Analysis on Indirect Influences of the U.S. Withdrawal from the Paris Agreement on China’s Coal Production and Carbon Emissions of Surrounding Nations

The U.S. officially announced its decision to withdraw from the Paris Agreement in June 2017. Although the announcement invoked a strong disappointment, it did not affect the position of major emitting nations nor domestic entities to commit themselves to emission reductions. On the other hand, the U.S. leaving the role of world’s climate leader may bring about an important change. Many believe that China could take over the leading role. There is, however, a great uncertainty in China’s coal production, which might also place uncertainties in coal consumption by other nations especially in surrounding nations of South and Southeast Asia. The purpose of this research is to analyze indirect influences by the U.S. withdrawal, which is interpreted as increase in China’s coal production, and how it affects surrounding nations’ carbon emissions. To analyze the influences leading up to 2030, we apply the GDyn-E model (Golub 2013) with some modifications to be configured with the GTAP-E database (ver. 9a). In the baseline scenario, shocks of emission caps are given according to each country’s nationally determined mid-term reduction targets. Two policy scenarios are set to compare the indirect influences of the U.S. withdrawal by different length of the current administration. The policy scenarios are interpreted in conjunction with the time-path of China’s coal production which is exogenously set on target. The results show that the influences on carbon emissions itself is not a significant one even with two terms of the U.S. withdrawal with less than 2% increase in the global emissions. On the other hand, it negatively affects the economy of South and Southeast Asia due to the fluctuation of its coal production and export, which then leads to the loss of its competitiveness as a coal exporter. The indirect influences of the U.S. withdrawal lead to decline in efficient emissions reduction specifically in the whole Asian region.