What are the consequences of the U.S. withdrawal from the Paris Climate Agreement?

On January 20, 2025, President Trump signed an executive order to withdraw the U.S. from the Paris Agreement. The formal withdrawal took effect on January 27, 2026. This is the second time this has happened: Trump did the same thing in 2017, and Biden rejoined in 2021.

As a result of the withdrawal, the U.S. has not submitted a national climate target to the UN and no longer contributes to the Green Climate Fund. Federal support for carbon markets has been eliminated. This creates uncertainty, particularly for U.S. project developers who depend on long-term revenues from carbon credit sales.

The U.S. withdrawal has no impact on CORSIA. This is an ICAO mechanism and therefore unrelated to the Paris Agreement. Article 6 also remains in effect: Japan, South Korea, and now the EU are planning to actively use international carbon credits. Moreover, during Trump’s first term, the voluntary carbon market grew by more than 300% worldwide: the private sector is stepping in where governments are pulling back.

For Europe, little is changing in terms of the fundamentals: EU regulations - such as CSRD, EU ETS-1 and -2, CBAM, and the 2040 target - are separate from the Paris Agreement and are being rolled out autonomously by Brussels.

The U.S. withdrawal is significant news. But for European companies and investors, the underlying market logic remains unchanged. And even if anything were to change, it would only strengthen Europe’s position as the new center of carbon market regulation.