Business

Press Release: Alstom and CME Group Join Pew Center's Business Environmental Leadership Council

Press Release                                       
July 14, 2009

Pew Center Contact: Tom Steinfeldt, (703) 516-4146   
Alstom Contact: Tim Brown, (860) 713-9530
CME Group Contact: Allan Schoenberg, (312) 930-8189   

 


    

 


ALSTOM and CME GROUP JOIN PEW CENTER’S BUSINESS ENVIRONMENTAL LEADERSHIP COUNCIL
Global Leaders Share Innovative Solutions that Address Climate Change

WASHINGTON, D.C. – The Pew Center on Global Climate Change announced today that Alstom and CME Group have joined the Pew Center’s Business Environmental Leadership Council (BELC) and its efforts to address global climate change.
“Alstom and CME Group bring diverse expertise and unique strengths to the issue, but they are united in their belief that strong corporate leadership is critical in confronting the challenge of climate change,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “By joining the BELC, they are demonstrating that leadership, and I look forward to working with them as we develop sound business and policy solutions to climate change.”

Alstom is a leading producer of integrated power plant systems and innovative transportation solutions. With annual sales of $26.34 billion and more than 80,000 employees in 70 countries, Alstom is also a pioneer in the development of technologies that capture and store CO2 emissions from power plants.  Additionally, the company is the top global manufacturer of high speed rail systems, including the new AGV high speed train that consumes 15 percent less energy than comparable trains. In its own operations, Alstom has committed to a 20 percent reduction by 2015 in overall energy intensity and greenhouse gas emissions.

“At Alstom, we are committed to developing new power generation and transportation technologies that result in significantly reduced greenhouse gas emissions,” said Pierre Gauthier, Alstom’s US CEO. “We have a unique approach to advocating for constructive policy solutions and we are excited about collaborating with the Pew Center to develop and promote policies that will stimulate private sector solutions to climate change.”

CME Group is the world's largest and most diverse derivatives exchange, offering the widest range of global benchmark products across all major asset classes.  This includes futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, and alternative investment products such as weather and real estate.  In addition, CME Group is one of the founding members of Green Exchange Holdings LLC, developing the Green Exchange venture as a platform for trading environmental commodities, including CO2 allowances, futures, and options on futures for emission products. It is intended that green products futures and options will be listed for trading as part of the Green Exchange venture once that venture has sought and achieved appropriate regulatory status. The Green Exchange venture will be working with U.S. and European regulators and intends to seek recognition in the U.S. as a designated contract market and approval from the FSA in the U.K.

“We are excited about the long-term opportunities to join with the other 44 BELC members in working with the Pew Center to strengthen markets for managing risks associated with greenhouse gas emissions,” Craig S. Donohue, CEO of CME Group said. “We especially appreciate the ongoing opportunity to offer our perspective on emissions market development and oversight as the Pew Center formulates its views on this important topic.”

The BELC was established by the Pew Center in 1998, and the Center is a leader in helping these and other major corporations integrate climate change into their business strategies. The BELC is comprised of mainly Fortune 500 companies representing a diverse group of industries including energy, automobiles, manufacturing, chemicals, pharmaceuticals, metals, mining, paper and forest products, consumer goods and appliances, telecommunications, and high technology. Individually and collectively, these companies are demonstrating that it is possible to take action to address climate change while maintaining competitive excellence, growth, and profitability. The BELC is the largest U.S.-based association of corporations focused on addressing the challenges of climate change, with 45 companies representing over $2 trillion in combined revenue and more than 4 million employees.

The other members of the BELC are: ABB; Air Products; Alcoa Inc.; American Electric Power; Bank of America; BASF; Baxter International Inc.; The Boeing Company; BP; California Portland Cement; CH2M HILL; Citi; Cummins Inc.; Dow Chemical Company, Deere & Company; Deutsche Telekom; DTE Energy; Duke Energy; DuPont; Entergy; Exelon; GE; Hewlett-Packard Company; Holcim (US) Inc.; IBM; Intel; Interface Inc.; Johnson Controls Inc., Lockheed Martin; Marsh, Inc.; Novartis; Ontario Power Generation; PG&E Corporation; PNM Resources; Rio Tinto; Royal Dutch/Shell; SC Johnson; Toyota; TransAlta; United Technologies; Weyerhaeuser; Whirlpool Corporation; and Wisconsin Energy Corporation.

For more information about global climate change and the activities of the Pew Center and the BELC, visit www.c2es.org.


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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.

Pre-Report: Energy Efficiency Workshop I: Operational & Facilities Strategies

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Companies including Air Products, Citi, Deere and Co., Exelon, and United Technologies presented on their strategies to reduce energy use in their internal operations and facilities.

Energy Efficiency Workshop I - Operational & Facilities Strategies
The Pew Center on Global Climate Change hosted its first Corporate Energy Efficiency Workshop on July 16, 2008, and focused on Operational and Facilities Strategies. Presentations from the workshop are available below. Click on the speaker's name to view the presentations.

 

Welcome & Opening Remarks

Eileen Claussen, President, Pew Center on Global Climate Change
Jo Cooper, Vice President, Government and Industry Relations, Toyota

 

Lunch Keynote

R. Neal Elliot, PhD., Industrial Program Director, American Council for an Energy-Efficient Economy

 

Company Panel 1
Lisa Shpritz, Senior VP of Corporate Workplace, Bank of America
Bruce Schlein, Vice President, Environmental Affairs, Citi

 

Company Panel 2
Vanessa Stiffler-Claus, Manager of Federal Affairs, Deere & Co.
Deborah Kuo, Director of Real Estate, Exelon Corp.

 

Company Panel 3
Paul Vitello, Director of Environmental Sustainability, United Technologies
Wendy Graham, Clean Energy Market Manager, Air Products

 

 

Workshop I:
Operational & Facilities Strategies
Workshop II:
Supply Chain Strategies
Workshop III:
Products and Services
Workshop IV:
Sharing Best Practices

 

Pre-Report: Energy Efficiency Workshop II - Supply Chain Strategies

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Hewlett-Packard and Mars were among the companies that shared their strategies to reduce energy use in their supply chains. Additionally, Clear Carbon Consulting presented on supply chain footprinting.

Energy Efficiency Workshop II - Supply Chain Strategies
The Pew Center on Global Climate Change hosted its second Corporate Energy Efficiency Workshop on October 23, 2008, and focused on Supply Chain Strategies. Presentations from the workshop are available below. Click on the speaker's name to view the presentations.

 

Morning Keynote
Dr. Michael Russo
Charles H. Lundquist Professor of Sustainable Management, University of Oregon, Lundquist School of Business

 

Company Panel 1: Supply Chain Footprinting
Kyle Tanger, Principal, Clear Carbon Consulting
Kevin Rabinovitch, Director of Sustainability, Mars

 

Company Panel 2: Reporting and Managing Emissions from the Supply Chain
Hewlett-Packard
Dave Newman, Global Climate & Energy Manager, Nike

 

Company Panel 3: Reducing Energy Use in Logistics
Mitchell Greenberg, Manager, EPA's SmartWay Transport Programs
Russell McKnight, Director of Global Logistics Procurement, Johnson Controls

 

 

Workshop I:
Operational & Facilities Strategies
Workshop II:
Supply Chain Strategies
Workshop III:
Products and Services
Workshop IV:
Sharing Best Practices

New Administration Puts Carbon Reduction on the Agenda

Featured in MetalMag's June edition.  See page 66.

New Administration Puts Carbon Reduction on the Agenda

By Andre de Fontaine

During the past decade, climate change steadily has moved up the political agenda. Now, with a new administration in Washington, D.C., that has demonstrated a clear commitment to action, comprehensive climate-change legislation appears ripe for passage within the next couple years. As a result, many industries are appropriately wondering what the new regulatory environment will mean for their businesses.

First, it is important to note that reducing greenhouse-gas (GHG) emissions will impose a cost to society, though that cost is likely to be small and manageable within the context of the overall economy. These costs must also be balanced against the costs of unabated climate change, which are projected to be much greater than taking action now. Still, there likely will be distributional impacts as the U.S. transitions to a low-carbon economy, with certain industries being able to handle the transition with greater ease than others.

The green-building industry widely is expected to be a major beneficiary of public policies to reduce greenhouse-gas emissions because policymakers recognize two related facts. First, the country’s existing buildings are major contributors to climate change, accounting for about 43 percent of U.S. GHG emissions; and second, a number of low-cost mitigation options available involve improving the efficiency of new and existing buildings. Additionally, as the nation is mired in a serious economic downturn, efforts to stimulate the economy are increasingly focused on green buildings as a major source of new jobs in the coming years.  For example, the recently enacted American Recovery and Reinvestment Plan of 2009 contained billions for weatherization assistance for low-income households, grants for states to improve the efficiency of residential, commercial and government buildings, and tax credits for energy efficiency improvements to existing homes.

While these stimulus provisions will benefit the green building sector in the near term, longer-term policy, in the form a cap and trade system for GHGs is also on the horizon. How does a cap-and-trade program work? The government sets an annual cap on allowable emissions, which declines over time. It then distributes allowances to entities– free of charge, through an auction, or a combination of the two – to entities included in the program. These typically are major emitters, like power plants and large manufacturing facilities. The total number of allowances distributed must match the total emissions allowed under the cap. 

Regulated firms must hold and submit to the government one allowance for each ton of GHGs they emit. This creates a market for allowances—a carbon market—and an economic incentive for firms to reduce emissions. Those that easily can cut emissions can position themselves to purchase fewer allowances and/or sell excess allowances to firms that face higher reduction costs.

Buildings would not be directly regulated under the cap, but they could be impacted by increases in electricity and fuel costs attributable to the price of carbon. These higher energy prices will, over time, make investments in efficiency more attractive in the buildings sector.

This year the prospects for aggressive government action appear better than ever. President Obama has made clear his commitment to cap-and-trade legislation and related clean-energy policies, and key members of the U.S. Congress have pledged fast action in moving climate change legislation forward. Adding to the momentum for action is a strong push from the business community. This especially is noticeable in the advocacy efforts of the U.S. Climate Action Partnership, a unique coalition of 25 businesses and five nongovernmental organizations that is calling on Congress to pass comprehensive climate legislation this year.

Even as the country faces a significant economic challenge, business and political leaders increasingly are vocal about their commitment to addressing climate change--not at a later date, but right now. The green-building industry uniquely is positioned to ride this wave and make a major contribution in the country’s transition to a low-carbon future.


Andre de Fontaine is a Markets and Business Strategy Fellow at the Pew Center on Global Climate Change.  He works with the Center's Business Environmental Leadership Council (BELC), a group of 43 largely Fortune 500 corporations that have partnered with the Pew Center to address issues related to climate change.  He also engages in Pew Center analytic work on climate-related markets and investment issues.

 

(See page 58 for the article)by Andre de Fontaine, Markets & Business Strategy Fellow— Appeared in Eco-Structure magazine, June 2009
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Maintaining Carbon Market Integrity: Why Renewable Energy Certificates Are Not Offsets

Maintaining Carbon Market Integrity: Why Renewable Energy Certificates Are Not Offsets

A brief by the Offset Quality Initiative
June 2009

 

 


Brief

Executive Summary

This brief explains how and why renewable energy certificates (RECs) differ from greenhouse gas (GHG) emission offsets (offsets). While the Offset Quality Initiative (OQI) is a strong supporter of renewable energy and believes it has a critical role to play in addressing climate change, OQI does not believe that RECs sold in voluntary green power or mandatory renewable energy portfolio standard (RPS) markets should be treated as equivalent to GHG offsets. REC programs fail to meet two basic definitional requirements of emissions offsets: First, they do not adequately establish a clear and unambiguous claim of ownership to emission reductions. Second, they fail to adequately establish that RECs are associated with offsetting emission reductions. Specifically, REC programs do not ensure that emission reductions are additional to what would have occurred in the absence of a REC market.

In order to ensure that markets for RECs function appropriately and do not undermine the effectiveness and integrity of markets for GHG emissions reductions, OQI recommends the following:

  • RECs should not be treated as equivalent to GHG offsets.
  • The definition of a REC should be clearly established and consistently applied. A suggested definition would be the following: “A Renewable Energy Certificate (REC) is the unique and exclusive proof that one megawatt-hour of electricity has been generated from a qualified renewable resource connected to the grid.”
  • It is inappropriate to treat RECs as an environmental commodity that conveys ownership of indirect “emission attributes” such as GHG emission reductions. OQI strongly recommends against the inclusion of indirect or derived “environmental attributes” or “benefits” in any definition of a REC, including those used in the various certificate tracking systems (e.g., Generation Attribute Tracking System [GATS] and Western Renewable Energy Generation Information System [WREGIS]).
  • Purchasers of RECs should not make GHG emission reduction claims associated with the retirement of RECs.



In addition to the Pew Center on Global Climate Change, OQI members include The Climate Trust, Climate Action Reserve (formerly CCAR), Environmental Resources Trust/Winrock International, Greenhouse Gas Management Institute, and The Climate Group. OQI was founded in November 2007 to provide leadership on greenhouse gas offset policy and best practices. OQI is a collaborative, consensus-based effort that brings together the collective expertise of its six nonprofit member organizations.

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Press Release: USCAP Testifies on Waxman-Markey Discussion Draft

USCAP

For Immediate Release
Contact: Tad Segal (202) 667-0901, Tad.Segal@widmeyer.com
April 22, 2009

 


USCAP to Congressional Panel: Clarity on Climate Policy Will Spur Economic Investment

Washington, D.C. (April 22, 2009) – American businesses stand ready to invest billions of dollars in critical infrastructure and next-generation clean energy technologies but first need clarity on future regulation of greenhouse gases, members of the U.S. Climate Action Partnership (USCAP) told members of the House Energy and Commerce Committee during a hearing on pending climate legislation today.

Backing an economy-wide cap-and-trade approach to reduce greenhouse gas (GHG) emissions, the members of USCAP urged the Committee to produce well-crafted and balanced national climate legislation that establishes clear rules of the road. Companies in many industries today cannot make prudent large-scale, long-term investment decisions without first understanding how climate protection efforts will be structured and implemented going forward, the USCAP members said. Resolving this uncertainty will free companies to begin deploying capital and spending more on badly needed research and development.

“Long-lasting climate change legislation must be based on three equal tenets – protecting the environment, the economy and consumers,” said Jim Rogers, President and CEO of Duke Energy. “The sooner Congress acts on climate change to provide the regulatory clarity business and industry needs to move ahead with major capital projects, the more rapid our economic recovery will be.”

This is the second time in the past three months that USCAP has testified before the House Energy and Commerce Committee on the subject of climate protection legislation. On January 15th, USCAP members presented the Committee with their Blueprint for Legislative Action, which lays out a comprehensive and integrated set of policy recommendations.

The Blueprint calls for reductions of GHG emissions of 80 percent by 2050, compared to 2005 levels. In addition, USCAP has called for domestic and international offset provisions that will help lower GHG emissions from non-capped entities, cost containment measures to protect consumers and industries, and other complementary measures that enhance the effectiveness of any emissions reduction program and increase investment in new technologies.

"With leadership and foresight, we can strengthen our economy by reducing pollution. Inaction is simply not an option," said Frances Beinecke, President of the Natural Resources Defense Council. "By increasing energy efficiency and moving to clean, renewable energy, we can create millions of jobs, save consumers billions of dollars, and increase our energy security. We have an opportunity to be the global leader in low-carbon technology if we act wisely and swiftly."

USCAP said that any legislation must also protect consumers, vulnerable communities and businesses while ensuring economic sustainability and environmental effectiveness.

“Swift enactment of a well-crafted cap-and-trade program will encourage the critical private
sector investment in low-carbon technologies required to protect our environment, while at the same time protecting consumers and our domestic industries,” said David Crane, President and CEO of NRG Energy.

Last month, USCAP hailed the introduction of the Waxman-Markey discussion draft as a strong starting point for national climate protection legislation. Commenting on the draft, USCAP members said it addresses many of the core issues and policy recommendations identified by USCAP in its Blueprint, which were agreed upon only after significant discussion and debate within the group.

"I believe that this may be the single greatest opportunity to reinvent American industry, putting us on a more sustainable path forward,” said Charles Holliday, Jr. Chairman of DuPont. “A federal climate program has the potential to create real economic growth through innovation."

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United States Climate Action Partnership (USCAP) is a group of businesses and leading environmental organizations that have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.

USCAP Members:
 Alcoa  Boston Scientific  BP America  Caterpillar  Chrysler  ConocoPhillips  John Deere  Dow  Duke Energy  DuPont  Environmental Defense Fund  Exelon  Ford  FPL Group  GE  GM  Johnson & Johnson  Marsh  Natural Resources Defense Council  The Nature Conservancy  NRG Energy  PepsiCo  Pew Center On Global Climate Change  PG&E  PNM Resources  Rio Tinto  Shell  Siemens  World Resources Institute  Xerox 

Op-Ed: Goals Can Be Met Without Auctioning Emission Allowances

By: Eileen Claussen and Jim Rogers
March 31, 2009

This article originally appeared in the National Journal's Energy & Environment Experts Blog.

Let’s get one thing straight: Though not perfect, we like the way President Obama and his team are addressing the potential catastrophe of climate change.

The Administration unequivocally accepts the underlying science. They realize that the cost of not acting will be far greater than the cost of taking responsible action – and that the longer we wait, the greater the costs will be for American consumers. Their emissions goals are ambitious but achievable, as is the timetable to meet them. And we agree that cap and trade is the right way to go. It’s based on common sense capitalism: it puts a price on carbon and rewards facilities that can reduce carbon dioxide and other greenhouse gases at the lowest cost, even as it provides incentives for others to find more economic ways to reduce their own emissions.

Where we temporarily part ways is when it comes to the Administration’s proposal calling for a full auction of emission allowances. How these allowances are distributed doesn’t change the overall environmental goal set by the cap. We believe it is critical that a number of them be used to reduce price impacts on households and businesses – in the early years of the program.  Just this week Chairmen Waxman and Markey released a discussion draft of energy and climate legislation that leaves open how we can best address this critically important issue.

In all states, electricity is distributed by local companies regulated by public service commissions whose fundamental purpose is to protect consumers and keep electricity rates low.  We recommend protecting households and businesses that purchase electricity from utilities by providing allowances to the regulated distribution companies during a transition period.

There is little question that an auction, in which allowances to emit specified amounts of carbon are sold to the highest bidders, will result in a price spike for electricity in some regions. That price spike will hit households and businesses the hardest, and for some, it will be very tough to manage.

We believe we need a climate change plan that protects against price spikes in electricity bills. Our plan would effectively curb carbon, limit the risk of price volatility, target relief to those who need it most, and take advantage of the distribution companies’ and public service commissions’ ability to deliver energy efficiency.

During the transition period from granting allowances to a full auction, there would be no windfall for utility companies or their investors. The legislation itself and actions by public service commissions would guarantee it.  On the flipside, there would not be huge price increases for electricity in coal-fueled states and a much smoother transition to a cleaner economy. If this approach is not taken, the whole argument for climate change legislation could be moot – senators and representatives from those states might effectively kill legislation mandating cap and trade.

Overall, we think a cap-and-trade system that shifts from granting allowances to a full auction over time will provide the most reasonable transition to the low-carbon and thriving economy we all desire.  To help ensure a smooth transition, granting allowances and auction revenues should be used to help cushion workers, households, and vulnerable industries from volatile prices.  It should also support the development of critical low-carbon technologies like carbon capture and storage, and assist in efforts to better adapt to the climate change we are already beginning to experience.

With a price on carbon, energy companies will more rapidly invest in clean technologies, as long as they can be certain that future regulations neither bankrupt them nor mandate that they bet on specific untried technologies. It will also help them look deeper into renewable sources of energy, be they solar, wind, hydropower, or even agricultural waste. They will rethink nuclear power which, despite its scary image, is actually a safe, clean way to generate electricity.

We know that some of those technologies still need the kinks worked out, and that others remain prohibitively expensive. But this is where the government could use some of the revenues that it gets from auctioning allowances to other emitters now, and to utilities and competitively challenged manufacturers down the road.

We’re not ostriches, and we’re not Pollyannas. We know there is a cost to addressing climate change, and that this cost will filter down to big business, to small business, and to households. Utilities that buy carbon allowances or shift to lower-carbon generating options will have to increase their rates, but energy efficiency can lower customer bills even in the face of rate increases. And there will be far less economic upheaval if higher prices come gradually, which our transition program would ensure.

Appeared in the National Journal Energy & Environment Expert Blog— by Eileen Claussen and Jim Rogers

CCS Public Workshops

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The Pew Center co-sponsored two East Coast workshops exploring issues related to Carbon Capture and Storage (CCS).

CARBON CAPTURE & SEQUESTRATION PUBLIC WORKSHOPS  

New York City: March 5, 2009
Bloomberg National Headquarters
731 Lexington Avenue, 7th Floor Auditorium
Click for Agenda.

Washington D.C.: March 6, 2009
Rayburn House Office Building, Room 2322
Click for Agenda.

The Pew Center co-sponsored two East Coast workshops exploring issues related to Carbon Capture and Storage (CCS). The events, organized by the Natural Resources Defense Council and Environmental Defense Fund, contributed to the public understanding of and dialogue regarding the important role of CCS in lowering greenhouse gas (GHG) emissions.

CCS is a key technology in the portfolio of low-carbon technologies necessary to achieve significant reductions in global GHG emissions. The process of CCS entails capturing carbon dioxide (CO2) from large stationary sources, such as power plants and refineries, and injecting the captured CO2 into deep underground formations for permanent retention, thereby keeping it out of the atmosphere.

The workshops featured speakers who are leading experts on CCS from academia, industry, finance, government, and the environmental policy field. The speakers provided a comprehensive overview of CCS, including:

  • An explanation of what CCS is and how it works
  • The potential for CCS to provide significant, cost-effective GHG emission reductions
  • The technology behind CCS, real-world experience with this technology, and the scientific/engineering challenges that remain
  • The regulatory framework and economic incentives necessary to facilitate CCS deployment

Click here for event presentations.

Comparing USCAP Recommendations to the EU Emissions Trading System

Side-by-Side Comparison of the USCAP Blueprint for Legislative Action to the EU Emissions Trading System
February 2009

Click here for the document. (pdf)

On January 15, 2009, the U.S. Climate Action Partnership (USCAP) issued A Blueprint for Legislative Action – a detailed framework for legislation to address climate change that calls for an economy-wide greenhouse gas cap-and-trade program. This document (produced while as the Pew Center on Global Climate Change) provides an accessible comparison between the USCAP plan and the EU-ETS on the following key topics:

  • Targets & Timetables
  • Scope of Coverage 
  • Allowance Allocation
  • Offsets
  • Other Cap-and-Trade Cost Containment Elements
  • Additional Climate Related Measures Related to Coal, Performance Standards, Tranportation, and Energy Efficiency

USCAP is an unprecedented coalition of 5 leading non-governmental organizations, including the Center, and 25 major corporations. This diverse group of business and environmental leaders have come together to call for mandatory action, with a comprehensive approach involving near-, mid-, and long-term targets, and a range of effective policies.

Op-Ed: A Blueprint for Action

By Eileen Claussen
February 2009

This article originally appeared in Environmental Finance.

The prospects for serious US action to address climate change have never been better – and it’s not just because we have a new President. In fact, an important reason why we’re likely to see real action on this issue by the current Congress is because of leadership not in the world of politics but in the world of business. Even in the middle of a serious economic downturn, many of America’s top business leaders are standing firm in their support for climate solutions.

Just days before the inauguration of President Barack Obama on January 20, the US Climate Action Partnership (USCAP) took its engagement on the climate issue to a new level, issuing “A Blueprint for Legislative Action.” The Blueprint represents two years and literally thousands of hours of work by USCAP members and offers federal lawmakers a consensus plan for an integrated package of policies to slow, stop and reverse the growth of US greenhouse gas (GHG) emissions.

USCAP includes the CEOs of 26 major companies in industries from automobiles and oil to coal mining and coal-burning utilities, together with representatives of five non-governmental organisations, including the Pew Center. The coalition’s role as a catalyst for change, and one that has significant influence across the political spectrum, was evident when USCAP CEOs testified before the powerful House Energy and Commerce Committee in January. During the hearing, the panel’s new chairman, Henry Waxman, pledged to pass a climate bill through the committee in May.

Since USCAP’s launch in 2007, its corporate members – which include General Electric, Duke Energy and DuPont – have been calling with their NGO partners for enactment of a domestic cap-and-trade programme. USCAP’s new landmark recommendations provide Congress with details for how such a programme could be designed to achieve steep reductions in emissions in an economically sustainable manner.

The USCAP Blueprint calls for a cap on US emissions of 14-20% below 2005 levels by 2020, 42% below by 2030, and 80% by 2050. USCAP believes we can achieve these targets while rebuilding and reinvigorating the US economy. Its key features include:

  • A robust carbon offsets programme, setting an overall annual upper limit for offset use starting at 2 billion metric tons with authority to increase the amount to 3 billion metric tons should market conditions warrant. Within this upper limit of 2 billion metric tons, domestic and international offsets would be limited so that each is no more than 1.5 billion metric tons in a given year. For example, the programme would allow for the use of 1.5 billion metric tons of domestic offsets and 500 million metric tons of international offsets;
  • A Carbon Market Board to oversee a strategic offset and allowance reserve pool, containing a sufficiently large set of other offsets and, as a measure of last resort, allowances borrowed from future compliance periods that could be released into the market in the event of excessive allowance prices; and
  • A combination of an auction of allowances with a significant initial free allowance allocation that facilitates the transition to a low-carbon economy for consumers and businesses, provides capital to support new low- and zero-GHG-emitting technologies, and funds adaptation measures. The free distribution of allowances would be phased out over time.

All of these measures were painstakingly negotiated as a way to both reduce emissions and revitalise the U.S. economy. They are joined in the USCAP Blueprint by a range of other proposals that would complement the national cap-and-trade programme with incentives for rapid technology transformation in areas from coal technology and transportation to buildings and energy efficiency.

Now to the question at the top of everyone’s mind: What are the actual chances of this kind of plan getting enacted during the 111th Congress? While we can only speculate at this point, the Pew Center’s belief is that the chances are very good. And we see several reasons why.

President Obama, in one of his first major policy statements after the election, reaffirmed his commitment to reducing US emissions to their 1990 levels by 2020 and to 80% below that by 2050, and to enacting a GHG cap-and-trade law. He has since appointed an environment and energy team with tremendous expertise and commitment to climate action.

In Congress, the Democratic leadership is made up of some of Congress’s strongest advocates of climate action, including Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, and the chairmen of the key committees: Waxman of the House Energy and Commerce Committee, Barbara Boxer of the Senate Environment and Public Works Committee, and Jeff Bingaman of the Senate Energy and Natural Resources Committee. Key Republicans are also continuing their leadership on the issue, including Senator John McCain, who plans to reintroduce a cap-and-trade bill with his longtime ally, Senator Joseph Lieberman.

Finally, we see the prospects for near-term enactment of a serious cap-and-trade law as good because of the very fact that these proposals have the backing of many of the nation’s leading businesses. Today, for the first time since climate change appeared as a faint bleep on the national radar screen in the mid-1980s, we are seeing what appears to be a critical mass of leadership and engagement in the White House, Congress and the business community.

However, while the stars may be aligned as never before, the push for serious climate action still faces enormous challenges. Designing an effective cap-and-trade programme will be very hard work – and hard politics.

But progress is possible, and we are beginning to see the outlines of a consensus approach to this problem. Even as the US is facing a significant economic challenge, the nation’s business and political leaders are increasingly vocal about their commitment to addressing climate change not at a later date but right now.

The current consensus bodes well for serious climate legislation finally emerging from Congress – and for the US finally to start exercising leadership on the most important global issue of our time.

- Eileen Claussen is President of the Pew Center on Global Climate Change.

Appeared in Environmental Finance— by Eileen Claussen
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