Global efforts to reduce carbon emissions will proceed despite any moderation or reversal of the US climate policy under the new administration of President Donald Trump, global credit ratings agency Moody’s Investors Service said.
This analysis is contained in a new report by Moody’s titled “Environmental Risks: Shift in US Climate Policy Would Not Stall Global Efforts to Reduce Carbon Emissions.”
In the report, Moody’s said while US leadership in global climate negotiations has been important, it may become increasingly marginalized should it temper its Paris Agreement commitments.
The other three largest emitters—China (Aa3 negative), the EU (Aaa stable) and India (Baa3 positive)—have reaffirmed their commitments, it said.
“Since taking office on 20 January, the new president has reaffirmed his commitment to eliminate the Climate
Action Plan, a key policy initiative of the outgoing administration focused on cutting carbon emissions, investing in clean energy and leading global efforts on climate change,” the report said.
At this stage, it is too early to determine precisely which areas of US climate policy may be moderated or reversed, and when, the report said.
Even if the US were to take these actions, it does not believe that the pathway to lower global emissions would be materially derailed over the coming decade, all else being equal, it said.
The credit ratings agency believes that powerful structural forces at play, including robust institutional and private sector momentum, will continue to drive global sustainable and climate agenda regardless of the direction of US federal climate policy.
“As such, the effects of carbon transition will continue to have material credit implications for rated entities in a number of industrial sectors globally,” it added.
Moody’s pointed out that since the US election, the vast majority of countries have reaffirmed their commitment to the Paris Agreement on climate change, reinforcing its view that adoption of carbon regulation globally will accelerate over the coming years.
In the Philippines alone, despite earlier pronouncements that he would reject the Paris Agreement, President Rodrigo Duterte is expected to sign a document that will pave way for the ratification of the global accord.
Earlier, Duterte met with the country’s Climate Change Commission (CCC), during which various government agencies completed and submitted certificates of concurrence (COCs).
The completion of COCs, according to the CCC, is a step closer to ratification of the Paris Agreement.
The Philippines was among the countries that pushed for the approval of the Paris Agreement and the inclusion of provisions beneficial to climate-vulnerable countries during the 2015 climate change negotiations in France.
Policymaking at a state and local government level within countries will also play an increasingly important role in fulfilling national climate commitments, even in the United States, Moody’s added.
The debt watchdog said the ability and willingness of individual US states to enact climate legislation and commit to carbon reduction will vary, as has been the case for some time.
More than two-dozen states have programs in place to continue reducing emissions, it stressed.
Moody’s also said that the global climate policy is not limited to the Paris Agreement, and institutional efforts such as the G20 study group on green finance and the Financial Stability Board (FSB) taskforce on climate-related financial disclosures suggest that policy momentum on decarbonization and green finance will be sustained.
Green bond issuance across the globe is another illustration of commitments on the part of the public and private sectors to the Paris Agreement, it said.
Green bond volumes continued to climb in 2016, reaching a new high of $93.4 billion—an increase of 120 percent versus $42.4 billion in 2015.
Extrapolating this level of year-over-year growth could bring 2017 issuance to $206 billion, it said.
Moody’s added that other regulatory initiatives beyond the Paris Agreement will also take effect in the coming years and support the transition to a lower carbon global economy.
Furthermore, corporate leadership and institutional investor focus on carbon emissions reduction, as well as broader sustainability issues, are increasing, it said.|
Strong institutional investor demand for greater sustainability and transparency, coupled with rising climate awareness and changing consumer preferences and technological change, will encourage more private sector companies to pursue explicit climate change strategies, Moody’s added.