After several years of significant progress in international climate change diplomacy, which culminated last year in the rapid adoption of the Paris Agreement and a global deal to phase out harmful hydrofluorocarbon gases (HFCs), Donald Trump’s announcement to withdraw the US from the Paris Agreement sends a negative political signal. It also raises legitimate concerns around the future financial support that developing countries urgently need to adapt to and tackle climate change.

However, Mr Trump’s announcement will not undermine the future of the Paris Agreement, nor will it derail the growth of the low carbon economy and continued action to tackle climate change. This observation holds true for both the US and the rest of the world.

Having a supportive federal government is clearly helpful but many decisions to support investment in clean technologies in the US are taken at the state level. Take the example of California, the world’s sixth largest economy (ahead of France), which has targets to cut greenhouse gas emissions by 40% by 2030 (relative to 1990 levels) and meet 50% of its electricity demand from renewable sources by 2030.    

Key Republican-held states are witnessing growing economic activity around renewable energy. Just under US$7bn was invested in renewable energy projects in North Carolina in 2015, whilst Texas has over 100,000 people working in the sector. This is one of the reasons why some of the federal incentives that facilitate the deployment of renewable energy, such as the wind and solar tax credits, have bi-partisan support and were recently renewed for another five years.

Beyond the positive commitments to the Paris Agreement made by major US corporate organisations such as Google, Facebook and Apple in recent weeks, US businesses are taking serious action on the ground. Walmart, the world’s largest retailer, recently committed to targets based on climate science, which include cutting emissions by 18% by 2025 compared to 2015 and sourcing half of its energy from renewables by that same date. One of its key competitors, Target, is doing the same.

Globally, the shift to a low carbon economy is clearly gaining momentum. In 2016, $240bn was invested in a record 138.5 GW of renewable electricity capacity worldwide. What President Trump glossed over in his withdrawal speech is that developing economies are major investors in renewable energy. 40% of investments in 2016 came from developing economies. In 2015, China, India, Brazil, Mexico and South Africa all ranked in the top 10 global renewable energy investors, with China having been the leader for many years. And critically, this is being accompanied by a faster slowdown than previously thought in the use of coal in India and China (who recently cancelled around 100 new coal power station projects).

The recent commitments made by six of the G7 leaders and the increased collaboration between China and the EU on climate change show that this trend is here to stay, as the costs of new technologies such as solar power and electric cars continue to fall and the number of people employed in low carbon supply chains continues to grow. What most countries around the world – and many US states and businesses - have realised is that whilst the transition to a low carbon economy is challenging, the business case for it is compelling.

The OECD, a group of mostly wealthy countries, illustrated that point very well when it concluded in a recent report that those countries in the G20 that incorporate measures to address climate change in their everyday economic policy decisions would benefit from an up to 2.8% increase in GDP in 2050, spurred by investment in energy efficient and low carbon infrastructure. If the positive impacts of limiting climate change are taken into account, the net effect on GDP in 2050 rises to 5%.

Mr Trump’s announcement is a deeply regrettable one for global collaboration on climate change and one that may hopefully be reconsidered by a future president. In the meantime, the rest of the world, businesses and US states and cities should go forth and seize the clear economic opportunities that mitigating climate change and growing competitive low carbon economies present.  

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.