The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
Models only provide a simplified view of our economy. In the case of the Lieberman-Warner Climate Security Act (S.2191), models can capture many of the key policy elements (e.g., the impacts of targets, timing, and offsets) but cannot incorporate all of them.
This In-Brief examines some of the models that have been used to assess the economic impacts of the Lieberman-Warner Climate Security Act (as reported out of Committee in December 2007) and puts them in context for consumers of this modeling information.
Download the In-Brief (PDF)
- Primer on Liberman-Warner Climate Security Act (S.2191) - As Reported out of Senate EPW Committee (PDF)
Vicki Arroyo, Director of Domestic Policy Analysis, Pew Center on Global Climate Change
- Insights from Modeling Analyses of the Lieberman-Warner Climate Security Act (S.2191) (PDF)
Janet Peace, Director for Markets & Business Strategy & Senior Economist, Pew Center on Global Climate Change
In this paper:
- Download Full In Brief
- Press Release
- Further Reading: Insights Not Numbers: The Appropriate Use of Economic Models
May 21, 2008
Contact: Tom Steinfeldt, (703) 516-4146
Click here to access the study.
ECONOMIC INSIGHTS OF THE LIEBERMAN-WARNER CLIMATE SECURITY ACT
Review of Six Economic Modeling Analyses Reveals Important Policy Insights
WASHINGTON, DC -- The Pew Center on Global Climate Change today releases a new study that provides critical insights regarding economic analyses of the Lieberman-Warner Climate Security Act (S. 2191). The study analyzes six major economic modeling exercises conducted to assess costs of this legislation. The Pew Center’s analysis puts the modeling results in context to provide a clear understanding of what models can - and cannot - reveal about the costs of climate policy.
The Pew Center examines the following economic modeling analyses of the Lieberman-Warner bill to derive insights about the drivers of key results and to inform effective policies.
- Energy Information Administration
- Clean Air Task Force
- American Council for Capital Formation/National Association of Manufacturers
- Massachusetts Institute of Technology
- Environmental Protection Agency
- CRA International
Key insights drawn from these modeling analyses and outlined in the Pew Center brief include the following:
- Availability of advanced, low-carbon technology is crucial to minimizing the costs of achieving greenhouse gas reductions;
- Flexibility in the timing of greenhouse gas reductions and allowing banking and borrowing of emission allowances lowers costs;
- The more offsets available, the lower the costs;
- Energy efficiency provisions reduce costs; and
- Robust economic growth is still achieved with climate policies in place.
“Stepping back from the details, all of these modeling efforts show the importance of policies that provide flexibility - like banking and offsets - and promote advanced low-carbon technologies and efficiency,” said Pew Center President Eileen Claussen. “This study delivers critical insights and demonstrates that cost-effective approaches to address climate change can be achieved with sensible policies.”
While the models offer valuable insights, they do not tell the complete story. They reveal long-term assumptions are at best only approximations. For example, accurately predicting the availability and cost of technologies 50 years in the future is nearly impossible. The models do not fully represent the Lieberman-Warner bill, often omitting potential cost-savings provisions including certain energy efficiency inducements and the Carbon Market Efficiency Board’s role in regulating allowances. The models also fail to consider the costs of inaction, and any credible analysis finds that unabated climate change will cost far more than reasonable climate policy.
As a companion to this study, a recent Pew Center paper describes the advantages and limitations of economic models for evaluating policy options. Insights Not Numbers: The Appropriate Use of Economic Models explains that economic modeling cannot predict future events or produce precise projections of the consequences of specific policies. Instead, model results are more appropriately used to provide insights into key economic relationships, to explore the impact of alternative policy designs, and to produce ranges of results based on plausible assumptions and reliable data.
For more information about global climate change and the activities of the Pew Center, visit www.c2es.org.
The Pew Center was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
Statement of Eileen Claussen, President
Pew Center on Global Climate Change
April 16, 2008
The proposal announced by President Bush today is a step backwards for U.S. climate policy. In 2002 the administration laid out a plan that allowed U.S. emissions to grow until 2012 - the current proposal will allow our emissions to grow until 2025. This proposal is a non-starter both domestically and internationally. The only good news is that this is irrelevant - both in the U.S. and globally - because this administration has only 9 months left in office and we have three presidential candidates who will take this issue seriously.
Pew Center Contact: Tom Steinfeldt, 703-516-4146
Science Friday's Ira Flatow talks with Eileen Claussen, who explains why President's Bush's new climate change proposal is a non-starter. (April 18, 2008)
On NPR's Morning Edition, Eileen Claussen discusses President Bush's climate change goals and why they are a step backward. (April 17, 2008)
A cap-and-trade system is one of a variety of policy tools to reduce the greenhouse gas emissions responsible for climate change. A cap-and-trade program sets a clear limit on greenhouse gas emissions and minimizes the costs of achieving this target. By creating a market, and a price, for emission reductions, cap and trade offers an environmentally effective and economically efficient response to climate change.
Ultimately, cap-and-trade programs offer opportunities for the most cost-effective emissions reductions. Many challenging issues must be addressed before initiating the program. Once established though, a well-designed cap-and-trade market is relatively easy to implement, can achieve emissions reductions goals in a cost-effective manner, and drives low-greenhouse gas innovation.
Resources accessible on this page help explain what cap and trade is and how it works to address the climate change challenge:
- Climate Change 101 Series: Cap and Trade explains how a cap-and-trade program sets a clear limit on greenhouse gas emissions and minimizes the costs of achieving this target.
- Cap and Trade vs. Carbon Tax
- Understanding the options for market-based mechanisms
- Carbon tax basics
- Congressional Policy Brief Series
- Climate Policy Memo Series
- Capitol Hill Briefings
- Paper: Offsets in Cap & Trade
- Brief: Policy Options to Reduce GHG Emissions from Transportation Fuels
- Op-Ed: Handling Climate Change
Response of the Pew Center on Global Climate Change to the House Energy and Commerce Committee's Climate Change Legislation Design White Paper: Competitiveness Concerns/Engaging Developing Countries
The Center commends the Committee for initiating this examination of options for addressing competitiveness and developing country engagement, in the context of domestic climate change legislation, and welcomes the opportunity to provide input on these critical issues. This submission offers a general perspective on these issues and responses to the questions posed by the Committee.
The issues of competitiveness and developing country engagement are closely related, and some policy approaches that might be incorporated into domestic climate change legislation could, to some degree, address both concerns simultaneously. However, it is important that these two issues be disentangled and that each be considered in its own right, both in order to understand their full characteristics and dynamics, and to identify policy options that may address one but not the other. Further, it is important to consider whether a particular policy approach that appears to hold promise in addressing one concern may complicate or undermine efforts to address the other.
Speech by Eileen Claussen, President, Pew Center on Global Climate Change
Pew Center State and Federal Workshop
February 25, 2008
On behalf of the Pew Center on Global Climate Change and the Pew Center on the States, I’d like to welcome you to our conference: Innovative Approaches to Climate Change: A State-Federal Workshop. I welcome the opportunity to be with all of you and kick-off this very timely conference that will examine the specific roles of Washington and the states in addressing the urgent challenge of global climate change.
As most of you know, what is happening on this issue right now is this: In the absence of federal action, states have taken the lead in designing regulatory approaches to reduce the greenhouse gas emissions that cause climate change. And while it is good that the states are acting - it does not mean the federal government is irrelevant. In fact, both Washington and the states have specific and important roles to play. And I will spend a few minutes this morning discussing what these different yet complementary roles look like and mean.
But first, let’s examine why states are acting. I think there are three reasons: risks, opportunities and authority. States are very close to what is happening - they see the risks that climate change poses to their states – not just higher temperatures and heat waves, but more coastal flooding, more intense rainfall, higher levels of drought, increases in the number and intensity of wildfires, and more. But many states also see opportunities in responding proactively to climate change, including developing new industries in alternative energy, applying information technology to buildings to improve energy efficiency, and improving the quality of life for their citizens through smarter growth.
States also recognize that they have real authority to reduce emissions. They are empowered to take action. States can promote clean electricity and energy efficiency with policy tools such as net metering, green pricing, and public benefit funds. States have authority to adopt building efficiency codes, which can have a major impact when you consider that energy use in buildings produces about 43 percent of U.S. carbon dioxide emissions. States also have great control over smart growth policies and transportation policies aimed at reducing emissions from cars and trucks. These are examples of things that fall within a state’s authority and in many instances, outside the authority of the federal government.
But what about the federal government? Washington most assuredly has been absent from the effort to reduce U.S. emissions, as I have said. But there are signs this will change, probably in the next couple of years. And so, when the federal government finally chooses to act, is there a risk that it might come in and supercede all the good and thoughtful work of the states?
I think not. I think the question of federal vs. state action on climate change is not a question of either/or. My thesis is that the states can do some things (indeed they are better suited to do some things) and Washington can do other things that only Washington can do. And I think there is more than enough responsibility and hard work to go around.
For example, certain actions, if they are taken nationally, can be more cost-effective. And we also have to keep in mind that there is no guarantee that all states would act individually. In order to reduce emissions of greenhouse gases, and to do so both cost-effectively and to the levels scientists say are necessary, I do believe we need the federal government to step up to the plate at the same time that the states are doing their part.
One of the things that Washington can and should do is to create a national cap-and-trade program to reduce greenhouse gas emissions. Cap-and-trade has been embraced by business and political leaders from both parties as the best and most cost-effective way to achieve real, specified reductions in emissions. But cap-and-trade works best when it covers many emission sources.
The more states, or the more countries, that are part of the system, the more you can achieve efficiencies of scale and the more you can lower the cost of reducing emissions. This is why many states are reaching across their borders to establish regional cap-and-trade programs. They understand that the economics of cap-and-trade get better when more states and more communities are involved. But if regional approaches are better than going state-by-state, it is also true that a national approach is better than doing this on a region-by-region basis.
Ultimately, we need a national cap-and-trade program like the one making its way through the U.S. Senate. This plan aims to reduce emissions across the country and levels the playing field for businesses in all 50 states. It ensures that we’re able to take full advantage (as a nation) of the cheapest emission reductions we can find.
Another thing that only the federal government can do is negotiate and enter into international agreements on climate change. At the federal level, the United States needs to commit to play an active part in crafting an effective global response to this problem. We have not been playing a constructive role in this process – and that has to stop.
International negotiators, including the U.S., have agreed to a process aimed at producing a new global climate treaty by the end of 2009. This is an extremely ambitious goal, but one worth pursuing. Clearly, we need a global agreement as soon as possible that includes binding commitments from the world's largest economies. And a global agreement that creates a worldwide market for emission reductions will help lower the global costs of achieving our emission reduction goals.
Negotiating such an agreement is clearly a federal government responsibility … and it is a responsibility we will carry out more effectively if we commit as soon as possible to a national program of reducing emissions. Right now, emerging economies and major sources of emissions like China and India are hiding behind U.S. inaction on this issue. U.S. leadership, in the form of mandatory emission limits at home coupled with a strong push for binding international commitments, would set the stage for effective global action – and, ultimately, real progress in reducing emissions around the world.
Does this mean the states should step aside and cede the leadership role on the climate issue to Washington? No. The states can and should keep exploring ways to leverage their unique authorities in areas from energy regulation to building codes, smart-growth planning and more. States are doing important and valuable work in all of these areas, and that must continue at the same time that the federal government begins to fulfill its role in the partnership.
In closing, I want to remind you of the vision of Justice Louis Brandeis. He saw the U.S. states as “laboratories of democracy” where policy innovations could take hold and perhaps provide models for other states, and for our national government as well.
And I honestly believe we would not be where we are today in the climate debate – on the verge of adopting a national cap-and-trade program – if many of the states had not acted first to adopt their own targets and to pursue cross-border emission trading regimes.
The U.S. states are acting in the best traditions of federalism by advancing an array of solutions to climate change that address their specific concerns and that take advantage of their unique responsibilities in our federalist system of government. Today, the challenge is to create a more balanced state and federal partnership – a partnership that promises to bring much-needed certainty to the question of how we as a nation are going to address the most critical environmental issue of our time.
On February 25 and 26, 2008, the Pew Center on Global Climate Change, in collaboration with the Pew Center on the States, hosted a workshop focused on state and federal action in response to climate change. The event brought together legislative staff and officials from both the state and federal levels to share their experience developing climate policies, and to discuss the appropriate roles of each level of government in implementing future national policy. Participants explored how federal policy might be informed by, and interact with, existing state efforts.
Two new publications were released at the workshop as part of the Pew Center on Global Climate Change Climate Change 101 Series:
In addition, a new publication in the Pew Center's Coal Initiative Series was also released:
Based in part on the results of this workshop, the Pew Center released a new report in June 2008:
Speaker and panelist presentations can be viewed by clicking on the presenter's name below.
Monday, February 25, 2008
- Eileen Claussen, President, Pew Center on Global Climate Change
Insights from National Association of Clean Air Agencies Dialogue:
- Doug Scott, Director, Illinois Environmental Protection Agency
Panel 1: Cap-and-Trade Design, Session 1
Moderator: Vicki Arroyo, Director of Policy Analysis, Pew Center on Global Climate Change
- Janice Adair, Special Assistant to the Director, Washington State Department of Ecology
- Lisa Jackson, Commissioner, New Jersey Department of Environmental Protection
- David McIntosh, Legislative Assistant, Office of Senator Joseph Lieberman (I-CT)
- Damien Meadows, Deputy Head of Unit, DG Environment, European Commission
Panel 2: Cap-and-Trade Design, Session 2
Moderator: Janet Peace, Senior Economist, Pew Center on Global Climate Change
- Michael Gibbs, Assistant Secretary for Climate Change, California Environmental Protection Agency
- Christopher Sherry, Research Scientist, New Jersey Department of Environmental Protection
- Damien Meadows, Deputy Head of Unit, DG Environment, European Commission
- Edith Thompson, Legislative Assistant, Office of Congressman Wayne Gilchrest (R-MD)
Lunch Keynote Speaker:
- Governor Bill Richardson, New Mexico
Watch Governor Richardson's speech on
Panel 3: Transportation - Low-Carbon Fuels and Vehicles
Moderator: Tom Peterson, President and CEO, Center for Climate Strategies
- George Crombie, Secretary, Vermont Agency of Natural Resources
- Chris Miller, Senior Policy Advisor, Office of Senator Harry Reid (D-NV)
- David Crane, Special Advisor for Jobs and Economic Growth, Office of California Governor Arnold Schwarzenegger
- Roya Stanley, Director, Iowa Office of Energy Independence
Panel 4: Electricity
Moderator: Steve Brick, Program Manager, The Joyce Foundation
Dinner Keynote Speaker:
- Erik Olson, Deputy Staff Director & General Counsel, Majority Staff, Senate Committee on Environment & Public Works
Tuesday, February 26, 2008
Breakfast Keynote Speaker:
- Governor Tim Pawlenty, Minnesota
Moderator: Doug Foy, Policy Advisor, Pew Center on the States
- Astrid Glynn, Commissioner, New York Department of Transportation
- Shannon Scutari, Policy Advisor for Growth and Infrastructure, Office of Arizona Governor Janet Napolitano
- Robert Grow, Sr. Counsel to O'Melveny & Myers LLP and Envision Utah, Founding Chair Emeritus
- Senator John F. Kerry, Massachusetts
Panel 6: Adaptation
Moderator: Joel Smith, Vice President, Stratus Consulting Inc.
- Larry Hartig, Commissioner, Alaska Department of Environmental Conservation
- Stephen Adams, Staff Director, Governor's Action Team on Energy and Climate Change, Florida
- Robert Twilley, Professor, Department of Oceanography and Coastal Sciences, Louisiana State University
- David Van't Hof, Sustainability Advisor, Office of Oregon Governor Ted Kulongoski
Panel 7: Respective State and Federal Roles in Climate Policy
Moderator: Judi Greenwald, Director of Innovative Solutions, Pew Center on Global Climate Change
- Sarah Cottrell, Energy and Environmental Policy Advisor, Office of New Mexico Governor Bill Richardson
- George Givens, Principal Legislative Analyst/Attorney, North Carolina General Assembly
- Franz Litz, Senior Fellow, World Resources Institute
- Brad Moore, Commissioner, Minnesota Pollution Control Agency
The Center for Climate and Energy Solutions (C2ES) seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas (GHG) emissions, and promote clean energy. Drawing from its extensive peer-reviewed published works, in-house analyses on the design of climate change policies and clean energy policies, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in both Congress and the Executive Branch.
The Center regularly meets with members of the federal Administration, U.S. Senate, and House of Representatives and their staff to discuss climate science, impacts, economics, policy, regulation, and legislation. C2ES also holds widely-attended Capitol Hill briefings on these topics, often bringing in experts from academia, business, and government to provide a broad range of perspectives.
The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of regulations and legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More