· 5 min read
President Trump has again withdrawn the United States from international climate initiatives, including the Paris Agreement. The world now grapples with the implications of a global superpower retreating from one of the most pressing challenges of our time. Policies distancing the U.S. from climate commitments are not just an environmental issue—they are an economic, political, and moral misstep.
One must examine the broader context, including the growing climate market, international obligations, and the role of U.S. states in climate action to truly understand the potential consequences.
Returning to climate isolationism
Trump’s original withdrawal from the Paris Agreement in 2017 sent shockwaves through the international community. As the second-largest emitter of greenhouse gases, America's participation is pivotal to achieving the agreement’s goal of limiting global temperature rise to 1.5°C. President Trump’s renewed policy position deepens the divide between the U.S. and global consensus on climate action.
The Paris Agreement is a symbol of collective responsibility and international collaboration. By stepping away, Trump’s administration signals a rejection of multilateralism, weakening the global effort to combat climate change.
Lessons from Brexit: the limits of nationalist policies
The aftermath of the UK’s decision to leave the EU, which was driven by promises of sovereignty and economic freedom, highlighted the challenges of retreating from international cooperation. Trade barriers, economic uncertainty, and a diminished global standing have plagued the UK ever since.
One critical limitation of Brexit is the UK’s heavy reliance on Europe as its largest trading partner. In 2022, the EU still accounted for 42% of UK exports and 45% of imports, making it difficult to break away from EU standards.
The energy sector is a case in point: the interconnected nature of European energy markets means that the UK must adhere to EU regulations to ensure smooth trade and energy security. This dependency illustrates the broader challenge of attempting to disentangle from an integrated system without suffering significant economic consequences.
Similarly, U.S. withdrawal from climate agreements risks isolating the country economically and diplomatically. In a globalized system, the U.S. may find itself increasingly sidelined in international negotiations and unable to shape the global climate agenda.
The booming climate economy
The global climate market is growing at an unprecedented pace. According to the International Renewable Energy Agency (IRENA), the renewable energy sector alone employed over 13.7 million people worldwide in 2022, a figure projected to rise dramatically. The International Energy Agency (IEA) recently reported that the global investment in clean energy technologies in 2024 was $2 trillion. And, an OECD report projected climate financing globally to reach $5 trillion/year by 2030.
China and the EU are aggressively investing in renewable energy, electric vehicles, sustainable infrastructure as well as in climate mitigation and adaptation capabilities. Chinese firms now dominate the global solar panel market, controlling over 80% of the supply chain. European companies are leading innovations in wind energy and green hydrogen.
If U.S. companies fail to align with global climate goals, they risk falling behind in the industries that will define the 21st-century economy.
Consequences for non-compliant companies
The international business community is increasingly aligning itself with climate goals. The Task Force on Climate-related Financial Disclosures (TCFD) and the Science Based Targets initiative (SBTi) are pushing companies to integrate climate considerations into their strategies. Firms that fail to adapt risk losing investor confidence, supply chain disruptions, and diminished access to international markets.
The EU’s Carbon Border Adjustment Mechanism (CBAM), coming into full effect in 2026, will impose tariffs on imports based on their carbon footprint. This policy aims to level the playing field for European industries adhering to strict climate regulations. A growing number of counties are following, including Canada, the UK, Australia, and Japan.
Finally, the Voluntary Carbon Market is and remains – voluntary. It is an independent indicator for the ‘health’ of the global sentiment towards climate action. Companies voluntarily bought carbon credits for a total of ~$1.4 billion during 2024, with transactional volume expected to rise to $7-35 billion within the next 5 years and as high as $250 billion by 2050. Most US-based multinationals are very active players in the market, which is not expected to change.
U.S. companies that don’t comply with these or similar standards will simply face higher costs and reduced competitiveness in the global market. The message is clear: ignoring climate action is not just environmentally irresponsible; it is economically untenable.
The role of U.S. states in climate action
Many U.S. states are taking a proactive role on climate. California has been a global leader in climate action, with ambitious goals to achieve carbon neutrality by 2045. The state’s cap-and-trade program, renewable portfolio standards, and investments in clean transportation have set a benchmark for others to follow. New York, Washington, and Massachusetts have also implemented aggressive climate policies.
In contrast, states that have historically opposed climate action have contributed little to national efforts. Heavily reliant on fossil fuels, federal climate policies have had limited influence on their actions. Trump’s withdrawal from international agreements is unlikely to change their stance.
The dichotomy between proactive and resistant states highlights the resilience of subnational climate action. Initiatives like the U.S. Climate Alliance, a coalition of 24 governors committed to upholding the Paris Agreement, demonstrate the power of localized efforts.
However, the lack of a cohesive federal strategy undermines the country’s ability to present a united front globally. State-led efforts remain fragmented, lacking the scale needed to meet national and international climate goals.
The cost of isolation
Trump’s renewed withdrawal from climate policies is a step backward at a time when global cooperation is more crucial than ever. The booming climate market presents a tremendous opportunity for economic growth, but the U.S. risks falling behind if it fails to engage. State-led efforts offer hope but cannot replace a comprehensive national strategy.
The stakes are clear: the world will move forward with or without the United States. The question is whether America will lead or be left behind.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
