Energy & Technology
CLIMATE CHANGE: BEYOND A SIDEWAYS APPROACH
SPEECH BY EILEEN CLAUSSEN
PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
DONALD BREN SCHOOL OF ENVIRONMENTAL SCIENCE
AND MANAGEMENT- UNIVERSITY OF CALIFORNIA, SANTA BARBARA
JANUARY 14, 2005
Thank you. I am delighted to be here – and I have to say it was awfully nice of the weather to clear up for my arrival.
Of course, I am not here to talk about the weather. I am here to talk about the climate. And the difference, as we all know, is that climate is what you expect. Weather is what you get. And California has certainly gotten more than it expected or deserved these last few weeks.
I am sure some of you saw the movie, The Day After Tomorrow, and it is hard not to think about it given the recent weather you’ve been having. This is the film that dramatized the effects of climate change by releasing tornadoes in downtown Los Angeles and flooding all of Manhattan. People called it left-wing propaganda, but I remember watching the movie and wondering why only Blue states were getting hit.
And then of course we have the new Michael Crichton book that you have probably heard about. The book, which is climbing the bestseller lists as we speak, tells a fictional tale of how climate change itself is a fiction created by overzealous environmentalists so that they can enact draconian regulations on big business.
The book is called “State of Fear,” and my only fear is that people will take seriously its absolutely wrongheaded portrayal of the problem of climate change.
I hope all of you will join me in reminding people that Mr. Crichton’s specialty is fiction – even if he does include all sorts of graphs and charts in the current book to make it seem like a scientific tract. This is the man who wrote such fantastical books as Jurassic Park, and it seems to me he has been hanging out with too many dinosaurs – people who are mired in the past and who simply cannot and will not accept the broad scientific consensus that we have a significant problem on our hands, and that there are practical and economically sound ways to tackle it.
The point is– whether we are talking about the movie or the book: They are both fiction.
In contrast to the book’s sensationalistic tone and style, your school’s emphasis on rigorous, interdisciplinary approaches to environmental problem-solving is something that is desperately needed in today’s world. With so many complex and urgent environmental issues on the agenda at the local, national and international levels, your work here is essential. And I applaud your interest in these issues and your commitment to solutions.
At the Pew Center on Global Climate Change, we are committed to solutions, too. And today, I would like to talk for a little bit about some of the potential solutions to the problem of climate change. More specifically, I want to talk about the nexus of technology and public policy – in other words, what policies do we need in order to unleash the global technological revolution that is necessary to protect the climate?
I understand there is a hit movie in theaters right now that was filmed in the wine country around here. The movie is called Sideways – and, unfortunately, this is a title that could just as easily apply to current U.S. policy on climate change. But in saying we are moving sideways, even that may be giving us too much credit. Perhaps Backwards would be more appropriate.
Clearly, we can do better. And today I want to talk about how. More specifically, I want to talk about a plan that the Pew Center is developing for U.S. action on the climate issue. We call it our Agenda – and it is something we have been working on in concert with business and government leaders and others to lay out a responsible and practical policy course for the United States for the years to come.
But, before I talk about that, I want to talk briefly about what is at stake here. And I want to paint a clearer picture of the problem we are trying to solve, the problem we must solve—that is, of course, global climate change.
Just last month, the World Meteorological Organization reported that 2004 was the fourth hottest year on record – and that the last four years were among the top five. Of even greater concern was the news we learned in November about the arctic region. This is the canary in the coal mine of climate change, the place where researchers have always said that the effects of this global problem will hit early and hard.
And in November, we learned just how hard. The report of the Arctic Climate Impact Assessment showed that the Arctic region is indeed undergoing dramatic and alarming changes. The reason: It’s warming much more rapidly than previously known, at nearly twice the rate of the rest of the globe.
And it’s important to remember that this isn’t a random, out-of-left-field report. It is the result of an unprecedented, four-year scientific study of the region conducted by an international team of 300 scientists. And its conclusions should be a wake-up call for all nations.
According to the report, at least half the summer sea ice in the Arctic is projected to melt by the end of this century, along with a significant portion of the Greenland Ice Sheet. The Arctic region is projected to warm by an additional 7 to 13 degrees Fahrenheit by 2100. These changes will have major global impacts, contributing to sea-level rise and even intensifying global warming as the disappearance of Arctic ice masses means that more incoming solar radiation will be absorbed at the Earth’s surface instead of being reflected back.
This is scary stuff. And, the fact is, we don’t have to travel to the Arctic to see that climate change is already being observed, even if the impacts in that region may be more pronounced and are occurring at a faster rate. Also in November, the Pew Center released a report showing some of the closer-to-home effects of climate change – effects right here in the United States. Right now.
For example, we are seeing a long-term trend toward an earlier spring, with earlier flowering and reproduction of plant and bird species. Butterflies here on the U.S. west coast are moving north and to higher altitudes in search of tolerable climate conditions, with some populations disappearing altogether from the southern end of their ranges. And this is only the beginning. In addition to their potential to lead to future declines in the diversity of U.S. wildlife, these ecological changes are indicators that global warming is already upon us and that adverse effects to other systems, and ultimately our economy, are just around the corner.
With warming for the next century projected to be two to ten times greater than the last, we’re heading toward a fundamental and potentially irreversible disruption of our ecology and natural systems, both in this country and around the world.
So what can we do? Well, at this point, we have to accept that some climate change already is built into the system – indeed, it is already happening, as I have said. But we do have the power to limit the scope and severity of climate change. And what we need to do is stabilize greenhouse gases in our atmosphere at a level that will keep this problem from becoming a global crisis.
According to the Intergovernmental Panel on Climate Change, stabilization means shooting for the magic number of 550 parts per million – that would be roughly double the pre-industrial level of atmospheric greenhouse gases.
But to get to that level, we need to reduce global CO2 emissions by 55 to 85 percent below what is currently projected under a “business-as-usual” scenario. Fifty-five to 85 percent. Making this challenge even more daunting, energy demand around the world is growing at a breakneck pace. We need to act now to come up with ways to keep global economies growing while curbing the growth in greenhouse gas emissions around the world. And make no mistake: The United States, which is responsible for one-fourth of global emissions, needs to take the lead.
Over the past year, as I have said, the Pew Center has been working to develop a comprehensive plan for U.S. action on this issue. This Agenda is our attempt to develop and articulate a responsible course for addressing climate change.
It is built on six years of Pew Center analysis and experience with leading businesses, and through dialogue with international leaders and experts. And what we recommend in the Agenda is that the U.S. develop an Integrated National Climate Change Strategy. That means a strategy that combines technology development with wide-ranging policies on issues from mitigation and science to adaptation.
This last point, about adaptation, is a crucial part of what we have to do, because even if we push forward with an ambitious strategy to reduce greenhouse gas emissions, we’re already locked in to future changes in the global climate. There is no way around it. And these future changes will pose many challenges to ecosystems and natural resources, as well as human health and national economies. We need to plan now for these changes so that our society and others are able to adapt.
But adapting, of course, is not enough. We also need to take serious action to limit the extent of climate change by reducing our emissions. More than anything else, that will require a global technology revolution – and we need policies to make that revolution happen.
While it’s true that technology normally advances over time on its own, it does not always advance in the right direction. Also, we plainly do not have time to wait. The challenge before us requires a much more deliberate, enunciated effort to develop policies that will help push and pull climate-friendly technologies to the market. We need a guiding vision on the order of putting a person on the moon or developing a cure for cancer. And we need to look at the full range of policy approaches that will get us where we need to be – from market incentives and public-private partnerships to a range of R&D efforts focusing on everything from basic research to deployment.
Perhaps the best way to look at the technology and policy challenge we face is on a sector-by-sector basis. From manufacturing and electricity to buildings, agriculture, forestry and transportation, all sectors of the economy have important parts to play in reducing greenhouse gas emissions. Let me talk briefly about just two: transportation and electricity.
The transportation sector is responsible for more than a third of our greenhouse gas emissions, and a quarter of U.S. energy consumption. To reduce these emissions, the Pew Center's Agenda identifies a range of specific policies-all aimed at speeding the development and deployment of new technologies. And what we need to do is focus on both short-term technologies such as hybrid gas-electric vehicles, as well as longer-term technologies such as hydrogen.
Looking first at the short term, we can do a lot more on the issue of hybrids. This is, in fact, a classic case of how smart policy can make a difference. Yes, hybrid vehicles are selling. But, despite their popularity, there is no way they will represent more than a small fraction of U.S. vehicle sales without government stepping in and creating a bigger market. What can government do? Well, we can do a lot more to step up consumer incentives for buying these low greenhouse gas emitting vehicles - and it is not just hybrids I am talking about but clean-diesel vehicles as well.
We can also remove incentives in the law for purchasing inefficient vehicles such as SUVs - it is frankly hard to believe these incentives exist, given the energy and climate challenges we face. And, last but not least, government can and should take steps to boost public-sector procurement of climate-friendly vehicles. The goal is to create and expand the market - and government can help do that with its own purchases.
Among the longer-term transportation technologies we need to be looking at are hydrogen, biofuels, and all-electric cars and trucks. But every one of these technologies faces substantial barriers that the private sector is unlikely to be able to resolve on its own. We need to ramp up funding for research, design and deployment. Just as important, we need demonstration programs. Everybody talks about a hydrogen economy, but you need a hydrogen infrastructure to make it work. And the government needs to work with industry to come up with demonstrations that will show what's feasible and practical - and how to do it right. For example, it is absolutely essential that we find environmentally friendly ways of producing hydrogen - because if we merely use fossil fuels to do it, the climate problem does not improve; it actually gets worse.
I have talked a lot about cars, but we need to look at other forms of transportation, too. Air, rail, marine transportation, road freight - all of these are a part of the problem, and all of them must be a part of the solution. In the Pew Center Agenda, we talk about the need for government to work with the International Civil Aviation Organization to adopt policies aimed at boosting the fuel efficiency of aircraft. The bottom line is that there are countless ways to reduce emissions from this vital and growing sector. Our challenge is to adopt policies that will ensure that those reductions happen sooner rather than later - when the damage may already be done.
People in California know what needs to happen. Your state is on the verge of establishing tough but achievable standards for greenhouse gas emissions from cars. You would be the first state to do this – and, if it happens, you’ll be charting a productive path forward for the rest of the country. Because the fact is we need national standards like those proposed for California. And, in the Pew Center Agenda, we recommend converting the United States' current fuel economy standards to a set of tradable standards based on greenhouse gas emissions. If you are looking to protect the climate, focusing on emissions is the way to go.
Another sector where we can and must achieve significant progress is electricity, which is responsible for almost 40 percent of U.S. emissions. And here I want to start by talking about coal. In 2003, coal provided 51 percent of U.S. electricity. Worldwide, it is the most abundant and widely distributed fossil fuel. Given current rates of production and use, we have 200 years of reserve supply. Whether you like it or not, coal is going to remain a major part of the energy mix for decades to come.
And so our challenge is twofold: we need to come up with better, cleaner ways to burn coal; and we also need to do everything in our power to figure out how to capture and store the carbon that is produced when we do burn it. There are technologies being developed that hold promise on both of these counts. But, once again, these technologies will go nowhere fast if we don’t light a fire under them, so to speak, with government R&D and other policies. We need tests to find out the practicality of geologic storage of carbon. We need demonstrations so we can understand the ins and outs of CO2 injection underground. We also need to build demonstration plants so we can learn more about coal gasification, which holds the promise of allowing us to burn coal with dramatically reduced carbon emissions.
All of these are smart and necessary investments – not just for climate reasons but also because they can place the United States in a leadership position around the world so we can then export these technologies to other countries with significant coal resources, such as India and China.
So that’s the story with coal. But what about other energy technologies? What about combined heat and power? This is when you capture and use the waste heat generated along with electricity. Want to know the overall efficiency of the U.S. electricity system – what we put in vs. what we get out? It’s 30 to 33 percent of input energy; that level has remained constant since the 1970s. This is inexcusable when you consider that combined heat and power systems can boost efficiency to upwards of 80 percent. Right now, these systems account for just 8 percent of U.S. energy supply, compared to 40 percent in Europe. What policy steps can we take to promote combined heat and power? Well, we can start by regulating utilities based on total energy output. A lot of these are just common-sense solutions.
Another promising energy technology is distributed generation, or DG. This is when you generate electricity close to the point of use. With distributed generation, you can reduce CO2 emissions in a number of ways. In fact, a major benefit of this technology is that you avoid so-called transmission and distribution losses; when electricity is moved over long distances, 7 to 8 percent of it is lost along the way. With distributed generation, you can also use waste heat for combined heat and power in ways that you cannot in a large, centralized power station. So it can be more efficient in that way too. But we need policies to make distributed generation more feasible -- for example, by allowing people to sell excess power back to the grid at a fair price.
Now, what about renewables? If you are talking about climate-friendly sources of energy, you have to talk about renewables – wind, solar, hydropower, geothermal and more. In the past, these technologies have cost significantly more than fossil fuels for the same energy output. But over time we have adopted policies at the national, state and local levels that promote renewables – tax breaks, consumer incentives, portfolio standards that require utilities to generate a set share of their power from these sources. California’s aggressive deployment policies in the 1980s helped bring the cost of wind power down to where it is today – close to the cost of fossil fuel generation in some markets. Yet, the lack of policy leadership in the U.S. meant that we lost our leadership position in the wind field to Europe.
So it is policy that has made these technologies more competitive, but policy needs to do more. We need to do things like extending the wind production tax credit, creating renewable portfolio standards at the state, regional and/or national level, and investing more in research and development. Given the energy security challenges we face in this country, not to mention the climate challenges, developing and deploying renewables should be at the top of our national agenda.
Burning coal in clean ways. Safely storing carbon. Investing in combined heat and power and distributed generation. And making renewables an integral part of our national energy mix. These are critical energy challenges for the future – and they are not the only ones. At the Pew Center, we have always been careful to remain “technologically neutral” – we will throw out the welcome mat for any and all technologies that can be part of the climate solution. And, in our Agenda, we address the need for policies to encourage the development and deployment of everything from advanced nuclear power to new energy-efficiency technologies. This problem is too big for any one solution.
We need to look at an array of technologies, and at an array of policies as well. We need strong R&D policies, government standards and codes, public infrastructure investments, public education programs, public-private partnerships and more. And we also need to look at broader, technology-neutral policies as well – policies that can encourage action across all sectors of the economy. Here I am talking specifically about the policy known as “cap and trade.”
Cap-and-trade is the approach taken in the Climate Stewardship Act introduced last year by Senators Joseph Lieberman and John McCain. Their bill attracted the support of 43 U.S. senators and prompted the first serious debate in Congress about exactly what we need to be doing to respond to the problem of climate change.
The reason cap-and-trade works is that it enables companies to reduce emissions as cheaply as possible. We all know the example of how trading has worked to achieve cost-effective reductions in emissions of the pollutants that cause acid rain. In fact, it was because of the United States’ successful use of trading to reduce sulfur emissions that our country insisted that trading be a central element of the Kyoto Protocol. And now, inspired by Kyoto, the European Union is on the verge of launching the broadest emissions trading system ever established.
What’s more, right here in the United States, nine Northeastern governors, led by New York Governor George Pataki, are developing a multi-state regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants. This effort is proceeding well, and we expect them to complete their work by this spring, with agreement on a model rule.
Now, it will probably be some time before we establish a national, economy-wide cap-and-trade system in the United States—the political support for it is not there. But what might be possible is a series of interlinked trading systems – the east coast with Europe and perhaps with Canada and the west coast as well. Such a “bottom-up” system could be robust enough both to achieve some environmental benefit and to keep costs down. And it would be a valuable learning experience for both sides on this issue, hopefully one that would show that taking action to protect the climate is both practical and affordable.
Of course, cap-and-trade is not the only broad policy that we need to think about. We also need a climate-conscious energy policy for the United States. In Great Britain, the government has developed an energy blueprint for the next 50 years that makes climate change a key driver of that country’s energy policy, along with price and security of supply. The United States would be wise to follow suit.
I have tried in these remarks to talk about what we need to do here at home in order to approach the climate issue in a serious way. We need a robust, climate-friendly energy policy. Incentives and requirements for clean technologies. A cap-and-trade program to reduce emissions at the lowest cost. But it is important to remember that we need to engage on this issue at the international level too. Climate change is a global problem. Even if we were to get dead serious about reducing our emissions tomorrow, we won’t get where we need to be unless all countries become a part of the solution.
In December, as many of you know, delegates from the United States joined representatives of other nations at a climate meeting in Buenos Aires. The ostensible purpose of the meeting was to tie up any loose ends that remained before the Kyoto Protocol goes into force in February. The Protocol, of course, is the international agreement that commits all of its signatory countries to specific targets for reducing their greenhouse gas emissions before 2012. The Buenos Aires meeting also, it was assumed, would begin to lay the groundwork for the next steps in the international climate effort – in other words, what happens after 2012?
The only problem with the latter assumption is that the United States, which is not even a party to the Protocol, was opposed to any discussion of the future. In a truly Orwellian quote, the lead U.S. negotiator at the meeting was heard to say, “We need to absorb and analyze lessons learned before committing to new actions.” End quote. New actions? I didn’t know that we had committed to any old actions. And it is hard to learn any lessons when you’re doing next to nothing.
We might as well have had Michael Crichton as the head of our negotiating team. At least he would have made it more interesting.
In any case, the events in Buenos Aires underscore how far the U.S. has strayed since 1992, when President George H.W. Bush signed the United Nations Framework Convention on Climate Change. This is the treaty where the nations of the world acknowledged that climate change was a problem and pledged to act – voluntarily, I might add – to reduce their emissions. Even during the Clinton administration, despite signing the Kyoto Protocol, we clearly were not willing to own up to our global responsibility on this issue.
Climate change requires that we act at both the international and the national levels, and my goal today has been to give you some ideas and examples of the kinds of things we need to do. Now, at this point I could wrap up by remarks by comparing what we need to do with what is actually happening. And, I would start by talking about the relatively low level of investment in this issue on the part of the federal government. I would then have to mention the Administration’s goal of growing our emissions. And I would come back again to our reluctance to enter the debate on how we might move forward on this issue globally. But I don’t want to leave you depressed, particularly given the fact that you have had such frightening weather these last few weeks.
Instead, I will leave you with a look on the bright side of this issue. Because, despite everything else, we have seen a few signs of progress in the past year. One of these, of course, is the fact that the Kyoto Protocol is ready to enter into force in February – no matter what you want to say about it, this is an historic achievement. And, in a related development that I already mentioned, we have seen the launch of the EU trading system for carbon dioxide – it is another historic achievement and, hopefully, the first of many such trading systems around the world.
Next, I want to pay tribute to British Prime Minister Tony Blair, who has spent a good part of the past year touting climate change as one of two key issues he intends to work on as president of both the EU and G-8 group of industrialized nations.
Yet another thing to celebrate is the work of many U.S. states to get a handle on this issue, even despite the lack of action in Washington. I mentioned the work of the Northeastern governors on cap-and-trade. And I also talked about what’s happening here in California with regard to motor vehicle emissions. And there are many more stories from the states about people stepping up to their responsibility to act. U.S. states are a large source of greenhouse gas emissions – California’s exceed those of Brazil. And, while national policies are essential, we also need the states to do their part.
Last but not least, I want to celebrate what is happening in many corners of the business community to address this problem. Many of the companies we work with at the Pew Center are adopting voluntary targets for reducing their greenhouse gas emissions. And, not only that, they are taking action to meet their targets by investing in new technologies, increasing efficiency, and developing energy-saving products, clean fuels, biomass energy, and more.
In closing, let me say that the forecast for the future needn’t be gloomy. A lot is happening to address the climate change problem. But we need to do a lot more. And I encourage all of you to do what’s needed to make sure your state remains a leader in addressing this issue in the years ahead. We need to show that solutions are within our grasp, that smart, forward-thinking policies can drive the development and deployment of new, low-carbon technologies, and that progress is possible.
Climate change is the most important global environmental challenge we will face in the years ahead. Don’t let anyone tell you it’s fiction. You know better. And it is going to be people like you who come up with the solutions we need.
Thank you very much.
Comparison of Passenger Vehicle Fuel Economy and GHG Emission Standards Around the World
Prepared for the Pew Center on Global Climate Change
Feng An, Energy and Transportation Technologies LLC
Amanda Sauer, World Resources Institute
Download Entire Report (pdf)
POLICY FORUM: CLIMATE POLICY
An Effective Approach to Climate Change
By Eileen Claussen
Enhanced online at www.sciencemag.org/cgi/content/full/306/5697/816
Originally published October 29, 2004: VOL 306 SCIENCE
The Bush Administration’s “business as usual” climate change policy (1), with limited R&D investments, no mandates for action, and no plan for adapting to climate change, is inadequate. We must start now to reduce emissions and to spur the investments necessary to reduce future emissions. We also need a proactive approach to adaptation to limit the severity and costs of climate change impacts.
Science and Economics
Those who are opposed to national climate change policies make much of the uncertainties in climate models, specifically the rate and magnitude of global warming. The Climate Change Science Program’s plan, points out Secretary Abraham, would address these uncertainties, although he offers no assurances that the program will be adequately funded. However, the scientific community already agrees on three key points: global warming is occurring; the primary cause is fossil fuel consumption; and if we don’t act now to reduce greenhouse gas (GHG) emissions, it will get worse.
Yes, there are uncertainties in future trends of GHG emissions. However, even if we were able to stop emitting GHGs today, warming will continue due to the GHGs already in the atmosphere (2).
National climate change policy has not changed significantly for several years. The first President Bush pursued a strategy of scientific research and voluntary GHG emissions reductions. The new Climate Change Science Program has a budget comparable, in inflation-adjusted dollars, to its predecessor, the Global Climate Research Program, during the mid-1990s. The Administration’s current GHG intensity target will increase absolute emissions roughly 14% above 2000 levels and 30% above 1990 levels by 2010 (3). These increases will make future mitigation efforts much more difficult and costly.
While reducing uncertainty is important, we must also focus on achieving substantial emissions reductions and adapting to climate change.
Low-Carbon Technology Development
The Administration’s more substantive R&D initiatives, such as Hydrogen Fuels and FutureGen (clean coal) are relatively modest investments in technologies that are decades away from deployment. We need a far more vigorous effort to promote energy efficient technologies; to prepare for the hydrogen economy; to develop affordable carbon capture and sequestration technologies; and to spur the growth of renewable energy, biofuels, and coal-bed methane capture.
Equally important, we need to encourage public and private investment in a wide-ranging portfolio of low-carbon technologies. Despite the availability of such technologies for energy, transportation, and manufacturing, there is little motivation for industry to use them. Widespread use of new technology is most likely when there are clear and consistent policy signals from the government (4).
One-fifth of U.S. emissions comes from cars and trucks (5). The Administration’s targets to improve fuel economy for light trucks and “sports utility” vehicles (SUVs) by 1.5 miles per gallon over the next three model years fall far short of what is already possible. California is setting much more ambitious emission standards for cars and light trucks. Current efficiency standards can be improved by 12% for subcompacts to 27% for larger cars without compromising performance (5).Hybrid vehicles can already achieve twice the fuel efficiency of the average car.
About one-third of U.S. emissions results from generating energy for buildings (6). Policies that increase energy efficiency using building codes, appliance efficiency standards, tax incentives, product efficiency labeling, and Energy Star programs, can significantly reduce emissions and operating costs. Policies that promote renewable energy can reduce emissions and spur innovation.Sixteen states have renewable energy mandates (7).
The Power of the Marketplace
Policies that are market driven can help achieve environmental targets cost-effectively. A sustained price signal, through a cap-and-trade program, was identified as the most effective policy driver by a group of leaders from state and local governments, industry, and nongovernmental organizations (NGOs) (8).
Senators Lieberman (D–CT) and McCain’s (R–AZ) 2003 Climate Stewardship Act proposes a market-based approach to cap GHG emissions at 2000 levels by 2010. The bill, opposed by the Administration, garnered the support of 44 Senators. Nine Northeastern states are developing a regional “cap-and-trade” initiative to reduce power plant emissions. An important first step would be mandatory GHG emissions reporting.
Adapting to Climate Change
An important issue that Secretary Abraham failed to address is the need for anticipating and adapting to the climate change we are already facing. Economic sectors with long-lived investments, such as water resources, coastal resources, and energy may have difficulty adapting (9). A proactive approach to adaptation could limit the severity and costs of the impacts of climate change.
By limiting emissions and promoting technological change, the United States could put itself on a path to a low-carbon future by 2050, cost-effectively. Achieving this will require a much more explicit and comprehensive national commitment than we have seen to date. The rest of the developed world, including Japan and the European Union, is already setting emission-reduction targets and enacting carbon-trading schemes. Far from “leading the way” on climate change at home and around the world, as Secretary Abraham suggested, the United States has fallen behind.
References and Notes
1. S. Abraham, Science 305, 616 (2004). |
2. R. T. Wetherald, R. J. Stouffer, K. W. Dixon, Geophys. Res. Lett. 28, 1535 (2001).
3. “Analysis of President Bush’s climate change plan” (Pew Center on Global Climate Change,Arlington,VA, February 2002); available at www.c2es.org.
4. J. Alic, D. Mowery, E. Rubin, “U.S. technology and innovation policies: Lessons for climate change” (Pew Center on Global Climate Change,Arlington,VA, 2003).
5. National Research Council, “The effectiveness and impact of corporate average fuel economy (CAFÉ) standards” (National Academies Press, Washington, DC, 2002).
6. “U.S. greenhouse gas emissions and sinks: 1990–2002”(EPA/430-R-04-003, Environmental Protection Agency, Washington, DC, 2002), Table 3–6.2002.
7. Workshop proceedings, “The 10-50 solution: Technologies and policies for a low-carbon future,”Washington, DC, 25 and 26 March 2004 (The Pew Center on Global Climate Change and the National Commission on Energy Policy, Arlington,VA, in press).
8. J. Smith, “A synthesis of potential climate change impacts on the United States” (Pew Center on Global Climate Change, Arlington,VA, 2004). Published by AAAS
For Immediate Release:
October 13, 2004
Katie Mandes 703-516-4146
CLIMATE POLICY AND TECHNOLOGICAL CHANGE
New Report Examines How Cimate Policies Affect the Cost of Greenhouse Gas Mitigation
Washington, DC — With Russian ratification of the Kyoto Protocol now likely, the development and deployment of technologies to reduce global emissions is more critical than ever. While technological change occurs naturally as companies compete in the marketplace, climate policies can spur additional or “induced” technological change (ITC).
Induced Technological Change and Climate Policy, by Larry Goulder of Stanford University, explores the use of ITC in climate policy, using state-of-the-art economic modeling and analysis. Goulder finds that models that include ITC produce lower cost estimates for GHG reductions, and that costs are lowest when climate policies are announced in advance. Furthermore, he finds that to reduce greenhouse gas emissions most cost-effectively, both policies that boost technological innovation, such as R&D funding, and policies that limit emissions, such as a GHG cap-and-trade program, are required.
“This research shows us that the costs of meeting a long-term CO2 emissions target using both R&D subsidies and a carbon tax (or cap-and-trade) is roughly 10 times less than with R&D subsidies alone,” said Eileen Claussen, President of the Pew Center on Global Climate Change.
A crucial point is that although studies show different implications of ITC on the overall timing of climate policy, all find that some abatement must begin now in order to jumpstart the critical process of technological change. “Timing is crucial for dealing with this issue in a cost-effective manner; the longer we wait, the more expensive it will be,” said the Pew Center’s Claussen.
The full text of this and other Pew Center reports is available at http://www.c2es.org.
The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan 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.
U.S. CLIMATE POLICY:
WEBCASTS AND TRANSCRIPTS (in PDF)
THURSDAY JUNE 24, 2004 (full transcript)
Strobe Talbott, President, The Brookings Institution (webcast/transcript)
Eileen Claussen, President, Pew Center on Global Climate Change
Science, Security, and Economics
Moderator: David Sandalow, Environment Scholar, The Brookings
Donald Kennedy, Editor in Chief, Science (webcast/transcript)
R. James Woolsey, Vice President, Booz Allen Hamilton (webcast/transcript)
C. Fred Bergsten, Director, Institute for International Economics
Question and Answer Session (webcast/transcript)
Climate Change: The Policy Challenge
Joseph I. Lieberman, United States Senate (webcast/transcript)
Spencer Abraham, Secretary, Department of Energy (webcast/transcript)
Michael Morris, Chairman, President, and CEO, American Electric Power
Larry Schweiger, President and CEO, National Wildlife Federation
Roundtable: Action by States and Business (webcast/transcript)
Moderator: Sally Ericsson, Director of Outreach, Pew Center on Global Climate
Jo Cooper, Vice President for Government Relations, Toyota
Douglas Foy, Secretary of Commonwealth Development, Massachusetts
Chris Mottershead, Distinguished Advisor BP
Stephanie Timmermeyer, Secretary of Department of Environmental Protection,
Domestic Climate Policy
Eileen Claussen, President, Pew Center
John Rowe, Chairman and CEO, Exelon Corporation (webcast/transcript)
John McCain, United States Senate (webcast/transcript)
Question and Answer Session (webcast/transcript)
FRIDAY JUNE 25, 2004 (full transcript)
Domestic Climate Policy (Cont.)
James Connaughton, Chairman, White House Council on Environmental Quality
Wayne Gilchrest, U.S. House of Representatives (webcast/transcript)
International Climate Action
Stephen Timms, Energy Minister, United Kingdom (webcast/transcript)
Elliot Diringer, Director of International Strategies, Pew Center on Global Climate
Nigel Purvis, Brookings Scholar on Environment, Development and Global Issues,
The Brookings Institution (webcast/transcript)
James Wolfensohn, President, The World Bank Group (webcast/transcript)
Closing Remarks (webcast/transcript)
ENERGY EFFICIENCY, CLIMATE CHANGE AND OUR NATION’S ENERGY FUTURE
Remarks by Eileen Claussen
Energy Efficiency Forum, Washington D.C.
June 16, 2004
It is a pleasure to join you to talk about energy efficiency, climate change and our energy future. I understand that the organizers of the forum, in seeking someone to make the connection between energy efficiency and climate change, originally extended an invitation to Dennis Quaid. Mr. Quaid is the actor, of course, who plays a climatologist in the film The Day After Tomorrow, which in case you have not heard is a movie currently in theaters that turns climate change into a global Armageddon. I am sorry to report, however, that Mr. Quaid’s flight was delayed by tornadoes, tidal surges, flooding and hail. So you will have to settle for me.
That was a joke. And now I will move on to more serious things. I know you have heard from many experts today about many different topics, so I want to be brief and make seven quick points.
My first point is that any discussion of energy policy to deal with three issues. The first is energy supply (and therefore security) – Can we find enough energy to meet our needs from sources that are secure? The second issue is climate change – Can we provide the energy we need in ways that do not harm the climate? Last but not least is the issue of cost or price – Can we meet our energy needs in affordable ways that will allow us to continue to grow our economy?
Looking across these three issues, it is clear to me that what we need is a climate-friendly energy policy on the one hand and an economy-friendly climate policy on the other. Some elements of these policies will be the same, but the important point is that we need to think broadly about how best to achieve the related goals of protecting the climate and meeting America’s energy needs affordably in the decades ahead.
My second point is that, looking across these three issues I have mentioned – supply, climate and cost – energy efficiency is an obvious “win-win-win.” Supply and security become less of a problem to the extent that we can save energy through efficiency efforts. Every barrel of oil or ton of coal that we do not burn because we are more efficient means less carbon dioxide in the atmosphere. And, on the cost issue, of course, energy efficiency is relatively cheap and can, in many cases, actually save money.
At the Pew Center, we work with 38 leading businesses that are taking practical steps to reduce their contribution to climate change. Many of the members of our Business Environmental Leadership Council are embracing energy efficiency as a key strategy, and they are reaping remarkable rewards. For example:
· DuPont used 9 percent less total energy in 2002 than it did in 1990, despite an almost 30-percent increase in production. The resulting energy savings: nearly $2 billion.
· Another example is IBM. Between 1990 and 2002, IBM’s energy conservation measures resulted in savings of 12.8 billion kilowatt hours of electricity, avoiding nearly 8 million tons of CO2 emissions and saving the company $729 million in reduced energy costs.
I have often said that there is no silver bullet solution to the problem of climate change – in other words, it is a problem that will require multiple solutions. But when you hear these stories—and when you look at the need to address climate change alongside the need to keep America safe and economically strong—you start to see how energy efficiency is about as close as you can get to a silver bullet. It is not the only answer, but anyone who would suggest that it is not an essential part of the solution is not seeing clearly. We would be foolish not to make it a priority.
But, of course, energy efficiency alone will not solve our energy and climate problems. And that is my third point. U.S. energy intensity is already improving by 1.5 percent per year. If we could accelerate this rate to 2 percent per year, energy use in 2050 would be nearly 50 percent lower than it would otherwise be, but still up 60% from current levels—clearly not where we need to be if our energy sources are not carbon-friendly.
So what these figures do tell us is that energy efficiency is an essential component – but not the only component – of any long-range effort to protect the climate.
And this brings me to my fourth point. We need a wide-ranging portfolio of technologies and strategies. We need to create the conditions for a new industrial revolution that will reach across each of the major energy-producing and -consuming sectors of our economy. And every technology that could potentially play a part in this revolution comes with challenges – challenges that we can frame, once again, in terms of the three issues of supply, climate and cost.
With use of natural gas, for example, we can limit our emissions of greenhouse gases, but there are real challenges in terms of supply and cost. With coal, by contrast, it is the climate and not cost or supply that we need to worry about (unless we put real effort into carbon capture and sequestration and can make it work at an affordable price). Cost, of course, is an important challenge for nuclear power, as are considerations of waste and weapons proliferation. And cost is also a challenge with renewables--a challenge that clearly influences the supply and use of these technologies. When we look at oil, we see challenges in all three areas. The world may have ample supplies overall, but the security of those supplies is an obvious concern, as are the price and the climate. And finally, is there a silver bullet in the hydrogen economy? Here there are many challenges, from infrastructure changes to the very important question of where the hydrogen comes from. We cannot forget that if it comes from coal, and there is no carbon capture and sequestration, we are better off with conventional fuels.
In other words, there is no technology without a challenge, and no technology that can by itself be “the” energy solution to meet our needs. We need to consider the full range of solutions available to us, work on them all, and try to meet the challenges and opportunities each present.
This brings me to my fifth point. While it is clear that we need a portfolio of technologies, I believe it is also clear that we need a policy that will draw the technologies into the marketplace. In other words, the “if you build it, they will come” energy strategy is not a realistic one.
Just last year, the Pew Center brought together a group of businesses and experts to explore three very different future energy scenarios for the United States. And what they found was that even in the scenario where we modeled the most optimistic assumptions about the cost and performance of new energy technologies, carbon emissions were still rising in 2030. This result points to the need for a mandatory carbon policy -- raising the question of what that policy should be.
Which brings me to Point Number Six. In the same way that no single energy technology solution will solve all of our problems, no individual policy solution will be enough to do the job.
As I said at the start of my remarks, we need both a climate-friendly energy policy and an economy-friendly climate policy. There will be a lot of overlap, of course, but the problem of climate change demands targeted policies. More than anything else, that means adopting a cap-and-trade system for large sources of greenhouse gas emissions that begins to yield real reductions in those emissions—and that does so in a way that gives companies a high degree of flexibility and keeps overall costs under control. This is the approach at the heart of the legislation introduced last year by Senators Joseph Lieberman and John McCain. A companion measure was introduced in the House of Representatives this spring.
But at the same time that we are crafting targeted climate policies, we also need to craft an energy policy for this country that will keep us safe and our economy strong—while also providing climate benefits. Here, I think we need both carrots and sticks. Some carrots should be in the form of substantial (and I mean very substantial) funding and public-private partnerships for research, development and demonstration of new carbon-friendly technologies. Others should be in the form of incentives and rewards for bringing to the market new, carbon-friendly technologies. But we also need sticks. Examples of sticks include efficiency standards for everything from appliances to automobiles and trucks, as well as renewable energy mandates.
So there we have it: a portfolio of technologies and a portfolio of policies. And that brings me to my seventh and final point. It is going to take a great deal of political will to pull this off. One piece of legislation, one high-profile initiative or one high-profile technology is not going to be enough to create a new industrial revolution. In the years and decades to come, we are going to need a sustained commitment to this agenda from our national leaders.
Right now, we are beginning to see the stirrings of that political will. The McCain-Lieberman bill attracted the support of 44 U.S. senators, a respectable number and an indication of growing support for U.S. action on the climate issue. Even more encouraging is the action we are seeing at the state level on this issue:
· For example, New York and nine other mid-Atlantic and northeastern states are discussing a regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants.
· And, in California, the state’s Air Resources Board is working to set greenhouse gas emission standards for new passenger cars and light-duty trucks, starting in model year 2009.
That is what I call political will, and we need a lot more of it. If we want to go on a diet – and a “low-carb” diet is what we need – we are going to need all the will power we can muster. We need to build a low-carbon economy, and we need to have it in place by the middle of this century. And that means making a real commitment to a climate-friendly energy policy and an economy-friendly climate policy.
It is not every generation that has a chance to launch a new industrial revolution. History has presented us with an awesome responsibility to the generations to come. And we will forever be remembered for the manner in which we respond.
Thank you very much.
Global Climate Change and Coal's Future
Remarks by Eileen Claussen
President, Pew Center on Global Climate Change
Spring Coal Forum 2004 - American Coal Council
May 18, 2004
It is a pleasure to be here in Dallas. And I want to thank the American Coal Council for inviting me to address this forum.
I thought I would open my remarks today with some commentary on the upcoming FOX movie about climate change—it is entitled “The Day After Tomorrow.” It is not often, after all, that I get to talk about the movies in my speeches. And I suppose that’s because there are not a lot of movies on the topic of climate change—of course, I am not counting “Some Like It Hot.”
In case you haven’t already heard, “The Day After Tomorrow” comes out Memorial Day weekend. It is a movie that tries to show the consequences of climate change by letting loose tornadoes in Los Angeles, dropping grapefruit-sized hail on Tokyo, and subjecting New York City to a one-day shift from sweltering-to-freezing temperatures.
The only thing I can say is it’s a dream scenario for the people at The Weather Channel.
Actually, the reason I bring this up is because we are bound to be hearing a great deal about the issue of climate change over the next several weeks. This is a major motion picture with a major marketing push behind it.
And, while I know of no one in the scientific community who believes climate change will unfold in the way it is portrayed in the film, I also know this: If this movie sounds far-fetched, it is frankly less of a distortion—much less—than the argument that climate change is a bunch of nonsense. It is not. Climate change is a very real problem with very real consequences for our way of life, our economy and our ability to ensure that future generations inherit a world not appreciably different from our own.
I strongly believe it is time for some straight talk about the problem of climate change and what it means for you - the coal industry. So while my remarks here today are also relevant to the oil and gas industry, I believe coal to be in a more precarious position, and I believe that for 2 reasons: 1) I think coal is an easier target politically and 2) oil and gas are already involved in the policy process. So despite the current outlook for coal in the United States, I am here to say that a robust future for coal is not a sure thing, particularly if we do not find environmentally acceptable and cost-effective ways to use it.
So let’s look at some facts.
Here in this country, as all of you know very well, coal provides 52 percent of all electricity, more than double the amount of any other fuel source and five times more than gas, oil or hydro-electric power. Coal is the most abundant energy source today, it is dispersed throughout the world, and it is available at a relatively low cost. Worldwide coal consumption, according to the U.S. Energy Information Administration, is expected to grow by more than 40 percent between 2001 and 2025, with China and India accounting for three-fourths of that increase.
Given these facts, a scenario in which we meet the world’s various energy challenges without coal seems to me highly unlikely.
At the same time, however, I cannot imagine—or, rather, I fear to imagine—what will happen if over the next 50 years we do not get serious about reducing worldwide emissions of carbon dioxide and other greenhouse gases that we know contribute to climate change.
Coal alone is responsible for 37 percent of CO2 emissions in the United States. Thirty-seven percent. Worldwide, the EIA projects that coal will continue as the second largest source of carbon dioxide emissions after petroleum, accounting for 34 percent of the total in 2025.
Coal’s dominant role in the global energy mix, together with its responsibility for a large share of CO2 emissions, suggests it is high time to figure out how to continue using coal in a way that results in the least amount of harm to the global climate.
I am not going to tell you that we can address this problem with no costs. Our goal must be to ensure that the costs themselves do not become a barrier to action. I believe we can manage those costs in a way that enables continued economic growth and, equally important, in a way that causes the least amount of harm to the environment.
And finally, we must acknowledge the very real costs of not acting to address the problem of climate change. I will talk more about that later.
And so today I want to lay out for you how important it is for this industry—your industry—to become a part of the solution to climate change. I also want to talk about your role in helping to shape the policies and in developing the technologies that will allow us to reduce greenhouse gas emissions from coal generation and other sources.
But before that, I need to address the question of why I am here and why we are having this discussion in the first place. And the answer is because the threat of climate change, as I have already noted, is very real. If you still have any doubts about this, then I refer you to the findings of a special, well-balanced panel put together by the National Academy of Sciences at the request of President George W. Bush. The panel’s conclusion: the planet is warming and human activities are largely to blame. And, of course, the human activity that is most responsible is the burning of fossil fuels.
Let's get one other thing out of the way -- the Kyoto Protocol. I am not here to argue the merits of the Protocol. And I'm certainly not here to argue for ratification of Kyoto. Because I think it's pretty clear that, at least as far as the United States is concerned, the Kyoto Protocol is a dead issue. So, let's agree on that, and let's move beyond Kyoto, and talk about what really needs to happen.
This is what we know. The 1990s were the hottest decade of the last millennium. The last five years were among the seven hottest on record. Yes, the earth's temperature has always fluctuated, but ordinarily these shifts occur over the course of centuries or millennia, not decades.
Now I know there are skeptics on this issue - there might even be a few here today, so let me take a minute to talk about some of the more common misconceptions I hear.
A common one is to point to the satellites circling our planet overhead and to note that these precision instruments show no warming of our atmosphere. Global warming, some skeptics say, is therefore just an artifact of urbanization or some other miscalculation here on the ground.
All I can say about these claims is that they are dead wrong. As early as 2000, the National Academy of Sciences concluded that the warming observed on the ground was real, despite what the satellites might tell us. What’s more, since that time estimates of warming from satellites have progressively increased. Just this month, in fact, a new study in the journal Nature took a fresh look at the satellite data and found that the so-called “missing warming” had been found, bringing the satellite estimates more in line with temperatures observed on the ground.
Warming by itself, of course, is not proof of global warming. Climate conditions vary naturally, as we all know, and I am sure you have heard arguments that such natural variability, whether caused by volcanoes or the sun, can account for the climate change we’ve seen in recent decades. But, when scientists actually take a look at the relative importance of natural vs. human influences on the climate, they consistently come to the same conclusion. And that is this: observed climate change, particularly that of the past 30 years, is outside the bounds of natural variability. Atmospheric concentrations of carbon dioxide are more than 30 percent higher now than they were just a century ago. Despite what you may hear, this increase in carbon dioxide is undeniably human in origin, and it is the only way to explain the recent trends in the global climate.
Scientists project that over the next century, the average global temperature will rise between two and ten degrees Fahrenheit. A ten-degree increase would be the largest swing in global temperature since the end of the last ice age 12,000 years ago. And the potential consequences of even gradual warming are cause enough for great concern.
What will those consequences be? We can expect increased flooding and increased drought. Extended heat waves, more powerful storms, and other extreme weather events will become more common. Rising sea level will inundate portions of Florida and Louisiana, while increased storm surges will threaten communities all along our nation’s coastline, including the Texas coast.
Looking beyond our borders, we can see even broader, more catastrophic effects. Imagine, for example, what will happen in a nation such as Bangladesh, where a one-meter rise in sea level would inundate 17 percent of the country.
In addition to the obvious threat to human life and natural systems, climate change poses an enormous threat to the U.S. and world economies. Extreme weather, rising sea level and the other consequences of climate change will result in substantial economic losses.
We cannot allow the argument that it will cost too much to act against climate change to prevail in the face of the potentially devastating costs of allowing climate change to proceed unchecked.
Furthermore, the longer we wait to address this problem, the worse off we will be. The Pew Center in 2001 held a workshop with leading scientists, economists and other analysts to discuss the optimal timing of efforts to address climate change. They each came at it from a different perspective, but the overwhelming consensus was that to be most effective, action against climate change has to start right now.
Among the reasons these experts offered for acting sooner rather than later was that current atmospheric concentrations of greenhouse gases are the highest in more than 400,000 years. This is an unprecedented situation in human history, and there is a real potential that the resulting damages will not be incremental or linear, but sudden and potentially catastrophic. Acting now is the only rational choice.
But what can we do? The Pew Center on Global Climate Change was established in 1998 in an effort to help answer this very question. We are non-profit, non-partisan and independent. Our mission is to provide credible information, straight answers and innovative solutions in the effort to address global climate change. We consider ourselves a center of level-headed research, analysis and collaboration. We are also a center in another sense–a much-needed centrist presence on an issue where the discussion too often devolves into battling extremes where the first casualty is the truth.
The Pew Center also is the convenor of the Business Environmental Leadership Council. The group’s 38 members collectively employ 2.5 million employees and have combined revenues of $855 billion. These companies include mostly Fortune 500 firms that are committed to economically viable climate solutions. And I am pleased to say that they include firms that mine coal and firms that burn it—some of whom are represented here today. As members of the Business Environmental Leadership Council, all of these companies are working to reduce their emissions and to educate policy makers, other corporate leaders and the public about how to address climate change while sustaining economic growth.
And, if their work with the Pew Center proves anything, it is this: Objecting to the overwhelming scientific consensus about climate change is no longer an acceptable strategy for industry to pursue.
We need to think about what we can realistically achieve in this country and around the world and begin down a path to protecting the climate. And that means making a real commitment to the full basket of technologies that can help to reduce the adverse environmental effects of coal generation. The most promising of these technologies, of course, are: carbon capture and storage; and coal gasification, or IGCC.
Carbon capture and storage, or CCS, holds out the exciting prospect for all of us that we can continue using proven reserves of coal even in a carbon-constrained world. In only the last three decades, CCS has emerged as one of the most promising options we have for significantly reducing atmospheric emissions of greenhouse gases. Today, 1 million tons of CO2 are stored annually in the Sleipner Project in the North Sea, and several more commercial projects are in various stages of advanced planning around the world. Between off-shore, saltwater-filled sandstone formations, depleted oil and gas reservoirs, and other potential storage locations, scientists say we have the capacity to store decades worth of CO2 at today’s emission rates.
Of course, it will still take a great deal more effort before CCS is ready for prime time. In a paper prepared for a recent Pew Center workshop held in conjunction with the National Commission on Energy Policy, Sally Benson of the Lawrence Berkeley National Laboratory identified several barriers to the implementation of carbon capture and storage, or CCS. They include:
- The high costs and quote-unquote “energy penalties” of post-combustion CCS.
- The high capital costs of gasification, as well as a lack of experience with the technology in the utility sector.
- Limited experience with large-scale geologic storage.
- Uncertainty about public acceptance of CO2 storage in geologic formations.
- A lack of legal and regulatory frameworks to support widespread application of CCS.
- And, last but not least, a lack of financial resources to support projects of a sufficient scale to evaluate the viability of CCS.
Yet another technology that could potentially help to reduce the climate impact of coal generation is IGCC. Of course, IGCC’s principal benefit from a short-term environmental perspective is a significant reduction in criteria air pollutant emissions and in solid waste. But, over the long haul, IGCC has great potential to reduce CO2 emissions as well, both because, compared to pulverized coal combustion, it could result in significant improvements in efficiency, because it can be much more easily combined with CCS, and because it enables hydrogen production from coal.
But, as with CCS, IGCC still has a ways to go before it can deliver on its enormous promise. As of today, there are only two real IGCC plants in operation in the United States, but neither is operating fully on coal. Yes, the Bush administration has made a big splash with its announcement of the $1 billion FutureGEN project—which, as you know, would build the world’s first integrated sequestration and hydrogen production research power plant. But no specific plans have yet been announced.
The bottom line: these technologies—both CCS and IGCC—are nowhere near prime time. Right now, to stretch the analogy further, they are far enough from prime time to be on the air around 3 a.m. with a bunch of annoying infomercials. And they won’t get any closer to prime time without substantial investment in research and development, as well as a major policy commitment to these technologies.
The potential rewards are great. If we make the necessary commitment to CCS and IGCC, these technologies could make an important contribution to the United States’ efforts to control greenhouse gas emissions in the decades ahead. And the potential for coal to become a source of hydrogen for transportation could revolutionize the industry and our energy future.
But we need to make a commitment.
Investing in the development of these technologies, in fact, may be the only way for coal to have a long-term future in the U.S. energy mix. There will be a time in the not-too-distant future when the United States and the world begin to understand the very real threat posed to our economy and our way of life by climate change.
When that happens, those industries that are perceived as part of the problem and not part of the solution are going to have a difficult time. Allow me to put it another way: if current trends continue, there is a strong possibility that, at some point, policymakers and the public are going to see the need for drastic reductions in our emissions of carbon dioxide and other greenhouse gases. The coal industry—because of its responsibility for such a large share of those emissions—may find itself the focus of intense scrutiny and finger-pointing. And it will need to demonstrate that it is making steady and significant progress in reducing its emissions—or else face draconian policy measures.
The coal industry, of course, cannot tackle this challenge alone. Government, too, must become a part of the solution, and this is not just a matter of technology policy; there is a need for a broader climate policy. I mean a policy that sets a national goal for greenhouse gas emissions from ALL important sectors - including transportation, utilities and manufacturing - and then provides companies and industries with the flexibility to meet that goal as cost-effectively as possible. This is the approach taken in the Lieberman-McCain Climate Stewardship Act.
The need for a broader climate policy was the key conclusion of a recent Pew Center study that looked at three future energy scenarios for the United States. Even in the most optimistic scenario where we develop a range of climate-friendly technologies such as CCS and IGCC, the study projected that we will achieve no net reduction in U.S. carbon emissions without a broader policy aimed at capping and reducing those emissions.
So the challenge before us is clear: we need to craft a wide-ranging set of policies and strategies to reduce humanity’s impact on the global climate. And coal needs to be proactively and positively engaged—much more so than has been the case thus far.
I am pleased to report that there are elected leaders at the state level and in Congress who understand the importance of government action. In Congress, of course, last year we saw the Climate Stewardship Act introduced by Senators Joseph Lieberman and John McCain. This measure, which would establish modest but binding targets for reducing U.S. greenhouse gas emissions, attracted the support of 43 senators—a respectable number and an indication of growing support for U.S. action on this issue. A companion measure to the Senate bill was introduced in the House of Representatives earlier this year.
Policymakers, particularly at the state level are moving beyond debate to real action on this issue. Among the examples:
- Thirteen states, including Texas, now require utilities to generate a specified share of their power from renewable sources.
- New York and nine other mid-Atlantic and northeastern states are discussing a regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants.
- And, last September, the governors of three Pacific states—California, Oregon, and Washington—announced that they will be working together to develop policies to reduce emissions from all sources.
So the fact is, we have a lot of people in government at the state and federal levels who are beginning to look seriously at this issue and who are trying to figure out how best to respond. So the coal industry needs to be at the table now, because the policy discussion has begun.
But understand - getting to the table is not just a matter of showing up and saying, “Let’s talk.” To earn a seat at the table, coal is going to have to demonstrate that it is committed to real and serious action on this issue. And as you are probably aware, some of your competitors from a climate change perspective - the gas, oil and renewable industries are already there.
The benefits of active involvement by industry in environmental policy became clear to me during negotiations on the Montreal Protocol.
An important reason for the success of that agreement, I believe, is that the companies that produced and used ozone-depleting chemicals—and that were developing substitutes for them—were very much engaged in the process of finding solutions. As a result, there was a factual basis and an honesty about what we could achieve, how we could achieve it, and when. And there was an acceptance on the part of industry, particularly U.S. companies, that the depletion of the ozone layer was an important problem and that multilateral action was needed.
In the same way, industry involvement was an important part of the process that developed the Acid Rain Program created under the Clean Air Act Amendments of 1990. And, once again, those with a seat at the table, by and large, came out with a policy they could live with. Those who were not at the table were not as happy with the outcome.
It is a basic principle of democratic governance: the more you get involved in the process and in shaping solutions, the more likely it will be that those solutions are agreeable to you. Or, as the Chinese proverb puts it, “Tell me, I forget. Show me, I remember. Involve me, I understand.” For those of you who think there is no possible configuration that would allow the coal industry, government and environmental advocates to sit around one table—I am here to tell you that I for one am willing to make the seating arrangements work. Because we need them to work.
Whether the issue is public-private partnerships, incentives for technology development, or the level and timing of reductions in emissions, coal has a chance to shape the right solutions.
What are the right solutions? A lot of it has to do with technology—and, more specifically, with the policies needed to push and pull solutions such as CCS and IGCC to market. (Let me say here that I don’t want to leave the impression that these are the only technologies we need to look at because there are others, such as coalbed methane, that show enormous promise as well.)
I will say it one more time: coal’s place in the U.S. and global energy mix in the decades to come will depend largely on the industry’s ability, in concert with government, to develop the technologies that will allow us to achieve dramatic reductions in carbon emissions from coal generation. Without those technologies, coal loses out when the United States and the world finally appreciate the need for serious action to address this very serious problem.
In closing, I want to note that the promotional materials for the film, “The Day After Tomorrow,” ask the question: “Where will you be?” It is my sincere hope that, whether you go and see the movie or not, this industry will be on the side of solutions to this very urgent problem.
I honestly believe you don’t have much of a choice. After all, a mine is a terrible thing to waste.
Thank you very much.
The 10-50 Solution: A Decade-by-Decade Approach to Climate Change
Remarks by Eileen Claussen
President, Pew Center on Global Climate Change
April 22, 2004
Thank you very much. It is a pleasure to be in Minneapolis. I know this may date me, but as I was on my way here to the home of the old Mary Tyler Moore show, I was reminded of an exchange between Mary and her boss, Lou Grant.
Lou Grant says, “You know, Mary, you’ve got spunk.”
“Well, thank you, Mr. Grant,” says Mary.
“And you know what?” says Lou. “I HATE spunk.”
In all seriousness, I honestly believe that everyone at this conference has spunk. And, unlike Lou Grant, I am a big fan of it. The reason you have spunk is that you are the leaders of the sustainability movement in America. And I am honored to be with such a distinguished group of environmental problem-solvers to celebrate Earth Day—or, as the Bush administration calls it, Thursday, April 22nd.
On the occasion of the 34th anniversary of Earth Day, I believe it is important to acknowledge how far we’ve come in that time. In 1970, after all, we had a lot of people driving around in monster vehicles powered by gas-guzzling V-8 engines. Today, by contrast, we have, well, a lot of people driving around in monster vehicles powered by gas-guzzling V-8 engines. The more things change, the more they stay the same.
Seriously, we have made significant progress on these issues since the 1970s—but, obviously, not nearly enough. And today we have a choice.
We can fall over ourselves seeking short-term gains for our businesses and society—potentially at great expense to our future. Or, we can think ahead—there’s a novel idea—and invest in strategies, processes and ideas that will help to ensure that our businesses—and, indeed, our life as we know it—are still around 10, 20, or 50 years down the line.
In attending this conference, I know that all of you have made the second choice. And I congratulate you for your commitment to environmental problem-solving—which I hope will be the number-one growth industry of the 21st century.
Today, I would like to talk with you about the issue of climate change. No surprise there. And, understanding that this group is looking at a wide range of environmental and sustainability topics, I want to start with a brief overview of what we know about climate change and what we are (and are not) doing in response. I will conclude my remarks by suggesting to you a new approach for addressing this enormous problem—an approach that couples a long-term vision of progress with a solid understanding of the interim steps that will help us achieve that vision.
But first a description of the problem itself. Global temperatures increased approximately 1ºF over the twentieth century, and additional warming of 2.5º to 10º F is projected over the century to come. What is causing this warming? The driving force, although not the only force, is human emissions of greenhouse gases, which grew globally by approximately 10 percent during the 1990s.
In the same vein as the standard line, “It’s not just the heat, it’s the humidity,” climate change is about much more than rising temperatures. It is also about increases in sea level, changes in precipitation, including more frequent floods and droughts, an increase in extreme weather events, as well as other effects. As if that’s not enough, substantial increases in global mean temperature could set off large-scale changes to the earth’s systems such as a shutdown of the Gulf Stream or a melting of the West Antarctic ice sheet. The thresholds are uncertain and it may take centuries for these things to happen, but it is possible that warming in the 21st century could trigger these types of events—events that, once started, will be extremely difficult, if not impossible, to reverse.
What are we doing to address this problem? At the global level, 121 countries have now ratified an agreement that would for the first time establish binding limits on worldwide emissions of greenhouse gases. I am talking, of course, about the Kyoto Protocol.
Over the last several years, there has been a lot of discussion of this treaty in political circles—much of it of a harshly critical nature—and I think it is important to remember what Kyoto is and what it is not. Most importantly, we must remember that Kyoto was never intended as the be-all and end-all solution to the problem of climate change. Rather, it was intended as a first step, a way to commit the nations of the world to real action to reduce their emissions of greenhouse gases. Right now, Kyoto’s targets take us only to 2012—just eight years away—when, in fact, we are going to have to work at this issue for decades to come.
The other thing to remember about Kyoto is that it is not only Russia’s fault that the treaty is right now in diplomatic limbo. As you may know, Kyoto cannot enter into force until it is ratified by countries responsible for 55 percent of global greenhouse gas emissions. And, right now, Russia’s signature is needed to reach the 55-percent level.
In all the talk about whether or not Russia will ratify and all the outrage that will surely surface should they decide not to, it is useful to remember that, among other big emitters, the United States and Australia have already opted out. So there is plenty of blame to go around.
Even though it remains in limbo, and even though it may never enter into force as it currently stands, the Kyoto Protocol was and remains an historic achievement—as well as a powerful instrument for bringing the countries of the world together around a common understanding of the problem and of our shared role in addressing it. It is because of Kyoto, after all, that we are finally seeing some nations get serious about reducing their emissions. The European Union, for example, has adopted a carbon dioxide emission trading program. And Prime Minister Tony Blair has committed Great Britain to a 60-percent cut in greenhouse gas emissions by 2050--the first instance of a world leader taking a long-term view on how to address this problem.
So that’s the global story. Here in the United States, we have a different story. At the federal level, we have seen no real action on this issue from either the Bush or the Clinton administrations (although Congress did engage in a serious debate about the climate issue last year). At the same time, state governments and large corporations in this country are, in many instances, taking it upon themselves to shape solutions.
Let’s start in Washington. A lot has been made of the Bush administration’s ill-mannered rejection of the Kyoto Protocol way back in 2001. But the rejection itself wasn’t really all that shocking. This was a new administration with its own ideas about how to tackle the problems of the world. Rather, what was truly shocking was that the White House offered nothing in the way of an alternative global solution—and, equally important, no real plan for reducing the United States’ contribution to the problem.
Indeed, the White House and its congressional allies were none too friendly toward a plan put forward last year by Senators John McCain and Joe Lieberman that would for the first time establish modest but binding targets for reducing U.S. greenhouse gas emissions. However, despite the opposition of the Bush administration and congressional leaders, the McCain-Lieberman Climate Stewardship Act attracted a very respectable 43 votes in the Senate, showing strong and growing bipartisan support for mandatory action against climate change in the United States. (A companion measure was introduced in the House of Representatives just last month.)
Still, for real action on this issue in the United States, we need to look to the state capitals and corporate boardrooms.
First the states. In 2002, the Pew Center released a report entitled Greenhouse and Statehouse: The Evolving State Government Role in Climate Change. In it, we surveyed state activity on this topic and found that a variety of measures that have proven controversial at the federal level--such as renewable portfolio standards, emission targets, and mandatory reporting of emissions--have indeed been implemented at the state level, often with little dissent.
The state initiatives are an important development not only because they can help pave the way for federal action but also because of the simple fact that U.S. states are large emitters of greenhouse gases. Texas, for example, emits more greenhouse gases than France, the United Kingdom, or Canada. Ohio’s emissions exceed those of Turkey and Taiwan, and emissions in Illinois exceed those from The Netherlands. Clearly, if we are intent on scrutinizing—and, hopefully, celebrating—what is happening in these and other nations to address the problem of climate change, we also must take account of the actions of individual U.S. states with comparable levels of emissions.
The Pew Center’s report makes clear that states across America have initiated programs that are achieving real reductions in their emissions.
· For example, 13 states, including Texas, now require utilities to generate a specified share of their power from renewable sources.
· Two states, Wisconsin and New Jersey, have created mandatory reporting programs for large emitters of greenhouse gases.
· Massachusetts has established a multi-pollutant cap that requires six older power plants to reduce their CO2 emissions.
· And, in California, state lawmakers have gone beyond target-setting and reporting and are working to establish direct controls on carbon emissions from cars and SUVs.
What’s more, we now are seeing groups of states begin to discuss climate solutions on a regional basis. Thus you have the agreement among New York and nine other mid-Atlantic and northeastern states to discuss a regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants. And, last September, the governors of three Pacific states—California, Oregon, and Washington—announced that they will be working together to develop policies to reduce emissions from all sources.
The second place in America, in addition to the state capitals, where real action is happening on the climate issue is in corporate boardrooms. At the Pew Center, we work with a group of leading companies that are committed to economically viable climate solutions. The 38 members of our Business Environmental Leadership Council together employ nearly 2.5 million people and have combined revenues of $855 billion. And here’s just a sampling of some of the things they are doing to reduce their emissions:
· Alcoa, for example, is developing a new technology for smelting aluminum that, if successful, will allow the company to reduce its greenhouse gas emissions to half their 1990 levels over the next nine years.
· United Technologies, or UTC, has reduced overall greenhouse gas emissions by 15 percent since 1997. In addition, the company has exceeded its goal of reducing energy consumption as a percentage of sales by 25 percent from 1997 levels.
· And, of course, I want to mention DuPont, which made a voluntary pledge to reduce its global emissions of greenhouse gases by 65 percent by the year 2010. In 2002, DuPont announced that it had achieved this target eight years ahead of schedule.
· Another company that has met its target ahead of schedule is BP, which in 2002 announced that it had reduced its global greenhouse emissions by 9 million metric tons in just four years.
All of these are important developments, and they show how increasing numbers of leading companies see a clear business interest both in reducing their emissions and in helping to shape a climate-friendly future.
But the truth of the matter is that these companies are basically freelancing—as are the states that I have mentioned. In the absence of a broader national strategy to address this problem, corporate executives and state officials are taking it upon themselves to act. We should all applaud that and encourage them to do even more. However, the global nature of the climate issue demands much broader action and a much broader strategy to bring about revolutionary change in the way we power our economy.
Consider this: in order to stabilize the global climate, global emissions must eventually fall to well below their 1990 levels. Depending upon whom you talk to, the figure ranges from 50 to 95 percent! And this would have to be achieved by the end of the century. And as I mentioned earlier, the UK already has a plan in place to reduce its emissions by 60 percent below 1990 levels by 2050. Where is the U.S.? As of 2000, we were 13.6 percent above 1990 levels, and we have no plan to reduce our emissions at all.
Clearly, individual states and a handful of companies cannot do this alone.
So how do we move forward? How do we create the impetus for broad, across-the-board reductions in emissions of greenhouse gases? At the Pew Center, we recently developed something we are calling the “10-50 Solution.” And, in case you were wondering, it is not a miracle household cleaner. Rather, it is a new way of thinking about the problem of climate change—and how to solve it.
By 10-50, we mean that we should be thinking ahead about where we want to be on this issue in 50 years (that’s the “50” part), and then identify the policies and strategies we can start pursuing in the next ten years and the decades to come so we can achieve our long-range goal. (That’s the “10” part.). In this, I am reminded of Antoine de Saint-Exupery’s advice that, “As for the future, your task is not to foresee, but to enable it.”
Here is what we know. First, we know that we need a low-carbon economy by mid-century. Second, we know that it will take a new industrial revolution to get there, and that low-carbon energy technologies will play a critical role in that revolution. And, third, we know that all signs indicate that we cannot and will not achieve a low-carbon economy if we continue on a “business-as-usual” path.
I am not here to say exactly what the alternative, low-carbon path will look like or exactly where it will take us. No one can say that. Rather, I want to point out some of the issues or guidelines we need to be thinking about as we begin to chart that path and get going.
I believe we need to be thinking about four major issues as we map our path to a low-carbon future. The first of these is technology development—in other words, how to spark an energy technology revolution.
The 1990s saw the peak of an unprecedented technology boom in computer, information, and telecommunication technologies. But we did not see this unprecedented technological change spread into the energy sector. Despite more than a few optimistic predictions to the contrary, the energy sector continues on a conventional-technology trajectory – without many signs of substantial change.
One reason for this is that there are fundamental market and policy forces that keep an energy technology revolution from happening. Developing the technology to replace the existing and entrenched energy system will require massive investment. But businesses continue to receive mixed signals from policy-makers about whether or not we are serious about getting on with the challenge. So there is not sufficient incentive to place big bets on the development and diffusion of low-carbon energy technologies.
What’s more, the federal government spends even less than the private sector on energy-related RD&D, which is particularly disappointing when you consider the importance of energy to our economy and our national security—not to mention the implications of our energy use for the environment. While there is some support for some breakthrough technology, most of the investment remains attached to carbon-intensive energy technologies.
The second issue we need to be thinking about as we look ahead to a low-carbon future has to do with what happens after we develop the technologies we need. In other words, how do we ensure that new, climate-friendly technologies can enter the marketplace and compete?
Many people who concede that government has a role in fostering energy R&D simply stop there. Once the technology is developed, they say, consumers will simply go out and buy it. In fact, experience tells us differently.
The fact that R&D alone will not get technologies into the market became clear to us through some of our work over the last few years. This past year, we finished a report that looked at historical U.S. technology and innovation policies to see what lessons could be learned for addressing climate change. One of the key insights from this report is that past government policies that go beyond R&D -- to promote downstream adoption of technologies and learning by doing -- have greatly influenced technological change. This was true in the past, and is likely to be true in the future. The bottom line is that we must have specific policies both to push and to pull these technologies into the market.
You’ll notice that I said these technologies, which brings me to the third issue we need to pay attention to: There is no technological silver bullet solution to climate change.
This problem is just too big for any single solution. At a workshop we sponsored with the National Commission on Energy Policy last month on the 10-50 solution, we convened a group of experts and business leaders to look specifically at five technologies that are sure to play a prominent role in reducing the carbon intensity of our economy. These are: energy efficiency technologies; hydrogen; carbon sequestration/coal gasification; advanced nuclear technologies; and renewables. These five technologies are obviously very important, but I want to be clear today, as I was during our March workshop, that any future portfolio of low-carbon fuels and energy technologies will surely be broader than them. For example, important fuels and groups of technologies—from coalbed methane to biofuels, ocean wave power, geothermal energy, nanotechnology, and biotechnology—may all have important roles to play in a future low-carbon energy mix.
So we have all of these technologies, and the fact remains that not one of them is likely to be deployed in the marketplace on the scale and in the time frame needed to address climate change without an explicit and unprecedented set of policies from government. Our shared challenge will be to develop policies that are broad enough and neutral enough to provide incentives for a high level of innovation across the relevant energy, materials, and information technology industries. At the same time, we need these policies to be targeted and specific enough to give promising technologies a start down the road toward significant deployment--and to do so without dampening the competitive ingenuity that is a driver of the most innovative economy in the world: ours.
This brings me to the fourth and final issue we need to be thinking about as we try to respond in a decisive and effective way to the challenge of climate change. Just as there is no technology silver bullet, there is no policy silver bullet for transitioning to a low-carbon future. According to some people, all we need is a strong technology R&D policy; in other words, forget about adopting a mitigation policy. Still others say a mitigation policy is all we need – and that even a small price signal will do the trick now and forever, amen.
At the Pew Center, we think we need both a strong R&D and a strong mitigation policy, as well as some policies that we may not even know about yet.
The Pew Center has always been a strong advocate of an economy-wide cap-and-trade policy—in other words, a policy that sets targets for greenhouse gas emissions and allows companies the flexibility to trade emission credits in order to achieve their targets. We still believe that a cap-and-trade system is an essential step in the “10-50” strategy.
But we also believe that cap-and-trade by itself will not bring about the technological revolution that is necessary. An aggressive RD&D program, government standards and codes, public infrastructure investments, public/private partnerships and government procurement all probably have some role to play. What we need to do is refine what this portfolio of options should look like, and what the timing of each of the components should be.
So those are the four things we need to be thinking about: how to develop climate-friendly technologies; how to market them; how to ensure that we are looking broadly at the many technologies that can help while paying close attention to the most promising technologies; and how to arrive at a broad set of policies that will put this country on a track to real reductions in emissions.
In closing, let me say that it is clear from all of the work that the Pew Center is doing on this issue that we need vision. We need spunk. We need people like those of you at this conference to help us move the discussion of climate change away from the divisive debate over environmental vs. economic tradeoffs. Instead, we need to focus on the concrete steps we can take—both in this decade and in the decades to come—to get a handle on this enormous problem. Each of us has a role we can play:
· If you are a manufacturer, do you have a goal and a plan for reducing your emissions and energy use and, ultimately, adopting low-carbon sources of energy?
· If you are a real estate developer or architect, what are you doing to develop the prototype homes and office buildings of 2015 or 2025—structures that achieve new levels of energy efficiency and embrace climate-friendly technologies?
· If you are an engineer, to what extent are you engineering new processes and products that will deliver significant energy savings in the decades to come? Are you engineering the systems that will help us deliver on the promise of new low-carbon energy technologies?
· And, last but not least, if you are a government official, what policies can you put forward that will help your community or your state couple a long-term vision with short-term action to address this issue?
And don’t let me forget one other important category of people: citizens. In this year of presidential and congressional elections, as well as elections at the state and local levels, all of us, as citizens, need to be engaged on this issue.
Recent history shows us that our government, whether it is in Democratic or Republican hands, has a very hard time dealing with the issue of climate change in an effective way. There are a lot of interests lined up on the side of doing nothing. But the number of people at this conference, and all the great work that you are doing to solve environmental problems, suggests to me that our side can be just as strong—and stronger.
Thank you very much.
The 10-50 Solution: Technologies and Policies for a Low-Carbon Future
A workshop sponsored by the Pew Center on Global Climate Change and the National Commission on Energy Policy
March 25-26, 2004
The St. Regis Hotel, Washington, DC
On March 25-26th, the Pew Center on Global Climate Change and the National Commission on Energy Policy (NCEP) sponsored a workshop entitled “The 10-50 Solution: Technologies and Policies for a Low-Carbon Future.” The goal of this workshop was to articulate a long-term vision for a low-carbon economy within 50 years and to discuss the technologies, industrial processes and policies needed in the short and medium term to achieve it. Over 100 policy-makers, business leaders, NGO representatives, and leading experts participated in the event.
In preparation for the workshop, the Pew Center and NCEP commissioned background papers on technological advances in five key areas (efficiency, hydrogen, carbon sequestration/coal gasification, advanced nuclear technologies, and renewables) and on policies designed to promote these and other low-carbon technologies in the marketplace. Workshop presentations and final proceedings, including a summary of common themes and policies identified during the workshop, and workshop background papers are now available.
In Brief, Number 7
Technological innovation on a global scale will be needed to mitigate global climate change. To significantly reduce emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs), three types of technological innovations are needed: (1) more efficient technologies that use less energy to deliver valuable services such as electricity and transportation; (2) technologies to expand the use of alternate energy sources with lower or zero GHG emissions, such as renewable energy (e.g., wind and solar); and (3) technologies to capture and sequester the CO2 from fossil fuels before (or after) it enters the atmosphere, such as disposal in geologic formations. Technological change will be instrumental in reducing costs, widening applicability, and improving reliability in these three categories, and will be required to reduce emissions of the non-CO2 GHGs as well.
The most effective way to bring about these innovations is through a combination of technology policy incentives that encourage climate-friendly technologies, and environmental policies such as a cap-and-trade program that limits GHG emissions. Lessons learned from the United States’ rich experience with technology and innovation policies can be applied to GHG-reduction efforts, and include the following:
- A balanced policy portfolio must support not only research and development (R&D), but also promote diffusion of knowledge and deployment of new technologies: R&D, by itself, is not enough.
- Support for education and training should supplement research funding.
- Policies that do not directly promote technological innovation (i.e., “non-technology policies”) still provide critical signposts for prospective innovators by indicating technological directions likely to be favored by future markets.
- Policy-makers should channel funds for technology development and diffusion through multiple agencies and programs, because competition contributes to policy success.
- Public-private partnerships can foster helpful, ongoing collaborations.
- Effective programs require insulation from short-term political pressures.
- Regulatory and marketplace certainty help create favorable conditions for firms to invest in new climate-friendly technologies.
- Policy-makers must be prepared to tolerate some “failures” (i.e., investments that do not pay off), and learn from them as private sector entrepreneurs do.
- In light of the inherent uncertainty in innovation, government policies should generally support a suite of options rather than a specific technology or design.
Government policies will be critical to the development and adoption of a portfolio of new technologies needed to abate global climate change. Widespread adoption of these new technologies—for electric power generation, transportation, industry, and consumer products—is required in any major effort to reduce the greenhouse gas (GHG) emissions that contribute to climate change. However, technological change on an economy-wide scale cannot happen overnight. Well-crafted government policies in both the short and long term will be instrumental in encouraging more rapid development, deployment, and diffusion of climate change mitigation technologies,1 and will be essential complements to environmental policies that set limits on GHG emissions—such as a GHG cap-and-trade program. Implementing these policies in the near term is essential for creating an environment in which technological innovation can thrive and contribute to GHG reductions. The United States—a global leader in innovation—is well placed to lead such technological change and hence enjoy benefits in terms of global competitiveness in new energy and other GHG mitigation technologies.
Private firms tend to under-invest in technology development, making government policy for technological innovation necessary. This under-investment occurs because environmental externalities (such as climate change) are undervalued. In addition, firms that invest in technology innovation cannot retain all of the benefits of their expenditures because the knowledge that they gain “spills over” to competing firms. As a result, although most innovations come from private firms, government policies of many types influence the rate and direction of technological change.
Global research and development (R&D) funding trends indicate that both governments and private firms are under-investing in energy technology R&D. In the United States, federal government energy technology R&D budgets declined 74 percent between 1980 and 1996 (from $5 billion to $1.3 billion), and were accompanied by declines in private sector investments.2 Similar funding declines have occurred throughout the industrialized world.3 Because the United States is a global leader in R&D, the nation’s under-investment in energy technology R&D has particularly disturbing implications for global efforts to address climate change. The research, development, and diffusion of new technologies necessary to address climate change will require coordination between the public and private sectors, and across nations.
This brief summarizes the role of technological change in GHG mitigation strategies, provides a taxonomy of technology policies, and gleans lessons learned from U.S. technology and innovation policies. It concludes with policy insights for spurring technological innovation in the effort to address climate change.
The Role of Technological Change in GHG Control Strategies
Climate change is one of the most far-reaching and formidable environmental challenges facing the world. The earth is undoubtedly warming, largely as a result of GHG emissions from human activities including industrial processes, fossil fuel combustion, and changes in land use, such as deforestation. Continuation of historical emission trends will result in additional warming over the 21st century, with current projections of a global increase of 2.5°F (1.4°C) to 10.4°F (5.8°C) by 2100, and warming in the United States expected to be even higher. Potential consequences of this warming include sea-level rise and increases in the severity or frequency (or both) of extreme weather events, including heat waves, floods, and droughts. The risks of these and other consequences are sufficient to justify action to significantly reduce GHG emissions.
In the United States, energy consumption is the dominant source of GHG emissions. Carbon dioxide (CO2) accounts for approximately 84 percent of total GHG emissions. Although other GHGs4 have a more powerful effect on global warming per molecule, CO2 enters the atmosphere in far greater quantities because it is produced whenever fossil fuels are burned.5 To significantly reduce these emissions, three types of technological innovations are needed: (1) increased energy efficiency for technologies that deliver valuable services like electricity and transportation; (2) technologies to expand the use of alternate energy sources with lower or zero GHG emissions; and (3) technologies to capture and sequester CO2 from fossil fuel combustion before (or after) it enters the atmosphere. Technological change will be instrumental in reducing costs, widening applicability, and improving reliability in efforts to reduce emissions of CO2 and non-CO2 gases alike.
Stabilizing atmospheric concentrations of CO2 and other GHGs at a “safe” level, the international goal under the United Nations Framework Convention on Climate Change,6 would have profound implications for industrial and industrializing economies alike. Human activity now adds around 8 billion metric tons of GHGs to the earth’s atmosphere each year, a total that is growing approximately 4 percent annually.7 A widely discussed goal of stabilizing atmospheric CO2 at twice the pre-industrial level by 2100 (i.e., at 550 parts per million, 65 percent higher than today’s concentration) implies worldwide CO2 reductions on the order of 60 to 80 percent below projected “business as usual” levels for the remainder of the 21st century. Substantial reductions in U.S. CO2 emissions would require that the United States replace or retrofit hundreds of electric power plants and substantially improve the efficiency of tens of millions of vehicles. In addition, appliances, furnaces, building systems, and factory equipment numbering in the hundreds of millions might also need to be modified or replaced.
Technological change on this scale cannot happen immediately. Many of the technologies needed do not yet exist commercially or require further development to reduce costs or improve reliability. Technology policies, such as those outlined in the next section, can help spur technological change.
A Taxonomy of Technology Policies
Technological change is a complex process with multiple stages and feedbacks. These stages include “invention” and “innovation,” which are distinct activities. Invention refers to the process of discovery that leads to scientific or technological advance, perhaps in the form of a demonstration or prototype. Innovation refers to the translation of the invention into a commercial product or process. “Adoption,” or “diffusion,” occurs when these products and processes are actually used.
Although many types of policies affect invention and innovation, no universally accepted nomenclature or taxonomy summarizes or describes them. Economists often use the term “technology policy” to describe the diverse collection of measures that somehow affect technological development, and these are the focus of this brief. Taxonomies of technology policies seldom include regulatory policies, such as environmental regulations and antitrust enforcement, which have in the past catalyzed innovation and adoption and are discussed in a subsequent section of this brief.
Different policies influence outcomes at different stages of technology development. Table 1 on pages 4–5 lists fifteen common technology policy tools grouped into three broad categories, with comments on the strengths and weaknesses of each. The first category is direct government funding for R&D. The second category is a collection of policies that directly or indirectly support commercialization and adoption, or indirectly support development. The final group includes policies that foster technology diffusion through information and learning.
Lessons Learned from U.S. Technology and Innovation Policies
Although the United States has never had a coherent set of technology policies, government actions have profoundly influenced the rate and direction of technological change. Federal policies affecting technological change began with the codification of the patent system in the U.S. Constitution. Federal land grants supported the U.S. system of publicly financed colleges and universities, which became major players in R&D and innovation. In addition, government procurement during World War I transformed an infant aircraft industry that had produced only a few hundred planes; by the war’s end, U.S. firms had manufactured some 14,000 planes, learning a great deal in the process. Government-spurred innovation accelerated in the post-World War II period. Despite the heterogeneity in federal policies—or perhaps because of it, given the high levels of uncertainty that characterize innovation—government actions have been remarkably effective. Lessons learned from this rich experience are supported by a large body of literature in economics and other fields concerning innovation, and include the following:
- Technological change is a complex process involving invention, innovation, adoption, learning, and diffusion of technology into the marketplace. The process is highly iterative, and different policies influence outcomes at different stages. For example, the U.S. government spurred diffusion of know-how in microelectronics through policies including antitrust and defense procurement. In response to a federal government antitrust suit, AT&T released technical information about the transistor (which it invented), licensed the relevant patents at nominal rates to all comers, and refrained from producing transistors for outside sale. Texas Instruments then introduced the first commercially successful transistor, and the Department of Defense (DoD) and its contractors began to design the new devices into radar, sonar, missile guidance, and communications systems, stimulating further learning and cost reductions. In addition, DoD procurement contracts stipulating that the chips be available from at least two suppliers led to the sharing of design and process know-how, which encouraged new market entrants and accelerated inter-firm technology flows.
- Gains from new technologies are realized only with widespread adoption, a process that takes considerable time and resources and typically depends on a lengthy sequence of incremental improvements that enhance performance and reduce costs. For example, several decades of significant government and private sector R&D investments occurred before gas turbines derived from military jet engines improved in efficiency and reliability to the point that they were cost-effective for electric power generation. Today, gas turbines are the leading technology for new, high-efficiency power plants with low GHG emissions.
- Technological learning is the essential step that paces adoption and diffusion. “Learning-by-doing” contributes to reductions in production costs, and adopters of new technology contribute to ongoing innovation through “learning-by-using.” Widespread adoption, in turn, accelerates the incremental improvements from learning by users and producers, further fueling adoption and diffusion. For example, an entirely new class of products emerged as Intel (and soon, other firms) designed successive families of microprocessors, based in large part on feedback from users. When Intel began work on its 386 processor family, the lead technical and marketing specialist spent six months simply visiting customers to understand the features they valued most highly.
- Technological innovation is a highly uncertain process. Because pathways of development cannot be predicted, government policies should support a portfolio of options, rather than a particular technology or design. The unforeseen explosive diffusion of the Internet during the 1990s is illustrative. Both the Internet’s technologies and many of the formal and informal governance mechanisms that evolved to coordinate its standards and infrastructure sprang from DoD-sponsored networking research and trials.
In addition to these insights gained regarding the innovation process, lessons learned from U.S. experience with technology policies over the past several decades include the following:
- Federal investments contribute to innovation not only through R&D but also through “downstream” adoption and learning. For example, in the early years of computing, defense agencies made indispensable contributions to a technological infrastructure that propelled the industry’s rise to global dominance.
- Public-private R&D partnerships have become politically popular because they leverage government funds and promote inter-firm collaboration. Partnerships may have particular advantages in fostering vertical collaborations, such as those between suppliers and consumers of energy.
- Adoption of innovations that originate outside a firm or industry often requires substantial internal investments in R&D and human resources. Smaller firms may be less able to absorb innovations without government assistance.
- Just as competition in markets helps resolve uncertainties and improves economic performance, competition within government can improve performance in fostering innovation. The messy and often duplicative structure of U.S. R&D support and related policies creates diversity and pluralism, fostering innovation by encouraging the exploration of many technological alternatives.
- Because processes of innovation and adoption are lengthy and convoluted, effective policies and programs require sustained political support. Reliable political constituencies have been essential for the development of new technologies in defense and for research in the biomedical sciences. By contrast, technology policies for addressing climate change face a discordant political environment.
Regulatory Policies and Technological Innovation
In addition to the technology policies discussed above, environmental and other regulatory policies can strongly influence the process of technological change. Regulatory policies create an overall incentive and framework for innovation by mandating pollution reductions. Such policies have influenced the development and deployment of many technologies over the past 30-plus years. For example, environmental regulations drove innovations in automobile engines and electric power plants that have contributed to widespread improvements in air quality. Regulatory policies will likewise be required to stabilize atmospheric GHG concentrations because technology policies, while important, cannot by themselves achieve the GHG reductions necessary to mitigate climate change. Rather, technology policies should be part of a comprehensive approach that includes “non-technology policies,” such as a GHG emissions cap-and-trade program.
Environmental policies respond to market failures that leave economic actors with little incentive to reduce activities that have adverse effects on society as a whole, such as releasing harmful substances into the atmosphere or water. The design of these regulations plays an important role in the extent and quality of innovation. Poorly designed environmental regulations can significantly inhibit innovation, and the overall timing and stringency of regulations can determine the extent to which innovation occurs or is used. Moreover, environmental policies must provide regulatory certainty—that is, they must reassure investors that additional future regulations will not impair the value of near-term investments made to comply with the original environmental policy. To foster the greatest innovation, environmental regulations should be designed to provide incentives to firms to both prevent and reduce pollution, such as by:
- Reducing use of polluting technologies;
- Selecting cleaner processes when installing new technologies or capital equipment;
- Continually striving to improve the environmental performance of existing processes or technologies; and
- Placing control technologies on existing plants to reduce emissions.
Regulations can be designed to assist innovation by promoting the greatest breadth of pollution reduction alternatives at the lowest possible cost. Many past environmental policies have relied heavily on “command-and-control” regulations that compel polluters to reduce their emissions to specified levels. Greenhouse gas emissions, however, are more suitably controlled through market-based approaches—such as emissions fees, pollution charges, or emissions cap-and-trade programs—because GHGs are emitted across all economic sectors around the world, and mix uniformly in the atmosphere. Thus it matters little precisely where the emission reductions take place, so long as they are real and verifiable. Traditional rate-based or technology-based standards, for example, would create little incentive for ongoing improvements in operational techniques to address climate change. The more recent turn toward “market-based” approaches for addressing climate change has created better incentives for continuous pollution reduction and technological innovation by giving firms greater flexibility and permitting compliance with regulations at lower cost.
Patterns of capital investment by businesses also can have a major impact on the success and cost-effectiveness of climate change policies.8 Capital stock, such as electricity generation plants, factories, and transportation infrastructure, is expensive and firms are often reluctant to retire old facilities and equipment. Certain policies can stimulate more rapid turnover of existing capital stock. These include putting in place early and consistent incentives that would assist in the retirement of old, inefficient capital stock; making certain that policies do not discourage capital retirement; and pursuing policies that shape long-term patterns of capital investment. In addition, even a modest carbon price could stimulate investment in new capital equipment. Likewise, uncertainty is likely to impede investment in new capital stock until the rules with respect to climate policy and other future environmental regulations are clarified.
U.S. energy and transportation policies also have influenced technology innovation and adoption. U.S. energy policy has often incorporated familiar tools of technology policy, such as tax credits for adoption of renewable energy technologies. Although the United States has long avoided energy pricing policies and fuel taxes to encourage energy efficiency, a substantial boost in gasoline taxes would likely be a powerful stimulus for innovation in automotive technologies.9 Fuel economy for cars and trucks could be increased by 25 to 33 percent over the next 10 to 15 years using market-ready technology at a net savings, if fuel savings are taken into account. However, since fuel economy is undervalued in the marketplace, policies such as mandatory GHG standards and public information are needed to pull technological improvements into the market.10 Because the goals of U.S. energy policy and the most effective methods to achieve them remain politically controversial, future choices—e.g., to encourage conservation or encourage fossil fuel production—could either support or undermine the goal of achieving GHG reductions.11
Policy Guidance for Climate-Related Technology and Innovation Policies
Greenhouse gas emission reductions will require a broad portfolio of policies to foster technology innovation and adoption by stakeholders ranging from multinational corporations to households. The policy portfolio should combine technology policies as discussed in this brief with other policies to induce innovation and deployment.12
A climate change policy response must account for uncertainties in the pace and cost of innovation. Technological evolution is always accompanied by unknowns concerning the levels of performance that can ultimately be achieved, the technological attributes that will prove most attractive to adopters, and the costs of these technologies. Technical design and development are fluid, open-ended activities with multiple choices and tradeoffs and often-ambiguous selection criteria. Uncertainties can be resolved only through learning processes. These processes are often slow and piecemeal, studded with lessons from both successes and failures. Technology-oriented policies and non-technology policies alike must function in such settings. Additional lessons for climate change policy include the following:
- Because the benefits of technological innovation come only with widespread adoption, and because adoption and learning are mutually reinforcing processes, the policy portfolio should support diffusion of knowledge and deployment of new technologies as well as research and discovery. In short, R&D alone is not enough.
- Because private investments respond primarily to near-term market incentives, public investments are necessary to build a technological infrastructure able to support innovation over the long term. A key ingredient of such infrastructure is a vibrant community of technologists and entrepreneurs working in settings in which knowledge and information flow freely. Government financial support for education and training, as well as for research, enhances such infrastructure. Intellectual property rights are important, but excessively strong intellectual property regulations may weaken such infrastructure.
- Competition among firms contributes to effective selection of innovations, and competition among academic research groups contributes to discovery. Similarly, competition among government agencies and government laboratories contributes to policy success. Competition exposes ineffectual bureaucracies, out-of-touch government laboratories, poor policy choices, and project-level mistakes. It encourages diversity by opening alternatives for exploration by technology creators and technology users alike. For these reasons, policy-makers should channel new funds for R&D through multiple agencies and allocate funds to industry and other researchers on a competitive basis.
- Because there can be no learning without some failures, policy-makers cannot expect every government investment to pay off. They must be prepared to tolerate mistakes, and to learn from them, just as entrepreneurs in the private sector do. In addition, policy-makers must be willing to accept a balanced portfolio that provides sufficient and sustained funding for both short- and long-term R&D. This means avoiding the temptation to pick “winners and losers” too early in the development phase of new technologies. Nonetheless, tolerance for error is no excuse for sloppy management or ill-conceived policies and programs.
Much technological innovation will be needed to mitigate global climate change. The most effective way to bring about these innovations is through a combination of technology policy incentives that accelerate the deployment of climate-friendly technologies and help create new markets for these products and processes, and environmental policies such as a GHG cap-and-trade program that sets limits on GHG emissions. Implementing these policies in the near term is imperative. A well-balanced portfolio of government policies that stimulates innovation, incentivizes adoption, and avoids picking winners is the best path forward to meet the challenges of global climate change.
1 Alic, John A., David C. Mowery, and Edward S. Rubin. U.S. Technology and Innovation Policies: Lessons for Climate Change. Pew Center on Global Climate Change. Arlington, VA. November 2003. This brief draws heavily from this report.
2 As calculated using constant U.S. 1996 dollars in Margolis, Robert M. and Daniel M. Kammen. “Evidence of under-investment in energy R&D in the United States and the impact of federal policy.” Energy Policy 27: 575-584. 1999.
4 The principal GHGs are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and a range of industrial gases including hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
5 From an environmental and economic standpoint, effective climate strategies should address CO2 as well as non-CO2 GHGs, and control of non-CO2 gases could be especially important and cost-effective in the near term. See Reilly, John M., Henry D. Jacoby, and Ronald G. Prinn. Multi-gas Contributors to Global Climate Change: Climate Impacts and Mitigation Costs of Non-CO2 Gases. Pew Center on Global Climate Change. Arlington, VA. February 2003.
7 Intergovernmental Panel on Climate Change. Climate Change 2001: Synthesis Report. Cambridge, UK: Cambridge University Press. 2001. This report includes a range of energy and emissions scenarios for the next century.
8 For a more complete discussion of capital cycles and their implications for climate change policy, see Lempert, Robert J., Steven W. Popper, and Susan A. Resetar. Capital Cycles and the Timing of Climate Change Policy. Pew Center on Global Climate Change. Arlington, VA. October 2002.
11 For a more complete discussion of the role of energy policy in addressing climate change, see Smith, Douglas W., Robert R. Nordhaus, and Thomas C. Roberts, et al. Designing a Climate-friendly Energy Policy: Options for the Near Term. Pew Center on Global Climate Change. Arlington, VA. July 2002.