With the new Administration, one of the largest and most economically developed countries in the world – the United States of America or simply the U.S. – has changed its stance on many global issues. Ecology is, unfortunately, one of them. Let’s take a closer look at the impact of the U.S. withdrawal from the worldwide Paris Agreement on green technology as well as the environment in general.
U.S. Withdrawal Timeline
On January 20, 2025, U.S. President Donald Trump signed an executive order titled “Putting America First In International Environmental Agreements,” initiating the United States’ withdrawal from the Paris Agreement. This decision was formalised on January 27, 2025, when the U.S. Ambassador to the United Nations submitted the official notification of withdrawal, which is set to take effect on January 27, 2026.
The executive order is the second time the U.S. has made an effort to retract from the environmental obligations prescribed by the international agreement. During his previous presidency term, in 2017, Donald Trump stated that the agreement was unfair to the U.S. economy and announced the withdrawal for the first time. However, under the agreement’s rules, the formal process of withdrawal could only begin three years after it came into force for the U.S., which was on November 4, 2019.
Therefore, the initial withdrawal officially took effect on November 4, 2020. Later, under President Joe Biden, the U.S. rejoined the Paris Agreement on January 20, 2021, the same day he took office. The country has abided by the ecological restrictions up until 2025, when the new Presidential Administration reversed the course again.
What Is the Paris Agreement?
Why is all that important? The Paris Agreement is an international treaty on climate change that aims to first limit global warming to well below 2°C (3.6°F) above pre-industrial levels, with a further ambition to keep it under 1.5°C (2.7°F). Those aims matter if we want to make the Earth liveable for future generations, preserve biodiversity, and maintain environmental stability.
The agreement specifically encourages financial and technological support from developed countries to developing nations while aiming not only to reduce greenhouse gas emissions worldwide but also help countries adapt to the impacts of climate change. The paradox is, advanced economies produce most of the emissions, while vulnerable emerging countries suffer from the outcomes of climate change and global warming. Hence, the treaty tries to create some kind of balance regarding the CO2 impact.
A total of 196 parties (195 countries + the European Union) signed the agreement, acknowledging its global importance and making it one of the most widely supported international treaties. Only a few small countries, Iran, Yemen, and Libya, have not formally joined the agreement. Even Eritrea, which lagged behind in the treaty adoption, ratified the agreement in 2023. Now, the U.S. has joined the club of non-supporters.
However, the big difference between the U.S. and, let’s say, Yemen is that the United States, unlike those smaller countries, is one of the biggest CO2 emitters globally. While Iran produces about 2% of the total world CO2, the U.S. is responsible for about 14%. Besides, we must note that the American CO2 emissions have significantly decreased since 2010. Paying attention to environmental issues was one of the main reasons for this decrease.
Today, caring about the environment is obviously not the pressing issue for the U.S. One of the main reasons quoted for the withdrawal from the Paris Agreement is that it impedes the local coal industry and “undermines” the U.S. economic development. Many Republican senators question the human role in global warming altogether, while others oppose contributions to the Green Climate Fund, which are obligatory under the Paris Agreement.
What Changes Upon U.S. Withdrawal?
U.S. withdrawal from the international climate treaty will bring about a lot of changes.
Carbon Reduction Targets
To begin with, stepping out of the Paris Agreement means ending the implementation of carbon reduction targets. Frankly speaking, unlike previous climate treaties (like the Kyoto Protocol), the Paris Agreement does not impose legally binding emission reduction targets anyway. Instead, it relies on voluntary national commitments and global peer pressure to achieve climate goals. However, abandoning the treaty altogether means also neglecting voluntary commitments established by earlier national administrations. In fact, the U.S. doesn’t even have to report its emissions to the United Nations anymore.
Basically, if the other countries still aim to lower global carbon emissions, (which they do), they might now face bigger cuts and amend their plans, as one of the biggest global CO2 producers will not participate in the joint scenario.
On the bright side, carbon reduction targets may be set not only by governments, but also by separate businesses or organisations. Therefore, some of the big U.S. companies might still decide to cut their carbon dioxide (CO₂) and other greenhouse gas (GHG) emissions and report to their stakeholders about these efforts, maintaining the public eco-agenda. In that case, U.S. national CO2 levels have chances to at least remain the same, not putting additional pressure on fellow economies.
Financial Gap in Climate Change Research and Aid
The second part of the Paris Agreement deal is the financial and tech support of climate goals. In the early days of the treaty ratification, the Obama administration was responsible for funding $3 billion U.S. dollars to the Green Climate Fund (GCF) that supports developing nations in shifting to low-carbon economies, helps vulnerable communities adapt to climate impacts, and scales up investment in renewable energy, sustainable agriculture, and green infrastructure.
The Biden administration committed to supply another $4 billion to the fund. However, as the pledge involved multi-year commitments, it faced obstacles with the change of power. Current U.S. President Donald Trump’s government had officially cancelled its outstanding pledges to the GCF made under previous administrations. Upon the news, Mafalda Duarte, the GCF’s executive director, encouraged global leaders to remain committed to providing essential climate funding to developing nations, reminding that the whole world is interconnected.
“We live in an interconnected world: no country, not even the richest ones, can afford to treat climate change solely as a domestic matter. Its most severe consequences—including conflict and migration—will ripple across the globe unless action is taken where it matters most: in developing countries.”
What Does It Mean for Green Tech Projects?
Naturally, the lack of financing for the Green Climate Fund negatively affects climate change research as well as climate change resilience initiatives, predominantly, in the emerging economies.
International Projects
Some examples of the projects financed by the GCF include:
- Debt-swaps to free up money for climate adaptation in Barbados, El Salvador, or Bahamas. With upfront loans of $70 million from the Inter-American Development Bank and Green Climate Fund, Barbados reallocated $165 million towards water infrastructure, food security, and environmental protection to combat climate change, including $125 million towards upgrading sewage treatment plants to improve water availability by 2050.
- The Tuvalu Coastal Adaptation Project (TCAP), funded by the Green Climate Fund and Australian Department of Foreign Affairs and Trade, aims to address the challenges posed by climate change and sea-level rise in the small Pacific Island nation of Tuvalu. The project is mainly focused on Funafuti, Nanumea, and Nanumaga islands, reducing their exposure to coastal erosion and providing buffers during storms. Besides, the initiative created an online hazard and risk dashboard platform, enabling local communities to investigate scenarios of wave impacts, track how shorelines have shifted over time, and design well-informed climate adaptation strategies.
- Funding of Pakistani venture capital firm Sarmayacar to support startups addressing climate change impacts in sectors such as energy, electric mobility, water treatment, recycling, sustainable agriculture, carbon accounting, etc. With the launch of a first-of-its-kind dedicated climate fund to support agritech and climate-tech startups, Sarmayacar aims to help the country, which suffered more than US$30 billion in economic damages during the massive 2022 floods and remains the world’s eighth-most vulnerable country to climate change.
Local U.S. Initiatives
However, U.S. withdrawal from the Paris Agreement stops not only the GCF investments, but also significantly limits financial opportunities for local startups or institutions dealing with carbon reduction and carbon capture. One example may be the Project Cypress by Battelle and clean technology developers Climeworks and Heirloom, which develops commercial scale direct air capture facilities (DAC) in Southwest Louisiana to address legacy carbon dioxide pollution and complement rapid emissions reductions.
Together with another initiative – South Texas DAC Hub – the Project Cypress is expected to create 4,800 good-paying jobs for local talent in Texas and Louisiana and remove over 2 million metric tons of CO2 emissions from the atmosphere each year. At present, the project has not yet reached its final investment decision (FID) which is due in 2026, when the U.S. withdrawal from the international climate treaty will be fully effective.
In his initial weeks in office, President Trump also vowed to put a stop to all offshore wind projects. Besides, a federal clean-energy initiative, backed by hundreds of billions in funding from the Biden administration, has lost over a quarter of its workforce due to the new president’s federal budget reductions.
Another example of potentially less funded institutions from now on can be green banks. They have significantly grown in the U.S. lately, from fewer than a dozen in 2019 to nearly 50 by 2024. These nonprofit, government-funded institutions play a crucial role in financing sustainability projects that commercial banks may not consider. For instance, they focus on enhancing energy efficiency in buildings to accelerate the deployment of technologies such as local solar installations and residential energy efficiency improvements. Such ethical finance institutions particularly benefit low-income and underserved communities, providing low-interest loans to local entities, and using alternative criteria to assess eligibility for low-income families.
When it comes to private green tech projects, it all depends on the inclinations of individual and institutional investors. They may either go in line with the local government development vector or follow their own missions. Many of the private companies in the U.S. value environmental causes and invest in them. For instance, according to a recent study, the retail sector in the U.S. has invested in green technologies more than the energy, industry, and manufacturing sectors.
Some of the companies may keep their course even if it’s not stipulated by the regulations. Let’s recall the case of Goldman Sachs, JPMorgan Chase, and other financial institutions, which have chosen to maintain or even strengthen their DEI programs despite increasing pressure from anti-DEI activists fueled by recent political shifts.
At the same time, policy changes and shifting regulatory approaches can impact investor confidence and the attractiveness of green investments. If we speak of the same financial institutions, for example, different U.S. banks and asset managers including BlackRock, JPMorgan, and Goldman Sachs have pulled out of the Net Zero Asset Managers initiative and the Net Zero Banking Alliance, though all claim they remain committed to their climate goals.
Summary
The U.S. withdrawal from the Paris Agreement in 2025 reverses the country’s previous climate commitments, halting carbon reduction targets and ending contributions to global climate finance. This decision weakens international efforts to combat climate change, limits funding for green tech and renewable energy projects at both global and national levels, and impacts investor confidence in sustainability initiatives. While some private companies may continue eco-friendly initiatives, federal budget cuts and policy shifts could significantly slow the growth of clean energy and climate-focused investments.
