What Climate Accord Withdrawal Means for Law Firms and Clients (Perspective)

Over the past few months, any strategy sessions among lawyers that represent clients in the energy and natural industries impacted by the effects of or even discussions about climate change, were sure to include a robust conversation around the “what if” of withdrawal from the Paris Climate Accord.

Certainly, we at Stoel Rives had many such debates around what this would mean for our practices, and most importantly, our clients. Now that we’re adjusting to this new reality, we find that there’s no single answer, as there are many factors influencing the outcome, including geography and industry. How a firm has organized its practices as well as the firm’s geographic reach will influence the impact of the Paris Accord withdrawal.

Renewable Energy

Looking at the potential impact from an industry perspective, the renewable energy industry is largely driven by state standards and regulation. Twenty-nine states, plus the District of Columbia, have adopted renewable energy portfolio standards, and eight additional states have established renewable energy goals.

These state policies, typically adopted by statute, promote the growth of renewables in addition to state and local implementation of emissions control strategies and energy conservation policies, including “smart grid” management and other clean energy technology innovations aimed at reducing power consumption and minimizing carbon emissions.

This effort to reduce carbon from the electric power grid was underway long before the Paris Accord, and if the actions and statements by mayors and governors over the past few days are any indication of what is ahead, and the “We Are Still In” campaign gains momentum, we expect a “doubling down” on the commitment by most states to require and integrate additional renewable energy generation. This reaction reaches even further if governors such as California’s Governor Jerry Brown make good on their pledges to forge their own relationships with the international community and investors to circumvent President Trump’s action. Albeit somewhat symbolic, this week’s meeting between Governor Brown and Chinese President Xi appears to indicate actions to follow.

Clean Technologies and Investment

Similar to the reaction by mayors and governors, a rapidly growing number of businesses and investment funds have reacted strongly to the Paris Accord withdrawal. Ex-New York Mayor Bloomberg’s statement following his own meetings with members of the international community sums up this commitment: “Americans don’t need Washington to meet our Paris commitments, and Americans are not going to let Washington stand in the way of fulfilling it …. I want the world to know that the U.S. will meet its Paris commitments and that through partnerships among cities, states and businesses we will seek to remain part of the Paris agreement process.”

More broadly, at least 71 of the Fortune 100 and 215 of the Fortune 500 have a sustainability or renewable goal, or both. We anticipate a heavy focus by investors to ensure that the economic opportunities implicated in new technologies are not lost as a consequence of the Administration’s action. If anything, we expect investment in technological innovations to continue and potentially surge, providing us with an opportunity to deploy our experience in corporate renewable procurement, energy storage, efficiency programs, grid management and other technologies to assist our clients in making investments in clean. technologies.

Conventional Fuel and Industry Clients

At Stoel Rives, our renewable energy and clean technology clients will likely see business opportunities in President Trump’s action, and we remain vigilant in assisting industrial and conventional energy clients facing the forces of change. Key issues for these clients relate to the fairness of emerging greenhouse gas regulations, where “process matters,” both in the fairness of the regulatory actions in the adoption of regulations, and the opportunities for survival in a climate-constrained world. These Stoel Rives clients are not naïve, nor are they “climate deniers.” But they do wish to survive. Particularly in the states west of the Mississippi, where stateside climate policies are driven by forces well beyond the Paris Accord, the trend toward adoption and enforcement of new and often rigorous regulatory requirements will continue.

Our firm will continue to focus on finding “clear paths,” and mitigation opportunities in complex regulatory programs. We expect that as the dust settles, state and local governments will understand the economic imperatives to create and preserve jobs, and that industry will hammer out strategies to implement change while securing survival—strategies that will likely include new relationships between our industrial clients and renewable energy and clean technology clients.

Efforts by local and state governments to circumvent the Trump withdrawal from the Paris Accord will have little meaning if key industrial employment sectors are unable to find this path toward transitions in a “carbon constrained” world. We believe our industrial clients can lead the way in finding new clean fuel technologies and new beneficial uses of fossil fuels, including conservation and transition fuel technologies. We are optimistic that we will “get there,” with all of the tradeoffs and incentives that typify complex new regulatory programs.