Whether that withdrawal becomes permanent will depend on who wins that election — Donald Trump, who is behind the withdrawal, or Joe Biden, who has promised to put the U.S. back into the agreement as soon as possible.
For Canada, having the U.S. back in the Paris pact, and the resulting domestic U.S. policies on the environment that will follow, could both open markets for Canadian clean energy technology, and level the playing field for Canadian companies competing against Americans with fewer environmental regulations and taxes.
Experts and observers say even a U.S. outside the Paris agreement may ultimately end up in the same place, with state governments going it on their own, renewable energy prices becoming more attractive, and global investors increasingly viewing carbon footprints as a critical element in their investment decisions.
“It all depends on what the policies are that you put in place,” said Gary Mar, president of the Canada West Foundation.“Canadian companies are already paying carbon taxes. And so if their competition in the United States was compelled to do the same thing then it would make it a more level playing field for Canadians to enter into the marketplace.”
In the last four years, Canada has in some places slowed or amended its own environment policies to reflect concerns American companies not regulated in the same way might hurt Canada’s competitiveness.
That includes methane regulations — which Canada delayed by three years when Trump paused similar targets in the U.S. — and limiting the carbon pricing on industries that face heavy competition from U.S. firms that don’t pay the same kind of tax.
If Trump stays in office, Canada will continue to measure its environmental regulations against competition in the U.S. facing less regulation. If Biden wins, he hasn’t just promised to rejoin Paris, he has pledged to use the power of the United States to influence, or even name and shame, countries that aren’t doing their part to slow climate change.
Gerald Butts, vice-chairman at the political-risk consultancy Eurasia Group and former principal secretary to Prime Minister Justin Trudeau, said Biden’s climate policies are the most aggressive any American presidential candidate has ever proposed.
That includes eliminating fossil fuels from the U.S. power grid by 2050, and using the power of the federal procurement system to spur growth in electric vehicles.
Butts said Biden’s plan would not only put pressure on the world, including Canada, to up its climate game, it opens a “big opportunity to grow the Canadian clean energy and clean-tech footprint in the United States.”
“It tilts the scales toward renewable energy and decarbonization in the United States in a way that no potential president has ever attempted to put his or her thumb on the scale,” said Butts.
“We’ve got a lot of hydro power, we’ve got a lot of nuclear power, we’ve got a lot of low- to zero-emissions electricity here. And that’s a real opportunity.”
Canadian mining could also benefit. Canada produces 14 of the 19 metals and minerals needed for solar panels and Quebec is home to one of the 10 biggest lithium mines in the world.
Butts said a Biden presidency might have negative effects Canada’s fossil-fuel sector. Biden has promised to halt the Keystone XL pipeline between Alberta and Nebraska, for instance.
That project, which was killed by Barack Obama when Biden was his vice-president, was revived by Trump and is supported by the Trudeau Liberals. Lack of pipeline space to ship more oil has left Canadian producers to accept significant discounts for their product, and limited growth.
Earlier this year, Alberta Premier Jason Kenney threw his province’s fiscal weight behind Keystone, with a $1.5-billion equity investment and a $6-billion loan guarantee.
Even under Trump, the pipeline has hit snags in the courts over its environmental impact, and construction on the U.S. portion has been halted.
Christopher Sands, director of the Canada Institute at the Wilson Center political think tank in Washington, D.C., said the pipeline has taken on an outsized role in the U.S. climate fight, as it was something environment groups could seize on.
But he said it’s possible that if Biden starts moving aggressively on other climate fronts, the pipeline may fall in importance.
Mar says that Biden may ultimately see the pipeline as a good thing for a transition period. The U.S. has sanctions against Venezuela, including oil imports, and he said it is cheaper for the U.S. to get oil from Canada through a pipeline than it is to seek other sources in the Middle East.
Sands is also careful to point out that Trump’s anti-climate rhetoric may be overshadowed by the economic opportunities of clean energy that a pro-development president cannot resist.
And even when and where he doesn’t, state governments and the private sector are moving on climate policies without him, said Mar.
“They might happen more quickly with the Biden administration, but I think again, because of the importance of states, even under Trump, I think that trend line will still continue,” Mar said.
Trump halted regulations to insist automakers produce more fuel-efficient vehicles, but a number of states and several automakers are sticking to the plan without him.
Trump has also done everything he can to “bring back king coal”, rolling back environmental regulations that made coal less palatable.
But cheaper natural gas and renewable sources of energy are crowding coal out of the market, and since Trump took office coal production has fallen almost 20 per cent, and coal’s share of the U.S. power grid fell from about one-third to less than one-quarter.