U.S. Withdrawal From the Paris Agreement: What Comes Next?

11/20/2019 - Blog

In April 2016, 175 parties from across the globe came together to sign the Paris Climate Agreement.

Today, the number of signatories has risen to a whopping 195. The Paris Agreement, constructed within the United Nations Framework Convention on Climate Change (UNFCC), aims to unite countries to fight climate change at the global level and reduce the effects of global warming by keeping the global average temperature increase below 2 degrees Celsius above pre-industrial levels. The Agreement was a huge step that effectively unified almost every country in the world, each signee vowing to commit to combating climate change.[i]

Continuing the Fight Against Pollution

Since the pre-industrial period, we’ve seen an unprecedented increase in global temperature, which the scientific community believes is primarily due to the burning of fossil fuels and other human activity. While the Industrial Revolution gave the U.S. and other developing nations a monumental boost in economic growth, a significant influx of job opportunities, and an enormous technological advancement, it also sparked mass pollution, the effects of which we are experiencing today. The Paris Agreement not only solidified a plan to halt greenhouse gas pollution, it also aimed to set the tone for decades to come. With China, India, the United States, and other major contributors to greenhouse gas emissions (GHGs) committing to change, it was and continues to be expected that the world will follow.

However, expectations hit a bump in the road on June 1st, 2017, when The Trump Administration announced that the U.S. would be withdrawing from the Paris Agreement, despite being one of the top producers of greenhouse gas emissions. Technically, the U.S. cannot officially pull out of the Paris Agreement until November 2020 at the earliest. Still, the decision put forward the idea that the U.S. would be steering away from clean energy and more environmentally friendly policies. Reactions were internationally negative on both sides of the political spectrum.

This decision brought states and corporations to a fork in the road: one road continuing the green, eco-friendly path, and the other a reversion to older, less environmentally conscious policies. It seems that despite the Trump Administration’s unilateral decision, the U.S. will remain on a greener path, working to reduce greenhouse gas emissions and improve energy saving initiatives. Individual states have been mandating their own environmentally friendly policies for decades to limit waste and negative environmental impact. For instance, many states and cities have implemented bans on plastic bags, Styrofoam, and other disposable items, particularly those that are not recyclable or that do not biodegrade. Additionally, the use of electric vehicles is on the rise, which release less greenhouse gasses into the air and are, over time, easier on the wallet.[ii]

CRE is a Key Part of the Conversation

There are dozens of non-governmental organizations nationwide that are committed to sustainable business and development practices, which is where many firms can implement changes that can really have an impact. Commercial real estate is one industry where green is becoming the norm. Take the U.S. Green Building Council that developed Leadership in Energy and Environmental Design (LEED) certifications, which aim to help building owners and developers be environmentally responsible. Not only is it environmentally and socially impactful to commit to LEED-Certified building, but it also looks great to investors.

As discussed in EBI’s Green Bonds blog, green investing and developing is on the rise. As a direct result, a new type of bond has been introduced: green bonds, meant to finance environmentally friendly projects and take advantage of incentives such as tax benefits and lower interest rates for green building improvement projects. This opportunity allows corporations—as well as individual developers and property owners—to contribute to keeping the commercial real estate industry on the path towards a reduced carbon footprint, lower greenhouse gas (GHG) emissions, and improving energy and sustainability efforts.

In recent decades, the Clean Air Act, Superfund, and other federal government regulations have significantly affected the commercial real estate industry. With the U.S. pulling out of the Paris Agreement, we may see fewer federal regulations, but state regulations are not likely to let up. Both before and after the Trump Administration’s announcement regarding the Agreement, states are seemingly committed to efforts towards lessening carbon footprints and reducing waste.

New England is one of the regions leading the way towards more environmentally friendly policies, with Vermont, Connecticut, Massachusetts, Rhode Island, and New Hampshire ranking in Wallethub’s list of the top 10 most environmentally friendly U.S. states. While being eco-friendly is the trend and appears likely to continue well into the future, many environmentalists say there’s still a long way to go. California, for example, creates some of the highest levels of pollution in the U.S. and has the worst air quality, according to the American Lung Association’s State of the Air report. However, they have ambitious climate targets and are working towards carbon neutrality by 2045.[iii] California, being one of the largest and most populated states, has a history of being an indicator of moves by other states, so we may see similar goals spread throughout the country soon. Back in New England, Boston is among a number of other cities and states that also aims to be carbon neutral, their neutrality goal being 2050.[iv]

A truly carbon neutral building uses only as much energy as it generates. Buildings are a huge key in the fight against global warming, according to a recent study showing they account for about 50 percent of a city’s carbon emissions. Last year, 19 cities declared that they will be enacting policies aimed to make all new buildings carbon neutral by 2030. These cities include Los Angeles, New York City, San Francisco, and Washington, D.C. These ambitious building targets are likely to lead real estate into a key role in keeping the U.S. and other influential countries on track to hit goals previously committed to under the Paris Agreement.

Green building is undoubtedly the future of commercial real estate. EBI’s staff of experienced, future-focused professionals include LEED-Certified professional engineers who are dedicated to clean, sustainable energy. To find out more about how EBI can help you stay on target and achieve environmentally-friendly goals, check out our Energy & Sustainability group.


[i] https://climate.nasa.gov/resources/global-warming-vs-climate-change/

[ii] https://afdc.energy.gov/fuels/electricity_benefits.html

[iii] https://www.greentechmedia.com/articles/read/californias-road-to-carbon-neutrality-runs-through-the-states-buildings

[iv] https://www.boston.gov/departments/environment/carbon-free-boston


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