Donald Trump’s decision to pull the US out of
the 2015 Paris Climate Treaty will not halt moves to cut fossil
fuels or reduce decarbonisation requirements on the non-energy
minerals sector and other industries, say experts.
Trump called for a new "fair" deal that would not
disadvantage US businesses and workers, and claimed that China
and India had "no meaningful obligations" placed on them by the
agreement.
Yet far from triggering a collapse of the treaty, analysts
say the US move has, if anything, bolstered determination to
enforce it. The announcement has prompted widespread
reaffirmation of the treaty by China and the G6 group of the
largest six European Union (EU) member states - Germany,
France, Britain, Italy, Spain, and Poland. Several US states,
such as California, along with US businesses have also
reconfirmed their commitments to work unilaterally of the
American federal government to work towards achieving
Paris-based commitments.
"Trump is trying to throw a spanner in the works but the
treaty has started a process that is not reversible," said
Maria Panezi, a post-doctoral fellow with the International Law
Research Programme at the Canada-based Centre for International
Governance Innovation (CIGI).
The Paris agreement committed 188 countries to keeping
rising global temperatures well below 2C above pre-industrial
levels. The accord endorsed an enhanced emissions trading
system and a restructuring of the UN’s Clean
Development Mechanism to allow companies to offset emissions by
funding compensatory schemes in developing countries. Funding
is also expected to be released for research into
renewables.
The agreement creates a more robust transparency framework
and demands that all signatory nations publish "nationally
determined contributions" (NDCs) and report every five years
under peer review on their emissions and on their
implementation efforts.
 |
President Trump announced that the US
would pull out of the Paris accord in
May this year.
White House, via Wikimedia |
The Paris Treaty and industrial
minerals
The treaty is highly relevant to the non-energy and
non-metallic minerals sector. Mining and processing such
minerals requires a great deal of energy, making the sector
sensitive to changes to how energy is priced and its
availability. Furthermore, silica sand and minerals including
bauxite, alumina, kaolin and boron are used in processes such
as fracking, which the treaty also puts under scrutiny. Other
non-energy minerals meanwhile are used in renewable energy
production, for which the accord is designed to provide
stimulus: new solar panels require bauxite, boron, phosphate,
silica, and titanium dioxide (TiO2) while wind
turbines use concrete, bauxite and rare earth elements to
reduce the weight and size needed for magnets in wind
turbines.
The EU’s climate action and energy Commissioner
Miguel Arias Cañete declared the treaty "fit for
purpose" and added that Trump’s "decision has no
benefits for jobs or the citizens of the US." Declaring that EU
institutions would continue to support the agreement, he said:
"In the long-term there will always be political change but the
most important things is we stick to the principles."
The EU has seven principal producers of non-energy mining -
the UK, France, Germany, Italy, Spain, Poland and Sweden, with
Portugal, Ireland, Romania and Bulgaria having created
specialist niche markets in the extraction of minerals such as
feldspar, salt, gypsum, barite, dolomite and talc.
Cañete added that the EU and China would, before 2020,
publish an "ambitious" joint decarbonisation strategy.
A spokeswoman for Cefic, the European Chemical Industry
Council, reaffirmed commitment to the Paris deal: "It gives us
the flexible framework to manage climate change while providing
a smooth transition for business. Chemical innovations enable
current and future climate change solutions, including
renewable energy, energy storage and thousands of products to
improve energy efficiency," she said.
According to Professor Jim Skea, president of London-based
global energy professional body the Energy Institute,
decarbonisation is "hard-wired" into the world’s
energy system "in a way that will ride out the ups and downs of
short-term political cycles". Skea, also a member of the
UN Intergovernmental Panel on Climate Change (IPCC), said costs
for renewables - many facilitated by non-energy minerals - were
dropping quickly. "Global investment in renewable power
capacity reached a record $265.8bn in 2015 which was more than
double that for new coal and gas generation."
Meanwhile, Shu Yinbiao, chairman of the State Grid
Corporation of China, the world’s largest
utility, followed the Trump announcement by saying that his
company was "dedicated to the interconnection of world
power infrastructure to realise efficient, clean and
sustainable development of global energy."
So what happens now?
In a practical sense, the US cannot leave the treaty for
another four years (the agreement demands that nations cannot
give notice of leaving for three years after it has been
ratified and then takes another year to formally leave). But
in reality, as Silvia Maciunas, deputy director of
international environmental law at CIGI points out, the US
can in the meantime choose not to implement the treaty:
"While the treaty is legally binding, the achievement of
national climate plans is not legally required. So, the
treaty is essentially about peer pressure and the compliance
mechanisms are not strong."
Trump’s move is still likely to apply a brake
to the speed of action. "The treaty is not at risk of being
nullified but it will probably struggle to have as much
impact as quickly as it could because of the money the US
was promising to put into it," said Maciunas, who warned
that "a bit of a battle" in high energy consumption
industry markets was shaping up, with US fossil fuel
companies and heavy industry looking "to continue with
business as usual".
The concern for the non-energy metals industry in Canada, is
that if US rivals are not being penalised for emitting carbon
then Canadian companies will become less price competitive.
However, Panezi points out mechanisms do exist: "There are
tools at your disposal including border carbon adjustments.
When dirty products hit your border - and you already have a
carbon pricing regime in place - you can put a tax on the
import."
The US has threatened retaliatory measures in such
circumstances and indicated it would take the issue to the
World Trade Organisation (WTO). However, Panezi believes that
America may not succeed in claiming such protection breaks WTO
rules, and indeed its slow-moving procedures may place enormous
pressure onto the US to ultimately comply with Paris. "[Carbon
taxing] countries would have a good case at the WTO," she said,
"such cases take a while to materialise and it would be a
product by product approach - perhaps taxing cement or steel -
and the WTO [disputes settlement cases] can take a couple of
years from beginning to end."
Panezi believes that similar expressions of intent made by
France and China will have the effect of "tying the giant that
is refusing to comply down like Gulliver in Lilliput. The US
approach may galvanise action."
Other mechanisms in the US also mean Trump is likely to have
less of an impact on
the Treaty than he might have hoped. These include the
US’s national Clean Power Plan (still in place,
at least for now) and state-based legislation, such as
California’s Environmental Quality Act, which
controls industries operating in this populous state. "The
[latter] act gives California a very expanded environmental
mandate and gives the state a lot of leverage and
standard-setting opportunities," said Panezi.
As for how carbon taxes and duties may operate, the CIGI
does not anticipate a universal tax on all metals or
high-energy cost minerals. "That would be a big category, you
can’t just regulate all metals with blanket
legislation," said Panezi. "Metals that are on the higher
emissions scale would be good candidates. If we just price out
metals where there are no alternatives you may be imposing an
environmentally responsible tax but not offering the economy a
way out in the long run."
Taxes would only be applied in such circumstances on
materials where less intensive or green alternatives exist.
"Take cement," said Panezi, "How close is the construction
industry to using timber and other materials? The better
strategy is to start with commodities where there is an
immediate alternative."
Canada and the US
Pierre Gratton, president and CEO of the Mining Association
of Canada, reiterated his support for a broad-based price on
carbon and said he backs meaningful emissions reductions while
simultaneously protecting trade-exposed sectors: "The
transition from 'policies that push’ renewables to
'market forces that pull’ them into viability is
not something that the US Administration’s
withdrawal from the Paris Agreement will reverse," said
Gratton.
The US is Canada’s largest export market for
mineral and metal products and the Canadian mining industry
produces more than 60 minerals and metals; in Alberta alone it
produces sand and gravel (production value $218m), sandstone,
iron and magnetite, and gold. "The US withdrawal may affect the
Canadian minerals industry in a couple of ways, but it is too
early to say with certainty," he said, adding that demand for
Canadian minerals used for renewables may be affected.
"Trump’s decision could also affect the extent to
which the US produces certain greener technologies, many of
which rely on Canadian mineral and metal inputs."
Gratton also expressed concern that uneven application of the
Paris treaty could see high-carbon industries relocate,
affecting non-energy mineral production and costs.
"Policy-driven carbon leakage would see Canadian mining, a
significant engine of the Canadian economy, needlessly
damaged. Carbon leakage could lead to a significant increase
in global GHG emissions, resulting in less
environmentally-responsible jurisdictions absorbing lost
Canadian market share," he warned.
Australia
In Australia, the Minerals Council of Australia said it
continued to support the government’s commitment
to the Paris Treaty (though it has opposed domestic carbon
taxes). In a statement, a spokesman for the MAC cautioned,
however, that Australia’s emissions policies
needed to be "calibrated with those of our trading
partners".
The US is Australia’s third largest trading
partner. China, which remains committed to the agreement, is
Australia’s biggest trading partner and receives
five times as many Australian exports than the US. Among
other minerals, Australia produces salt, lithium, graphite,
alumina, TiO2 and zircon.
Legislation taking effect
elsewhere
More widely, legislation and action prompted by Paris is
taking shape (the treaty gives nations until 2025-2030 to
produce their NDCs and the treaty’s exact rules
will not be published until 2018). In 2016 the European
Commission brought forward proposals for accelerating the
EU’s transition to a low carbon economy - in
November 2016 it published a 'Clean Energy for all
Europeans’ package to fully implement the
EU’s 2030 climate and energy framework, including
legislative proposals on energy efficiency, renewable energy
and actions to accelerate clean energy innovation.
In June this year, the International Renewable Energy Agency
(IRENA) and the State Grid Corporation of China agreed to
enhance co-operation to advance energy transition to low
carbon systems under global and regional initiatives. China
has the largest renewable energy market with more than 27%
(545 GW) of the world’s installed renewable
energy capacity and more than 40% of the world’s
renewable energy workforce.