Trump Has Rejected Paris Agreement Again, But Game Theory Shows How Other Countries Can Still Lead By Example

It came as a surprise to nobody that one of Donald Trump's first acts on his return to the White House was to sign an executive order withdrawing the US from the Paris agreement on climate change.

Almost 200 other countries will remain part of the deal designed to stem global warming. So how will they fare without the participation of one of the biggest polluters on the planet?

The exit of the US encapsulates a tricky issue when it comes to international efforts to tackle climate change. Any effort to decrease the use of fossil fuels is individual, while any benefits are universal.

And since 1997 , the main approach to tackle climate change multilaterally has been through UN-backed summits known as "Cops" (Conference of the Parties) where countries gather and promise each other to cut their emissions.

Richer countries, which polluted more in the past and created most of the accumulated CO₂ in the atmosphere, have also committed to helping poorer countries develop economically while emitting less, to the tune of US$300 billion (£244 billion) a year by 2035 .

But while plenty of effort goes in to organising the largest possible coalition of countries , in the end, everything is based on good faith and promises. There is no mechanism by which countries which fail to live up to agreements are punished.

So when national politics or budgetary constraints come into play, climate commitments can be left by the wayside. A project to tax pollution may be cancelled or campaigners may succeed in blocking plans .

Yet there are benefits to be had from leading by example and cutting emissions without any guarantee that others will do the same. This is partly because humans have a tendency towards what's known as "conditional cooperation" . People who fail to cooperate when they have to do it at the same time as others are much more likely to join in if they observe previous cooperation.

For this reason, research I recently published with colleagues on game theory (the mathematical study of strategic interactions), suggests that the best thing for advanced economies to do is keep on cutting their own emissions.

Because without efforts from rich countries to pursue a path towards mitigating global warming, there is no hope the others will follow. In that case, even a small wealthy country (like the UK) matters in demonstrating an unambiguous commitment to tackling climate change.

Carbon cooperation

Beyond encouraging further cooperation, a strong climate policy in the form of carbon taxes is also the most powerful way to punish those who do not take part in the global effort.

Both the US (under Biden) and the EU have developed their own versions of a tool called a "carbon border adjustment mechanism" which means exporters from countries that do not tax emissions (or tax them less less heavily) need to pay the domestic carbon tax instead.

Consider for instance a Chinese company exporting a container to the UK. If Chinese manufacturers have already paid a carbon tax worth £100 to the Chinese government for the product in the container, but the UK's carbon tax would have been £200, the border tax is the difference between the two, £100.

But if the Chinese government increases its domestic carbon tax to the UK level or above, the tax from the border adjustment mechanism drops to zero.

This approach has influenced many countries to start their own carbon tax, because it is better to get tax receipts at home than to send them elsewhere. But again, it helps to lead by example. To influence others with border taxes, you need to implement your own system first.

Cop out?

Despite all of this apparent cooperation, and widespread concern about the impact of climate change , the latest Cop summit in Azerbaijan, held in November 2024, was considered by many to be a disappointment .

But there is also some good news, which suggests that efforts are heading in the right direction. The latest data for example, shows that the EU is not far away from its 2030 target. Greenhouse gas emissions are already 37% below what they were in 1990 level. In the UK, the figure is 42% .

In China, emissions might have apparently already peaked, earlier than expected . Even in the US, emissions are decreasing .

Looking back at the scenarios that led to the first UN climate summit in Kyoto, not everything is bright. The world is unlikely to avoid global temperatures raising to more than 1.5°C above pre-industrial levels.

So maybe we shouldn't rely too much on future summits to make the next environmental breakthrough. The path forward could be more likely to come from technical solutions like carbon taxes and border adjustment mechanisms. And perhaps the best way to convince the rest of the world to cut their emissions is not to give them lectures and conferences - but to lead by example.

Renaud Foucart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.