding global market for renewables. AON, a top reinsurance company, highlighted the economic toll of climate change with natural disasters costing $368 billion in 2024, a significant increase from $216 billion in 2016.
The U.S.’s policy shift offers industrial and technological opportunities for other regions. Ani Dagupta of the World Resources Institute contends that the withdrawal “will not protect Americans from climate impacts but will provide China and the EU a competitive advantage in the booming clean energy sector.”
In Europe, the EU maintains its climate mission, targeting a 55% reduction in CO2 emissions by 2030 and striving for net-zero by 2050, according to European Commission President Ursula von der Leyen. Meanwhile, the UK, under Labour Prime Minister Kein Starmer, aims to cut emissions by 81% by 2035, reinforcing its leadership in climate action. Brazilian President Luiz Inácio Lula da Silva criticized Trump’s decision as regressive for humanity. With Brazil set to host COP30, the UN Climate Conference, marking the Paris Agreement’s tenth anniversary, Lula’s comments underscore the geopolitical and economic dimensions of global climate policy.