In Brief: Clean Energy Markets: Jobs and Opportunities
July 2011 Update (originally published February 2010)
Download this Brief (PDF)
This brief discusses how investment in clean energy technologies will generate economic growth and create new jobs in the United States and around the globe. The United States stands to benefit from the expansion of global clean energy markets, but only if it moves quickly to support domestic demand for and production of clean energy technologies through well-designed policy that enhances the competitiveness of U.S. firms.
Clean energy markets are already substantial in scope and growing fast. Between 2004 and 2010, global clean energy investment exhibited a compound annual growth rate of 32 percent, reaching $243 billion in 2010. Forecasts of investment totals over the next few decades vary according to assumptions made regarding the nature of future global climate policies. Over the next decade, assuming strong global action on climate change, cumulative global investment totals for clean power generation technologies could reach nearly $2.3 trillion.
Recognizing the potential of these markets, the European Union, China, and other nations are moving to cultivate their own clean energy industries and to position them to gain large market shares in the decades ahead.
- The European Union continues to lead the world in clean energy investments, spending nearly $81 billion in 2010. Since 2009, China has invested more money per year in clean energy technologies than the United States, investing $54.4 billion in 2010 compared to the United States’ $34 billion. Over 85 percent of today’s market for clean energy technologies is outside of the United States, primarily in Asia and Europe.
- Germany’s clean energy investments of $41.2 billion were the second most for any country in 2010, surpassing the now third-place United States.
- China now boasts the world’s largest solar panel and wind turbine manufacturing industries, accounting for nearly 50 percent of manufacturing for both technologies.
- Danish wind manufacturers produce close to 22 percent of annual global installed wind capacity.
These countries have taken deliberate steps to position themselves as leaders in the 21st century clean energy economy. History shows that it matters where industries are first established, and countries can use policy to foster domestic “lead markets” for particular industries, giving them the foothold that can lead to significant growth in global market share. In the United States, well-crafted climate and clean energy policy can give nascent clean energy industries such a foothold by creating domestic demand and spurring investment and innovation. Strong domestic demand creates not only export opportunities but also jobs – many of which must be located where the demand is, thus fostering domestic job growth even when industry supply chains are globally dispersed.
National climate and clean energy policy in the United States can help create jobs and domestic early-mover industries with the potential to become major international exporters. Such policy should provide incentives for investment in clean energy, for example through a clean energy standard, that requires a certain amount of electricity be obtained from clean energy sources, or a market-based mechanism that puts a price on carbon. The time to act is now: through policy leadership at home and abroad, the United States can position itself to become a market leader in the industries of the 21st century.
Click here for the press release.
In a unanimous (8-0) decision, the U.S. Supreme Court ruled in AEP v Conn that the state and land trust plaintiffs could not invoke a federal common law public nuisance claim against the five largest electric power companies. The plaintiffs in the case were seeking controls on the carbon dioxide emissions from the utilities’ power plants. Building on their 2007 decision in Mass v EPA, the Court held that Congress in passing the Clean Air Act had authorized federal regulation of greenhouse gas emissions and in doing so had effectively “occupied the field” thereby negating any common law claims. In a decision noteworthy for its brevity and clarity, the Court stated:
We hold that the Clean Air Act and EPA actions it authorizes displace any federal common law right to seek abatement of carbon dioxide emissions from fossil-fuel fired plants. Massachusetts made plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act. (page 10)
by Eileen Claussen, President of the Pew Center on Global Climate Change
Energy is essential to human progress. Societies depend on it to maintain and improve quality of life, keep industries competitive and create jobs. But despite energy’s importance, we are not moving fast enough to make sure we can meet our future energy needs in ways that are affordable, sustainable and secure.
The status quo is not the answer. We need to move past the policy disputes of today and take bold action to build a clean-energy economy for tomorrow.
Fortunately, a handful of leading companies like GE have committed themselves to doing their part to achieve this goal. But these businesses need more certainty from government. They need to know that their investments are aligned with public policies that infl uence and shape domestic and world energy markets over time.
I am proud to see GE taking action on these issues despite today’s uncertainty and the mixed signals business is receiving from governments around the world. GE knows that transforming how we generate and consume energy is essential to protecting both the environment and our economic competitiveness. It’s time for others to follow GE’s lead so we can see dramatic growth in new clean-energy technologies in the years to come.
To view the full report, visit GE's website
The South is under increasing pressure to smartly manage its energy use and find ways be more energy efficient. Along with new energy efficiency policies, new energy strategies from corporations, the region’s biggest energy consumers, will be key to these efforts. And with almost half-a-trillion dollars in savings possible, there is good reason to take action.
This free workshop highlighted the key results from two reports - the Pew Center's From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, which describes leading corporate energy efficiency strategies and Georgia Tech's Energy Efficiency in the South report, which estimates that implementing of certain energy efficiency policies can result in as much as $448 billion in savings – while requiring fewer new power plants over the next twenty years.
8:30 – 9:00 AM
Registration and Continental Breakfast
9:00 – 9:20 AM
9:20 – 10:20 AM
Panel I: Corporate Best Practices
10:20 – 10:30 AM
10:30 – 11:30 AM
Panel II: Policy Options to increased Energy Efficiency in the South
11:30 – 11:40 AM
Keynote Address By Eileen Claussen, President, Pew Center on Global Climate Change
Institute of International and European Affairs
June 14, 2011
Thank you very much. It is a pleasure to be here. I am especially pleased to be in Ireland just a couple of weeks after President Barack Obama paid a visit to his ancestral home of Moneygall. I thought you would be interested to know that some of the President’s opponents, following the recent controversy about whether or not he was truly born in America, demanded proof of Mr. Obama’s Irish ancestry … and I understand he responded by finishing his Guinness and reminding his opponents that he is the only president to host a Beer Summit at the White House.
In all seriousness, I want to thank the Institute of International and European Affairs for inviting me to this beautiful city to talk with all of you about what’s happening in the United States to address the issue of climate change.
Well, that about sums it up. It has been a pleasure speaking with you and, if you will pardon me, I will now get along with my sightseeing.
I am kidding, of course. Well, let me clarify that. I am kidding about being through with my remarks, but the notion that not a lot is happening on this issue in the United States is no joke. The renowned Irish blessing calls for the winds to be always at your back; the sun to shine warm upon your face; and rains to fall soft upon your fields. Well, for those of us who care about this issue and who want to see the United States take its rightful role in protecting the climate, it seems like the wind has not actually been at our back – but rather hitting us squarely in the face for quite some time now.
Any time you have someone winning an election to the United States Senate, as we did in November, thanks in part to a campaign ad where he uses a rifle to shoot a hole through a piece of paper representing climate change legislation, I guess you could be forgiven for feeling, well, not sufficiently blessed.
For perspective, let’s look back for a moment at what was happening on this issue in the United States just two years ago. President Obama was just months into office after an election campaign during which he had pledged to reduce U.S. emissions of greenhouse gases by 80 percent before mid-century, and during which he promised to invest tens of billions of dollars in new climate-friendly energy technologies.
As his secretary of energy, the President appointed a Nobel Prize winner who supported strong action to address climate change. And he built an all-star team of advisers on environment and energy issues who felt the same way.
Meanwhile, the U.S. House of Representatives, just two years ago this month, passed comprehensive climate change legislation that established national limits on U.S. emissions and that authorized a new trading program to help industries meet their targets as efficiently as possible.
It was indeed a heady time for those of us who have labored on this issue over the past two decades and more. We definitely felt as though we had the wind at our back. But now it all seems like a distant dream … there is no getting around the fact that 2010 was a dark time for those of us who believed that the United States was on the precipice of taking serious action.
So today, I will spend my time talking with you about why I believe things have changed so dramatically in so short a time. But I also want to point to some signs of hope. William Butler Yeats once wrote, “When one looks into the darkness there is always something there.” And I believe this is an insight we should remember, no matter how dark things may appear to be at the present time.
John McCain joked once in a different context that it’s always darkest before the light goes completely out. (Pause.) Which is very funny – but also somewhat depressing. In my remarks today, I intend to look into the present darkness and reflect on some of the reasons why things are so dark right now. But I also will point out that indeed, there is “something there.”
Let us start with a closer look at why it has grown so gloomy (for some) in Washington. In the two years since the House of Representatives voted on the so-called “cap-and-trade” legislation in June 2009, the opposition to climate action has gained the upper hand in the debate. The 2010 U.S. elections last November brought an astonishing number of new members to Congress who publicly disavowed the science of climate change. In fact, shortly after the election, a U.S. think tank conducted a comprehensive review of the policy positions and statements of more than 100 incoming Republican members of Congress. It found that more than half of them — I repeat: more than half —are skeptics of climate change. They say they are not sure it’s really happening. Remember: This is in the majority party that controls the legislative agenda in the U.S. House of Representatives.
So if anyone tells you that serious congressional action on this issue is possible in the next two years, I hope you will politely tell them they’re crazy. It’s not going to happen.
And it is not just the presence of a large number of climate skeptics that make it improbable that the current U.S. Congress will do anything. As always in Washington, there are a range of other issues and other interests at play. In the wake of President Obama’s effort to overhaul the U.S. health care system, for example, there is a pronounced distaste in our nation’s capital and throughout the United States for policies that could be branded as quote-unquote “big government” solutions.
We can do our level best to try and help people understand how a cap-and-trade approach leaves it to the market (and not government) to find the most efficient ways to reduce emissions, but opponents inevitably will turn this into an issue of government overreach. And in the current political climate in the United States, attacking things in this manner is a strategy that seems to work.
There is also of course the economy – a seemingly unending challenge with which I know all of you are familiar. You understand how unemployment rates can color every political decision. In the U.S., unemployment hovers at or near the 9 percent mark, causing members of Congress to feel their own jobs are at risk to the extent that they embrace policies that could be construed as being anti-business or, worse, “anti-jobs.” The President’s health care law regularly is referred to as a quote-unquote “job killing,” “job destroying” or “job crushing” initiative. This is how you attack your opponents in Washington today. You accuse them of wanting to take away people’s jobs. And, once again, this is a strategy that seems to work, even if it can be argued that addressing climate change in a serious way will actually create new jobs in clean energy and related industries.
Unfortunately, it gets even worse. Not content merely to block legislation that could strengthen or expand U.S. efforts to address climate change, many in the House of Representatives are pursuing a strategy of trying to eliminate or curtail existing policies and programs related to this issue, however modest they may be.
Earlier this year, the House passed a spending bill to avoid a government shutdown. Ironically, this measure could have been nicknamed the “Kill Government” bill for its drastic cutbacks. While fiscal realities demand cuts to a wide range of vital federal programs, the House plan disproportionately cut funding for the climate science and clean energy programs needed to transition to the robust clean-energy economy that many businesses and the public support.
Thankfully, the U.S. Senate had its say, and the spending bill the President eventually signed into law avoided total annihilation of federal climate initiatives. While the most aggressive efforts by Congress to strip the U.S. Environmental Protection Agency of its funding and authority to act on climate and clean energy may not have passed, many politically-contentious issues lie ahead that may present more hurdles for EPA. For instance, debates this summer over the U.S. debt ceiling and battles over the 2012 budget could again put EPA in the crosshairs. Many Republicans, especially in the House, are likely to stay vigilant in their anti-climate efforts.
But under our bicameral legislative system, the House does not have the last word in these matters. The Senate, however, presents its own challenges, starting with an arcane set of rules that allows a minority of senators to block major legislation. The Democrats are in the majority in the Senate, but they don’t have the 60 votes they need to pass anything major on climate change or other big issues. What’s more, the Democrats themselves remain divided on the climate issue, with senators from oil- and coal-producing states often siding with Republicans to block proposals that could be portrayed as trying to change the prevailing, high-carbon energy mix in the United States.
Looking ahead, things could get worse before they get better. The period after the November 2012 elections could be the next best chance for the United States to do something serious on the climate issue. But if the House remains majority Republican, or the Senate falls into Republican hands, the chance will probably be lost for another two years or more.
So, it’s a little dark in Washington at the moment and it is hard to see how anything substantive or serious can happen on the climate issue under the current Congress. Indeed, the challenge right now is to prevent Congress from endangering the mostly modest initiatives and programs that are in place right now to address this issue, and on which we can potentially build a more robust response in the future under friendlier leadership.
Which brings me to the shadows of hope we can see if we follow the advice of Mr. Yeats and look into the darkness. The first of these appears when we look at what’s happening at the U.S. Environmental Protection Agency, the federal agency that is responsible for carrying out many U.S. laws related to climate change and the environment.
With Congress unable to pass comprehensive climate legislation in 2010, attention turned to what the EPA might be able to do under the agency’s existing authority. And it turns out the EPA can do a great deal. One of the reasons why it can do a great deal is because the U.S. Supreme Court in 2007 decided that greenhouse gases meet the definition of pollutants under the Clean Air Act. This is the omnibus federal clean air law that was originally passed in the 1970s and has been amended and expanded several times since.
In its 2007 ruling, the Supreme Court left it to the EPA to decide if emissions of greenhouse gases present a risk to public health and welfare. EPA decided they did, based on the overwhelming scientific evidence about the enormous risks that climate change poses to America and the world. Interestingly, we recently learned that the previous EPA Administrator under President George W. Bush came to exactly the same conclusion … and other senior Bush administration officials agreed. So when opponents of the EPA decision on greenhouse gases inevitably painted it as a partisan attempt to expand government, well, let’s just say that their arguments seemed a tad partisan themselves.
What is the EPA doing to try and limit U.S. emissions of greenhouse gases? National standards for passenger cars and light-duty trucks that won approval from industry and environmentalists will increase fuel efficiency to 35.5 miles per gallon by 2016 and save consumers $3,000 over a vehicle’s lifetime. A new EPA proposal to be finalized next year aims to increase fuel efficiency by another 3 to 6 percent per year through 2025. In late October, the agency announced a sensible proposal to reduce emissions by 20 percent and improve fuel efficiency for medium and heavy-duty vehicles. This was followed by a November announcement that will go a long way to making sure that new industrial facilities in the United States use state-of-the-art technologies to boost efficiency and reduce their greenhouse gas emissions. And later this year, EPA is expected to propose the first-ever greenhouse gas standards for new and existing power plants and oil refineries.
Of course, opponents of these and other reasonable EPA actions will continue to raise a ruckus, and there have already been loud cries in Congress to take away the agency’s regulatory authority and cut its funding, as I already discussed. But the fact remains that, even though its efforts are relatively mild and will not come close to achieving the broader reductions in greenhouse gas emissions that President Obama promised during his election campaign, EPA is still in the fight and is still putting forward reasonable rules and regulations for reducing the U.S. contribution to climate change. And that is an encouraging thing to see as we take in an otherwise dark scene.
It is also important to take notice of action actually taking place on the ground that has climate benefits. Most notably, we expect many old coal plants to shut down. While some new coal plants will come online soon, we are far more likely to see new natural gas power plants built in the future. While not “The Answer” to our climate and energy challenges, natural gas emits half the amount of carbon dioxide as coal. So this shift to natural gas, largely driven by regulations of conventional pollutants and by discoveries of shale gas that make natural gas more cost-competitive, will certainly help keep the U.S. on the downward emissions pathway that we’ve experienced in recent years. Of course, achieving bigger, brighter changes in how we produce and consume energy will ultimately require new policies, technological innovation, and broad public support.
Another shadow of hope that we can see if we look hard into the current darkness is that President Obama continues to talk about energy issues in a way that is helpful for the climate. Yes, he recently proposed to expand drilling for oil in the United States, but he continues to frame the nation’s energy challenge (and, indeed, the world’s) as a challenge that we can meet only through an all-of-the-above energy policy that reserves a vital role for low-carbon, clean-energy sources in meeting our energy needs in the decades to come. Obama’s rhetorical commitment to climate action was again heard in his speech before the British Parliament last month, when he grouped climate change as one of the world’s principle threats to confront along with terrorism, nuclear proliferation, famine and disease.
Looking ahead to the 2012 U.S. presidential election, we can even see a faint shadow of hope (I emphasize it’s a faint one) in the histories of the leading Republican candidates for President. A number of the leading Republican candidates (including former state governors Tim Pawlenty, Jon Huntsman and Mitt Romney and former House Speaker Newt Gingrich) have in the past supported cap-and-trade policies. Of course, they wouldn’t admit it now even under enhanced interrogation techniques.
But these men who are running for President on the Republican side are not your classic climate change deniers. In fact, some of them still agree that the science of climate change is real, although they are not supporting any real action to deal with it. I know this does not sound like much … but the fact is that these candidates will find it hard to make climate change a polarizing issue in the 2012 election given their records and past statements on the issue – and that is a good thing.
Of course, if former Governor Sarah Palin of Alaska or another out-and-out climate change skeptic runs for President on the Republican side, then this might change. And I expect the well-funded, highly-influential Tea Party movement to continue to mislead the public about the science and hold up climate action as a prime example of government run amuck. But in all honesty, I am not sure that running on a climate-change-denial platform is smart politics in America today. I am convinced from a review of the polls that the majority of the American people actually support reasonable action to develop clean energy sources and take other steps to create a low-carbon economy.
According to various credible surveys, a majority of Americans (about 60 percent) believe global warming or climate change is happening. It is important to note, however, that these numbers have trended down in recent years in sync with the recession and with the increasing political battles over climate change policy and well-funded attacks on climate science.
One of the more interesting public opinion surveys on this topic is the so-called “Six Americas” study by Yale and George Mason universities. The project’s researchers identified six distinct subsets of the U.S. population based on their beliefs about climate change. The six categories are: Alarmed; Concerned; Cautious; Disengaged; Doubtful; and Dismissive. (Add the name Grumpy and you could have the climate change version of Snow White and the Seven Dwarfs.)
Interestingly, majorities in all six of these groups said they believe the United States should make it a priority to develop clean sources of energy. Regulating carbon dioxide emissions was supported by a majority of each group except the Dismissive. (Nobody asked Grumpy what he thought.) So it’s obvious that a significant portion of the U.S. population supports policies that directly or indirectly would result in reduced emissions of greenhouse gases.
Where support for these policies begins to decline is where researchers ask Americans what they are willing to pay to achieve these goals. But still, public support for clean energy (and, to a lesser extent, regulating greenhouse gas emissions) is certainly a hopeful thing we can see as we look into the darkness in the United States on this issue today. And the reason why it is so hopeful is because it suggests to me that the current stalemate on this issue cannot last, especially in the face of continuing extreme weather events such as the recent flooding of the Mississippi River and Texas wildfires that have ravaged nearly 3 million acres.
These are exactly the kinds of events that climate scientists keep warning us will become more frequent in a warming world, and these types of extreme weather events inevitably raise serious questions in people’s minds about whether warming global temperatures are already wreaking havoc with the climate.
So far, I have talked mostly about national politics in the United States, but it is important to remember that in the U.S. political system, states have an enormous degree of authority and flexibility to advance climate solutions and other policies on their own. And the good and hopeful news is that many U.S. states have banded together in recent years to launch regional initiatives aimed at reducing emissions and developing clean energy. This is in addition to individual states acting on their own on these issues.
The not-so-good news is that state actions on the climate issue suffered a bit of a setback last November. As was the case with the U.S. congressional elections, the 2010 gubernatorial elections brought to the nation’s statehouses a group of new leaders who adopted strong stands against climate action in their campaigns. This is already setting back some of the progress we were seeing at the state level on this issue in recent years. For example, New Jersey’s new governor, Chris Christie, who is a rising star in the Republican Party, announced last month that he would withdraw his state from a very promising regional climate initiative that includes 10 northeastern U.S. states. While Gov. Christie said he accepts the scientific consensus that climate change is happening and humans play a role, he follows the standard Republican position of opposing policy action, specifically cap and trade.
But there is still hope among the states. During the November election, for example, voters in California overwhelmingly rejected a measure aimed at curtailing the state’s nascent efforts to reduce its greenhouse gas emissions. Shortly after that vote, the California Air Resources Board formally approved the state’s cap-and-trade program, which is designed to reduce California emissions to 1990 levels by 2020. A lawsuit by environmental activists opposed to cap and trade challenged the regulations on procedural grounds and may prevent the state from implementing its program on time. But the good news is California is still in the fight. And there is strong public support for what the state wants to do. California Gov. Jerry Brown also has signed into law one of the nation’s most aggressive renewable electricity standards. It requires 33 percent of the state’s electricity be produced by renewable sources by 2020.
Of course, California, as a relatively progressive state,will always provide a more hospitable climate for action on this issue. But the fact that the most highly populated U.S. state will soon be implementing a cap-and-trade system and other measures to reduce emissions has to be a positive sign.
Internationally, the Cancún climate talks showed that there are opportunities for incremental, evolutionary progress in the global negotiations on key operational issues of finance; measurement, reporting and verification; adaptation; technology; and forestry. It is important to understand that progress on these issues does not require a new legal agreement. Each of them can be advanced in tangible ways by decisions of the Parties. That is exactly what was achieved in Cancún. The Cancún Agreements are a package of decisions by the Parties. And what that package does, in large measure, is to import the essential elements of the Copenhagen Accord into the UN climate system and take initial steps to implement them.
What this represents is incremental progress – evolutionary progress – the kind of progress that had eluded us for years because we were so preoccupied with legally-binding outcomes. So we were able to move forward in Cancún on operational issues. But we were able to do so – and this is an important point – only because Parties were willing to put aside their differences on the legal issues.
I encourage the talks this year in Durban, South Africa to build on the effective, incremental approach taken in Cancún. Because the reality is that the U.S. cannot make global commitments until there is stronger consensus for action at home. And even apart from the situation in the U.S., the reality is that few if any developed countries will take on new binding commitments unless China and other emerging economies do as well. For now, we must look to coalitions of the willing to make progress in key areas, such as renewable energy and forest protection. While maintaining the international process is key to working toward the ultimate, longer-term goal of a global climate agreement with legally-binding commitments, actions taking place on the ground in individual countries right now are the most important signs of progress.
The last shadow of hope – and perhaps the most important one – that I want to talk about is the fact that there remains a strong core of business support for reasonable action on the climate issue in the United States. The Pew Center’s Business Environmental Leadership Council includes 46 major corporations that support mandatory, market-based approaches to tackle climate change.
Starting with 13 companies in 1998, our Business Council is now the largest U.S.-based association of corporations focused on addressing the challenges of climate change and supporting mandatory climate policy. It includes mostly Fortune 500 companies with combined revenues of over $2.5 trillion and over 4.5 million employees. Many different sectors are represented, from high technology to diversified manufacturing; from oil and gas to transportation; from utilities to chemicals.
While individual companies hold their own views on policy specifics, they are united with the Pew Center in the belief that voluntary action alone will not be enough to address the climate challenge. The bottom line: Business support for climate solutions is surely a hopeful sign amid the present darkness … and it is yet another factor that suggests to me that the current situation can’t last for long.
I would like to end my remarks by drawing your attention to something that will happen today in the United States that, at least on the surface, appears to have very little to do with the subject of my remarks. On 42nd Street in New York City, at the Foxwoods Theater, a new rock musical based on the Spiderman comics with music and lyrics by U2’s Bono and The Edge has its official opening after several months of delays and various catastrophes along the way.
Just months ago, many people wondered if it would ever open, given that it was way over budget and that it had gone through a number of cast changes, script rewrites and more. The low point came when a stunt performer fell more than 20 feet to the stage after a cable snapped on the harness that held him aloft. Fortunately, he was released from the hospital and is OK, and despite mixed reviews, ticket sales for the production have been, well, phenomenal.
I bring up the opening of the Spiderman musical because it’s a reminder that even when things are at their darkest, there can still be hope for success. I also bring it up because of the title of the production. It is called Spiderman: Turn Off the Dark.
Yeats told us, “When one looks into the darkness there is always something there.” And right now, as I have said, we can indeed see shadows of hope in the darkness that has descended on the climate change debate in the United States. When we will be able to turn off the dark, I cannot say. But I believe it can happen in due time.
Now perhaps we can turn up the lights for some questions … Thank you very much.
June 7, 2011
Pew Center Contact: Rebecca Matulka, (703) 516-4146
Survey Says … Low-Carbon Innovation Vital for Future Growth
Pew Center survey of industry leaders focuses on strategies for low-carbon innovation
Washington, D.C. – Over the next two decades, low-carbon innovation will become more important for business and U.S. economic growth, according to a survey conducted by the Pew Center on Global Climate Change of largely Fortune 500 companies with a demonstrated commitment to addressing climate and energy issues. Conducted in late 2010, the survey is designed to gauge business strategies for low-carbon innovation with a focus on how companies perceive the associated risks and uncertainties.
The survey, part of a larger Pew Center study to be released in October 2011, explored best practices among industry leaders. Thirty-five companies, ranging in size from $600 million to $285 billion in annual revenues and with an average annual R&D expenditure of $1.4 billion, participated in the survey.
“Leading businesses are investing today with an eye toward a future low-carbon economy. They are focusing more on researching, developing and bringing low-carbon solutions to market,” said Judi Greenwald, Vice President of Innovative Solutions at the Pew Center on Global Climate Change. “The competitive edge of U.S. companies, and the strength of the U.S. economy, depend on more companies employing this same foresight and ingenuity.”
This survey is one element of a study on the most effective methods used by companies to develop and bring low-carbon solutions to market. Other key findings of the survey include:
- Long-term, transparent climate and energy policies are critical to establishing a business environment that will allow for greater certainty for decision-making and investment in low-carbon innovations. Nearly half of the companies surveyed think putting a price on carbon is the most important action the U.S. government can take to advance low-carbon innovation.
- Financial growth is the biggest driver for bringing low-carbon innovations to market, allowing companies to position themselves competitively in the marketplace. Other reasons for focusing on low-carbon innovation include anticipating or shaping regulatory changes, being a leader in emerging technologies or markets, and meeting consumer demand.
- The most significant uncertainty in low-carbon innovation is policy as it relates to regulatory changes and tax/subsidy changes.
- Public policy plays a strong role in deciding which country has the best business climate for domestic low-carbon innovation.
The survey results will be combined with insights from three workshops, four in-depth case studies, and other supporting research for the report Business of Innovating: Bringing Low-Carbon Solutions to Market, which will be released at a conference in Atlanta on Oct. 25-26, 2011. The survey and forthcoming report are being funded with a grant from Hewlett-Packard.
For more information on the low-carbon innovation project, visit www.c2es.org/business-innovation.
For more information about global climate change and the activities of the Pew Center, visit www.c2es.org.
The Pew Center was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
Pew Center Vice President for Innovative Solutions Judi Greenwald spoke at a National Journal event about advancing solutions toward vehicle fuel efficiency. Other speakers at the May 25, 2011, forum were Sen. Lamar Alexander (R-TN), Sen. Ron Wyden (D-OR), Deputy Assistant to the President for Energy and Climate Change Heather Zichal, ANGA-AGA Joint Collaborative on Transportation Executive Director Dr. Kathryn Clay, Edison Electric Institute President Thomas Kuhn, and Association of Global Automakers President and Chief Executive Officer Michael Stanton.
On May 25, 2011 Sustainability 24 will unite leading thinkers, Non Governmental Organizations, business high performers and sustainability service providers enabling them to share fresh ideas, innovations and thought-provoking concepts associated with the adoption of wider sustainability practices throughout business. During the 24 hour event business and local government leaders will demonstrate how they have embedded sustainability their organizations and governments, not only to drive efficiencies and cost savings, but also to drive differentiation in their markets through innovation.
Meg Crawford, a Markets and Business Strategy Fellow, will participate on the panel Sustainability and Carbon Performance Management: Understanding Performance Levers to Drive Sustainability Success. During this presentation you will hear how Sustainability Performance Management processes can help meet both strategic business and stakeholder objectives. Join leading figures for live Q&A to learn how measuring the value of sustainability initiatives, and carbon management, is imperative to driving the sustainability agenda.
Testimony of Elliot Diringer
Vice President for International Strategies
Pew Center on Global Climate Change
Subcommittee on Oversight and Investigations
Committee on Foreign Affairs
U.S. House of Representatives
May 25, 2011
Hearing on “UN Climate Talks and Power Politics – It’s Not About the Temperature”
Mr. Chairman, Ranking Member Carnahan, and members of the Committee, thank you for the opportunity to testify on the critical issues confronting the United States and other nations in the effort to address global climate change. My name is Elliot Diringer, and I am Vice President for International Strategies at the Pew Center on Global Climate Change.
The Pew Center is an independent non-profit, non-partisan organization dedicated to advancing practical and effective policies and actions to address global climate change. Our work is informed by our Business Environmental Leadership Council (BELC), a group of 46 major companies, most in the Fortune 500, that work with the Center on climate change risks, challenges, and solutions.
Mr. Chairman, climate change poses a serious long-term threat to our nation’s resources, our economic well-being, and our national security. While action to address climate change must begin at home, this is a quintessentially global challenge, which therefore requires a global solution. I would like to focus my testimony today on three topics: 1) the status of the international climate negotiations, and the objectives that should guide U.S. climate diplomacy; 2) the policies being implemented in other countries – including our major trading partners – to reduce greenhouse gas emissions; and 3) the environmental, economic and security rationales for stronger climate action.
My principal points are as follows:
- The past two years have seen the emergence of a more realistic and balanced approach in the international climate negotiations, thanks in large measure to the efforts of U.S. negotiators. The United States must remain fully engaged in the talks with the aim of strengthening multilateral support and transparency, thereby promoting action while laying the groundwork for a future binding agreement.
- A growing number of countries are pursuing policies that help reduce greenhouse gas emissions. Many see the challenge as an important opportunity as well. Some of our major trading partners are moving aggressively to grow their clean energy technology industries, which create domestic jobs and high-value exports. Without stronger policies creating similar incentives here, the United States risks falling further behind in the rapidly expanding clean energy market.
- U.S. inaction on climate change exposes our nation to real and rising risks. The longer we delay action, the harder it will be to avert the worst consequences of warming, the higher the cost of coping with those that can not be avoided, and the further we fall behind in the clean energy race. Taking steps now to expand clean energy and reduce greenhouse gas emissions is squarely in our strong national interest.
Moving the Negotiations Forward
Multilateral regimes do not generally spring forth fully formed – rather, they evolve over time. The international climate effort is no different. It began with the 1992 United Nations Framework Convention on Climate Change (UNFCCC), which was signed by the President George H. W. Bush and unanimously ratified by the U.S. Senate. The UNFCCC, now ratified by 195 parties, established a long-term objective of preventing “dangerous anthropogenic intereference with the climate system” and a framework within which countries can work together to achieve it. To be certain, countries’ positions in the climate negotiations are heavily conditioned by their respective national interests. But underlying the Framework Convention is a clear recognition that countries share a common interest in averting dangerous climate change. And a fundamental principle of the Convention is that while our respective responsibilities are differentiated, depending on nations’ circumstances, we all share a common responsibility for meeting this common challenge.
Since the signing of the Framework Convention, the climate regime has evolved in fits and starts. While the Convention is largely voluntary in nature, countries resolved shortly after its entry into force that stronger action was needed, and initiated a new round of negotiations aimed at establishing binding emission targets for developed countries. This led in 1997 to the Kyoto Protocol. Although the United States chose not to participate, Kyoto entered into force in 2005, and most other industrialized countries are on track to meeting their obligations. For many countries, the principal aim since 2005 has been to extend this legally-binding regime through a second round of targets. But many of the countries with targets have made clear that they will not assume new binding obligations without commensurate commitments by the United States and the major developing economies. Through this prolonged stalemate, the negotiations were stuck in a mode of binding-or-nothing, and consequently produced virtually nothing.
Over the past two years, however, we have seen the emergence of a more realistic, more balanced and more constructive approach, in large measure through the efforts of the United States. Many viewed the Copenhagen summit in 2009 as a major failure because they had hoped – unrealistically – that it would produce a binding agreement. In our view, the Copenhagen Accord, negotiated personally by President Obama and other world leaders, represented genuine progress. Among other things, the Accord set an aspirational goal of limiting global temperature increase to 2 degrees Celsius; set goals for mobilizing financial support to help developing countries reduce emissions, preserve forests, and adapt to climate change; and established the broad parameters of a system to ensure transparency and accountability. What’s more, it provided for mitigation pledges from both developed and developing countries. As a result, for the first time ever, all of the world’s major economies – including China and India – have now made explicit pledges to reduce or limit their greenhouse gas emissions.
In the chaotic final hours in Copenhagen, the Accord was not formally adopted by the UNFCCC Conference of the Parties. However, at the 16th Conference of the Parties last year in Cancún, parties adopted a package of decisions incorporating the essential elements of the Copenhagen Accord into the UNFCCC framework, and taking initial steps to implement them. The Cancún Agreements represent the most tangible progress within the UNFCCC negotiations in nearly a decade. First, they memorialize the pledges taken under the Copenhagen Accord by more than 80 countries accounting for more than 80 percent of global emissions. Second, the Agreements establish the fundamentals of a stronger support system for developing countries, and a stronger transparency system enabling countries to verify whether others are fulfilling their pledges.
The Agreements also reflect a more flexible and realistic framework for enshrining countries’ actions. Unlike the Kyoto Protocol, which allows only one type of commitment (a binding emissions target with a prescribed, common base year), the Agreements allow for a diversity of approaches. In the case of developed countries, pledges take the form of economy-wide emission targets, but with flexibility on base year and accounting. Developing countries have even broader discretion in defining their “nationally appropriate mitigation actions.” China and India, for instance, have pledged reductions in emissions intensity (emissions per unit of GDP), while Brazil, South Africa, Mexico and the Republic of Korea have pledged to reduce emissions below “business as usual.” This more realistic and balanced approach reflected in the Cancún Agreements, as well as the movement toward greater transparency for all major economies, are direct consequences of U.S. engagement and leadership in the climate negotiations.
It is important to emphasize that the pledges countries have made at this stage are voluntary in nature. We continue to believe that the global response to climate change should ultimately be enshrined in fair, effective and binding commitments among all of the world’s major economies. Countries will deliver their strongest possible efforts only if they are confident that others are also contributing their fair share, and this confidence is best maintained through mutual and binding commitments. We also recognize, however, that it will be a number of years before the United States, China and other key countries are prepared to assume binding commitments. Under these circumstances, we believe the United States must remain fully engaged in the climate negotiations with the aim of strengthening the UNFCCC as a means of delivering support and transparency, thereby promoting near-term action while laying the groundwork for a future legal agreement.
At the 17th Conference of the Parties later this year in Durban, we believe the aim should be further progress on the operational issues addressed in the Cancún Agreements, including the launch of a new Green Climate Fund to support developing country efforts and significant progress in strengthening transparency through new “measurement, reporting and verification” practices; and a clear declaration by parties of their intent to work toward legally binding outcomes. This outcome would build on the achievements of the past two years and continue the incremental progress needed to strengthen confidence in the regime and among parties.
Efforts in Other Countries
While international agreements and commitments are critical to our success in addressing global climate change, a more important measure of efforts to date are the policies and actions countries are undertaking domestically. A growing number of countries are developing or implementing policies contributing in one way or another to reducing greenhouse gas emissions. Many see the challenge as an important opportunity as well. A number of our major trading partners are moving aggressively to grow their clean energy technology industries, which create domestic jobs and high-value exports. Without stronger policies creating similar incentives here, the United States risks falling further behind our competitors in the rapidly expanding clean energy market.
The European Union is a clear leader in the development, manufacture, and deployment of clean technologies. The EU has set mandatory targets to reduce greenhouse gas emissions 20 percent below 1990 levels, and to increase renewables to 20 percent of its energy mix, by 2020. The centerpiece of EU climate policy is the Emissions Trading System (ETS) launched in 2005, which regulates carbon dioxide emissions (CO2) in the power and major industrial sectors generating about half of the EU’s CO2 emissions. Having overcome the early complications typical of a new compliance market, the system is set to expand in 2012 to cover other gases and the aviation sector. Europe’s clean energy investments, the world’s largest, doubled from 2009 to 2010, reaching nearly $81 billion. From 2004, the year before the ETS began, through 2008, the year before the global financial crisis, the European Union reduced its emissions 4.1 percent, while its GDP grew 9.8 percent.
China also has taken major steps towards increasing its manufacture and use of clean energy technologies. Under the Cancún Agreements, China pledged that by 2020 it will reduce the CO2 intensity of its economy 40 to 45 percent below 2005 levels; increase the share of non-fossil fuels in primary energy consumption to 15 percent by 2020; and increase forest coverage by 40 million hectares and forest stock volume by 1.3 billion cubic meters. These targets are reflected in domestic policy as well. Additional policies include: a national target for renewables to provide 15 percent of primary energy by 2020, with specific targets for wind, solar, biomass, and hydropower; feed-in tariffs for onshore wind power; and proposed fuel efficiency standards requiring urban cars and light trucks to achieve an average of 36.9 miles per gallon by 2015. The 12th Five-Year Plan adopted by the Chinese leadership in March devotes considerable attention to energy and climate, establishing a series of targets and policies for 2011-2015. These include a suite of policies to promote innovation in new strategic and emerging technologies, including nuclear, solar, wind, biomass, and hybrid and electric vehicles. The plan also includes a goal to "gradually establish a carbon trade market."
To be certain, China continues to build coal-fired power plants as well, and its emissions continue to rise. A recent analysis by the Lawrence Berkeley National Laboratory projects that on the present path China’s emissions will peak between 2030 and 2035. But the climate and energy provisions of the new Five-Year Plan show how China is moving forward with domestic policies in line with the pledge it offered in Copenhagen and formalized in the Cancún Agreements. Many of the policies also are clearly calculated to help ensure that China – which recently surpassed the United States and other countries to become the leading manufacturer of wind turbines and solar panels – retains a strong competitive edge going forward.
Other major developing countries are also stepping up their efforts to limit emissions growth and transition to cleaner energy. India, which pledged to reduce its emissions intensity (excluding the agricultural sector) 20 to 25 percent below 2005 levels by 2020, is pursuing a range of policies under its 2008 National Action Plan on Climate Change, including: a renewable energy target; a feed-in tariff for renewable energy; a market-based system of tradable energy savings certificates in industrial sectors; and a coal levy generating finance for clean energy research and innovation. Brazil and Indonesia have set goals to reduce deforestation. South Africa has set national renewable energy and energy efficiency targets and established a renewable energy feed-in tariff. Meanwhile, the governments of Mexico and South Korea have proposed establishing emissions trading systems.
While the global picture is uneven, these examples demonstrate a growing will among countries to undertake a wide variety of measures to promote clean energy and to reduce greenhouse gas emissions.
Addressing Climate Change is in Our National Interest
Earlier I emphasized that all nations share a common interest in averting dangerous climate change. It is important to understand why stronger efforts to address climate change and pursue clean energy are in our direct national interest as well. There are many reasons, whether from an environmental, national security or economic perspective.
The scientific and environmental rationale for lowering our greenhouse gas emissions is clear and compelling. As again underscored two weeks ago in America’s Climate Choices, a report produced by the U.S. National Academy of Sciences at the request of Congress, “Climate change is occurring, is very likely caused by human activities, and poses significant risks for a broad range of human and natural systems.” On these fundamental points, there is very strong consensus within the scientific community.
Due largely to the combustion of fossil fuels, atmospheric concentrations of carbon dioxide are at their highest level in at least 800,000 years. Over the last century, average global temperatures rose more than 1 degree Fahrenheit and in some places, including parts of the United States, temperatures rose more than 4 degrees. If greenhouse gas emissions continue to grow, average global temperatures are projected to reach 2.0°F to 11.5°F (1.1°C to 6.4°C) above pre-industrial levels by 2100, with warming in the U.S. expected to be even higher.
We are already witnessing the impacts of climate change here in the United States; the widespread flooding now inflicting communities along the Mississippi River vividly illustrates how vulnerable we are to the rising risks associated with climate change. Most of North America is experiencing increasing numbers of unusually warm days and nights and a decreasing number of unusually cool ones. At the same time, droughts are occurring more frequently while snowpacks are melting earlier in the year. Sea-level rise of 8 inches or more has been recorded in some coastal areas of the country. Continued warming will mean further sea-level rise, elevating storm surges and gradually inundating low-lying coastal areas along all U.S. coastlines; increased frequency and severity of extreme weather events; increased risk of droughts and floods; significant threats to ecosystems and biodiversity; and increased public health risks. Beyond such readily foreseeable impacts, the longer warming persists and the greater its magnitude, the greater the risk of abrupt or catastrophic changes in the global climate.
Actions to reduce the risks of climate change by lowering greenhouse gas emissions have other environmental co-benefits as well. Lower-carbon technologies such as natural gas and renewable energy also emit less of other pollutants including nitrogen dioxide, particulates, sulfur dioxide, lead, carbon monoxide, mercury, and other hazardous pollutants that have a wide range of harmful health effects, from asthma to cancer and premature death. Past regulatory efforts to reduce these pollutants have proven highly successful and cost-effective. The Office of Management and Budget (OMB) found that from 1992 to 2002 “major rules” enacted under the Clean Air Act produced benefits of between $145 billion and $218 billion a year, far exceeding the annual costs $22 billion to $25 billion. A study by researchers at MIT found total annual benefits rising from $50 billion in 1975 to $400 billion in 2000. We can expand these benefits by moving towards cleaner energy sources.
America’s military leaders recognize that climate change also poses increasing risks to our national security and new demands on our military resources. According to the Pentagon’s latest Quadrennial Defense Review, climate change may act as “an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world.”
Indeed, climate change will be a threat multiplier, further destabilizing regions of the world already burdened with countless other problems. Chronic drought, rising seas, extreme weather and other climate impacts could undermine weak governments, induce mass migrations, and trigger or heighten resource competition, contributing to social instability and, potentially, armed conflict. Rising seas could displace as many as 30 million people in Bangladesh, creating additional tensions on the Indian subcontinent. Receding glaciers could leave millions across Asia facing chronic water shortages. A distinguished group of retired three- and four-star U.S. military officers warns that drought, thirst, and hunger are already exacerbating the conflicts and humanitarian disasters in Darfur and Somalia, and climate change portends more situations like these.
Within the past year, devastating floods in Pakistan have strained the resources and stability of a key U.S. ally in the battle against international terrorism, and an intense drought and heat wave has diminished food production in Eastern Europe and Central Asia, causing a spike in global wheat prices. Yemen, where the CIA says Al Qaeda is of greatest concern today, is running out of groundwater for its under-employed population. While these events cannot be directly attributed to climate change, scientists are very clear that these types of events will occur more frequently in a warming world.
Other security issues are arising closer to home. The Arctic has long been a place where defense issues were minimized because the waterways were largely frozen over year-round. With warming now occurring there at twice the average global rate, the Arctic Ocean is opening to military and civilian transportation, and the potential security implications are already apparent. Receding sea ice is creating increased competition over territory and resources in a region where the United States is currently unprepared to address potential military situations.
Protecting our nation’s security necessarily involves being prepared to deal with an uncertain future. Indeed, planning under uncertainty is business as usual for the defense community. The fact that military and security experts are increasingly concerned about the risks associated with climate change should serve as an important wake-up call to us all.
Finally, addressing climate change is very much in our economic interest. The United States is the world’s leading manufacturer, producing 21 percent of global output while supporting 18.6 million domestic jobs. Yet in the growing clean energy sector, we risk falling further behind our competitors because the demand for these goods is not as strong at home as it is overseas.
China and other countries are investing heavily in clean energy technologies, positioning themselves to compete in a growing global market projected to reach $106 billion to $230 billion a year in 2020, and as much as $424 billion a year in 2030. In order for the United States to develop a successful, profitable, and competitive clean energy sector, companies need clear regulatory frameworks ensuring a strong domestic market for these goods.
The recent experience of the U.S. auto industry provides an instructive case study. While the technology in our cars has advanced significantly in the last two decades, the typical new vehicle today consumes gasoline at about the same rate as one produced in the late 1980s. But with gas prices again rising, consumers are increasingly turning to more fuel-efficient vehicles. Spurred by fuel economy standards enacted in 2007, American automakers have been ready to meet their customers’ needs. U.S. automakers reported strong sales and combined profits of nearly $5.9 billion in the first quarter of 2011, and all three cited higher sales of fuel-efficient vehicles as a contributing factor. Last year, the Smart car was the only conventional car available in the United States with a fuel economy rating of 40 miles per gallon or better. Today there are nine, and three of them – the Cruze, Elantra, and Focus – were among the 10 top-selling vehicles last month. All three are made in the United States.
Unfortunately , similar examples in the clean energy field must be found outside the United States. In Germany, for instance, renewable energy policies helped boost jobs in the renewable energy sector from 160,000 in 2004 to 370,000 in 2010.The German government credits this dramatic growth in clean energy jobs as a major factor in its relatively fast recovery from the 2008 recession. Germany’s renewable energy sector is projected to employ about 450,000 to 580,000 workers by 2020, and between 500,000 and 600,000 in 2030.
By contrast, U.S. clean energy manufacturers are increasingly finding their biggest growth opportunities overseas. First Solar, Inc., of Arizona, the world’s second largest solar manufacturer, plans to build a 2,000-megawatt solar photovoltaic power plant in China – the largest planned project of its kind in the world. While First Solar will also add new manufacturing jobs at its U.S. facilities, at least 71 percent of its planned growth is outside the United States. U.S. firms remain among the world’s top innovators. But if our clean energy firms are to invest and create jobs at home, and compete effectively overseas, we must provide the regulatory certainty that creates strong, sustained demand for their goods here in the United States. Doing so will strengthen our economy while protecting the United States against the risks of climate change.
Mr. Chairman, U.S. inaction on climate change exposes our nation to real and rising risks. The longer we delay action, the harder it will be to avert the worst consequences of warming, the higher the cost of coping with those that can not be avoided, and the further we fall behind other countries in the clean energy race. Taking steps now to expand clean energy and reduce greenhouse gas emissions is quite clearly in our strong national interest.
As the world’s largest economy, leading innovator, and largest cumulative emitter, the United States also has a responsibility to the international community. Thanks to U.S. efforts, the global climate effort now appears headed on a more reasonable course. Our ability to continue to shape that effort in the years ahead depends heavily on a demonstrated commitment to address climate change here at home.
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This post also appeared in the National Journal Energy & Environment Experts blog in response to a question about oil use and the future of electric vehicles.
Whether or not electric vehicles (EVs) take off will ultimately depend on consumer acceptance of new technology. But public policy and technological progress are just as important, as we highlight in our new report on the transportation sector.
Indeed, electric drive vehicles powered by batteries or hydrogen fuel cells could revolutionize transportation in the United States, saving considerable amounts of oil while also reducing the sector’s impact on our global climate. And the EVs on the market now are off to a great start, winning national and international awards.
Nearly all major automakers are planning to introduce these vehicles in the coming years, and I applaud automakers like Ford that have committed to building alternative drivetrains in significant number for the long haul. Companies like Ford understand climate change and the need to reduce our impact on our global environment while not sacrificing our mobility. For EVs to achieve that goal, we need policies like a clean energy standard that aim to decarbonize our electrical grid. I’m sure Ford is also investing in this space because they see a market opportunity.
The private sector has invested billions of dollars in developing, manufacturing, promoting, and distributing EVs in the last decade. From a map on our website, you can see that policymakers across the country are supporting EVs because they want their region to benefit from this burgeoning market.
Policymakers should rely on private capital as much as possible to build out the EV charging infrastructure so we can balance the desire to support alternative vehicles while also tackling our nation’s budget deficit. To that end, we should coordinate policy related to EV purchase and home charging nationwide so private players can enter new markets more easily. The most efficient way to “refuel” these vehicles is not yet clear, and we should use policy to help provide the foundation to let the market work.
Another element that is critical to the success of these vehicles is its most expensive component – the battery. Not only do we need aggressive R&D to develop batteries with much higher energy density, we also need to figure out what to do with these batteries at the vehicle’s end-of-life. About 80 percent of the battery’s capacity is still usable at this point, resulting in the largest untapped resource in this space today.
If we achieve the right mix of policy, technological progress, and consumer acceptance, there’s little reason to doubt that alternative vehicles will have a significant impact on the car market in this decade. It appears that it will be tough to kill the electric car this time.
Eileen Claussen is President