Federal

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
 

Greenhouse Gas Offsets in a Domestic Cap-and-Trade Program

November 2008

This brief presents the key issues and identifies options for the incorporation of greenhouse gas (GHG) offsets into emerging U.S. climate change policy. A GHG offset represents a reduction, avoidance, destruction, or sequestration of GHG emissions from a source not covered by an emission reduction requirement. The elimination of GHG emissions can be converted into tradeable offset credits, and cap-and-trade programs can be designed to permit firms to use these credits to meet their compliance obligations. A carefully crafted and implemented offset program can significantly reduce cap-and-trade compliance costs by providing lower cost emission reduction options. Yet, while economic modeling has shown that incorporation of offsets into a cap-and-trade program can significantly reduce costs and allowance prices, their inclusion is not without controversy or complication. Some are concerned that offset inclusion will reduce the price signal to the point that the innovation and technological change needed to address the climate problem will be diminished. Others focus on the difficulty associated with substantiating offsets as real emission reductions. Important considerations in designing offset programs include the way in which offsets are defined; the types, location and quantity of offsets allowed; and the methods for assessing and crediting projects. Generally speaking, offset projects come in three distinct types: 1) direct emission reductions, 2) indirect emission reductions, and 3) sequestration. Before a project can create an offset credit, the emission reductions should meet all of the following criteria: they must be real, measurable, additional, permanent, monitored, independently verified, measured from a credible baseline, not represent leakage, and be able to convey as a clear property right. Additionality is perhaps the most important yet complicated issue, as it requires an assessment of what would have happened in the absence of the project. Offset project assessments can be either project specific or standardized. A hybrid assessment approach, which uses some standardization methodologies but allows for a degree of flexibility in assessing projects, may be the most effective. Each of these important factors for creating high quality offsets are discussed in this brief.

 

Download the brief (PDF)


On March 6, 2009, the Pew Center held a Hill briefing on domestic offsets in a cap-and-trade system.  Learn more here.

 

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Greenhouse Gas Emissions Allowance Allocation

November 2008

This policy brief outlines various options for distributing greenhouse gas emission allowances under a cap-and-trade program. Allowances represent a significant source of value and can be used to compensate firms or individuals affected by climate change policy or to raise funds for other socially desirable policy objectives. The basic allocation decision involves whether to freely allocate emission allowances, and if so, to whom, and whether to auction allowances, and if so, how to distribute the revenues. A number of recent cap-and-trade proposals begin with a combined approach that provides some allowances for free and auctions the rest, with the share of auctioned allowances rising over time. If free allocation is chosen, the basis for distribution must be determined. Options include granting allowances based on historical emissions (“grandfathering”), on levels of an output or input, or on an environmental performance “benchmark;” each has implications in terms of who benefits from the value of the allowances. If allowances are auctioned, in addition to deciding how the revenue generated by the auction will be used, policymakers will need to determine the type and frequency of the auction. Many of the same objectives can be met using either auction revenues or free allocation, including easing transition for affected firms and consumers and supporting new technologies. However, allocation decisions will sometimes entail trade-offs among the competing goals of achieving an equitable distribution of economic impacts, ensuring political feasibility, and minimizing overall program cost. Allowance allocation presents both a challenge and an opportunity: no allocation formula will satisfy everyone, yet allocation decisions can be made in ways that ease the transition to a low-carbon economy and enhance the likelihood of meaningful action on climate change.

 

Download the brief (PDF)

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Carbon Market Insights Americas 2008

Promoted in Energy Efficiency section: 
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An event hosted by the Pew Center and Point Carbon.

November 12-14, 2008
Marriott Wardman Park Hotel
Washington, DC

The Pew Center on Global Climate Change and Point Carbon invite you to Carbon Market Insights Americas 2008, taking place in the heart of political decision making, the week following the U.S. presidential election.

The event will involve key decision makers in the forthcoming U.S. Administration and Congress and provide participants with a fresh analysis on climate policy and carbon markets in North America. It will offer key insights into how federal policy changes are likely to affect regional cap-and-trade schemes in North America, the global carbon market, and emissions trading around the world.

View the Conference Program

Click here to Register and to get more information about the conference.

President Obama & Climate Change

 

Click here to visit our Obama Administration page. The page you are now on is no longer being updated.

 

Statement of Eileen Claussen
President, Pew Center on Global Climate Change
on appointment of Todd Stern, Special Envoy on Climate Change

January 26, 2009

Secretary Clinton’s appointment of America’s first special envoy on climate change is another clear and early signal that the Obama administration is determined to address this issue head on.  This new position can help ensure strong and focused engagement at the highest levels as the United States works with other countries to forge a new international climate agreement.  As special envoy, Todd Stern brings the expertise, insight and judgment needed to represent renewed U.S. leadership in the global effort against climate change.  

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Statement of Eileen Claussen
President, Pew Center on Global Climate Change
on President-Elect Obama's New Energy and Environment Appointments

December 11, 2008

This is a team with a keen interest in addressing climate change, and the talent and skills to get the job done.  With Steven Chu, Carol Browner, Lisa Jackson and Nancy Sutley at the helm, President-Elect Obama's Administration will be well-equipped to tackle the challenge of building a new clean energy future that preserves the climate while revitalizing our economy.   We look forward to working with the new Administration to achieve these goals.

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On the occasion of President-Elect Barack Obama's Statement to Bi-Partisan Governors' Global Climate Summit

 

November 18, 2008

This is exactly the kind of leadership the country and the world have been waiting for. President-elect Obama's statement makes clear that he's ready to roll up his sleeves and deliver the action that is needed to protect our climate, our economy, and our national security. He is setting the right goals and choosing the right policies. We urge the bipartisan leadership in Congress to work closely with the new president to quickly enact an economy-wide cap-and-trade system.  Doing so will ensure significant reductions in U.S. emissions at the lowest possible cost, and help set the stage for a new international agreement ensuring that all other major economies contribute their fair share as well.

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On the occasion of Senator Barack Obama's election to the presidency, we released the following statement of Eileen Claussen, President, Pew Center on Global Climate Change

November 5, 2008

President-elect Obama faces an array of urgent challenges when he assumes the Presidency on January 20, but I am confident that he will provide the leadership needed to enact a comprehensive climate policy that significantly reduces U.S. greenhouse gas emissions.  I am equally optimistic that new leadership will provide the impetus we need to forge a strong green energy economy and restore America's standing in the world community, and I look forward with great anticipation to working with the Obama administration to achieve these critical goals.

 

Further Resources on Next Steps for the New Administration:

  • Obama's Remarks: Watch President-elect Obama's remarks to the Governors' Global Climate Summit.
  • Pew Perspective: The Obama administration should seek a greenhouse gas cap-and-trade law, we argue.
  • Climate Policy & U.S. Election: In an article for the Heinrich Boll Foundation's Transatlantic Climate Policy Group, Elliot Diringer discusses prospects for an international climate agreement under a new U.S. president.
  • Congressional Action: Pew's Nikki Roy offers a possible timeline for legislation in the 111th Congress on E&ETV's On Point.
  • Congressional Policy Briefs: This new series of briefs walk policymakers through important design choices for a federal cap-and-trade system and the strengths and weaknesses of various complimentary policy approaches.
  • The Candidates and Climate Change: A Guide to Key Policy Positions: In this presidential voter guide, Pew outlines key policy positions of President-elect Obama and Senator McCain.
  • Cap and Trade 101: This brief report explains how a cap-and-trade program sets a clear limit on GHG emissions and minimizes the cost of achieving this target.

 

Statement: Looking Ahead to the Obama Administration

Statement of Eileen Claussen
President, Pew Center on Global Climate Change


November 5, 2008

President-elect Obama faces an array of urgent challenges when he assumes the Presidency on January 20, but I am confident that he will provide the leadership needed to enact a comprehensive climate policy that significantly reduces U.S. greenhouse gas emissions.  I am equally optimistic that new leadership will provide the impetus we need to forge a strong green energy economy and restore America's standing in the world community, and I look forward with great anticipation to working with the Obama administration to achieve these critical goals.

 

Further Reading:

Obama Signals Action: Eileen Claussen’s statement on President-elect Obama’s remarks to the Bi-Partisan Governors’ Global Climate Summit. (November 18, 2008)

Pew Perspective: The Obama administration should seek a greenhouse gas cap-and-trade law, argues a new Pew Center article. (November 2008)

Climate Policy & U.S. Election: In an article for the Transatlantic Climate Policy Group, Elliot Diringer discusses prospects for an international climate agreement under a new U.S. president. (October 2008)

Tax Policies to Reduce Greenhouse Gas Emissions

November 2008

This brief outlines the motivation for and key features of a tax designed to reduce emissions of greenhouse gases (GHGs). The two most commonly discussed market-based instruments for reducing GHG emissions are a cap-andtrade system and a GHG (carbon) tax. These mechanisms function in a similar way by establishing a price for GHG emissions. They both correct the market failure that exists when the value of environmental damages is not included in the market price of fossil fuels and other activities that release GHGs. A GHG tax and cap-and-trade approach are compared, with consideration given to how effective each policy instrument may be at meeting key objectives. These objectives include environmental integrity, cost-effectiveness, and distributional equity, and will inevitably involve political considerations. Fundamental design issues of a GHG tax policy are explored, including who would pay the tax and how to set an appropriate tax rate. There are a number of options for determining the appropriate level for a tax, including setting it to equal some estimate of the social cost of carbon or pursuing the long-run goal of stabilizing the concentration of GHGs in the atmosphere. A tax can be levied at various points throughout the energy supply chain, but most proposals call for an upstream tax on fuel suppliers in order to maximize the scope of coverage, which lowers costs, and for administrative simplicity. This brief also reviews existing GHG taxes in Europe and North America, along with several recent U.S. legislative carbon tax proposals. Finally, other pricing strategies to reduce GHG emissions in the transportation and electricity sectors are examined.

 

Download the brief (PDF)

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Policies to Reduce Emissions from the Transportation Sector

November 2008

This brief discusses public policy tools available to reduce greenhouse gas (GHG) emissions from the transportation sector. Reducing GHG emissions from transportation, which comprise one third of total U.S. CO2 emissions, will need to be a key part of any strategy to limit economy-wide emissions. Transportation energy use and emissions are determined by three elements: the fuels used to power the vehicles, characteristics of the vehicles themselves, and total miles traveled. Of the various transportation modes, passenger vehicles consume the most energy, followed by truck, rail and ship transport of freight, and then air travel. To reduce emissions, the sector can be included in a multi-sector cap-and-trade program or managed through sector-specific measures, or both. The critical issues for transportation policy are understanding market imperfections, where individuals are somewhat insensitive to changes in fuel price and tend to undervalue fuel economy. This makes it difficult to harness market forces (such as a cap-and-trade program) to drive investment in long-term transportation technology. To guarantee significant emission reductions from the transportation sector, especially in the short term, sector-specific policies can complement (or substitute for) the cap. These policies will need to focus on all three elements of the sector for major emission sources within the transportation sector. Policy tools include pricing policies (e.g., taxes, tolls, and congestion changes), standards (e.g., fuel economy standards), and funding for research, development, and deployment. Policies for the transportation sector will have to address several objectives at the same time: energy security and GHG reduction goals, a transition to low carbon fuels and alternative vehicle types, and an alignment of infrastructure and land use planning with GHG goals.

 

Download the brief (PDF)

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Addressing Emissions From Coal Use in Power Generation

November 2008

Coal is a cheap and abundant resource, and carbon dioxide (CO2) from coal use is responsible for about 40 percent of global greenhouse gas (GHG) emissions from fossil fuel use. The United States and China are by far the largest emitters of CO2 from coal consumption, accounting for nearly 60 percent of global CO2 emissions from coal, with India a distant third. The United States currently relies on coal for roughly half of its electricity generation resulting in roughly one third of total U.S. emissions. China generates 80 percent of its electricity from coal, and in recent years, emissions from coal use have grown five times faster in China than in the United States. With enough coal reserves to meet current consumption levels for centuries, the United States and the rest of the world face the challenge of reconciling the realities of coal use with the dangers posed by climate change.

Carbon capture and storage (CCS) is a means to meet this challenge. If widely deployed, CCS could allow the world both to continue to exploit its cheap and abundant supply of coal and to adequately address the threat of climate change. CCS works by separating CO2 from other gases in the exhaust stream at power plants and industrial facilities, compressing the CO2 to pressures suitable for pipeline transport, and injecting the CO2 into deep geologic formations where it can be safely and indefinitely stored.

Although components of the CCS suite of technologies have been used in a variety of situations, the entire suite has not been deployed at a commercial scale at any coal-fueled power plant to date. Deployment has not proceeded for a number of reasons, primarily the high costs of installing and operating CCS technologies and the absence of government policies that place a financial cost on GHG emissions. In addition, uncertainties remain concerning actual cost and performance of CCS technologies at commercial scale. Finally, CCS deployment requires an appropriate regulatory system for CO2 storage, including long-term liability.

This brief describes the potential role of government in facilitating widespread and more rapid deployment of CCS through a number of means including: providing financial incentives for initial CCS projects through the use of bonus allowances under a cap-and-trade program, or a fund generated by charges on electricity or fossil-fuel based sources of electricity; setting GHG emission performance standards for coal generators or electricity providers; and establishing the required regulatory and liability frameworks for CO2 storage.

 

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Technology Policies to Address Climate Change

November 2008

This brief presents public policy tools available to provide support for research, development, demonstration, and deployment (RDD&D) of technologies that reduce greenhouse gas emissions. An emissions price induced by a cap-and-trade program can provide an incentive to “pull” new technology into the marketplace, while public funding for technology can provide a “push” with the two approaches more powerful in tandem than either alone. Economic theory provides the rationale for public expenditure on RDD&D, which can compensate for several market failures that would otherwise generate sub-optimal investments from the private sector. The appropriate policy tool depends on the stage of development for a particular technology and the scale of a project. Direct public expenditures, channeled through organizations such as the Department of Energy or the National Science Foundation, have a long history of funding earlier stages of research and development, and make up the bulk of current technology dollars. Some technologies to address climate change, such as next-generation nuclear power and carbon capture and storage, require a larger investment for early projects than private industry is likely to make, and could benefit from public funding of demonstration projects. The federal government can also provide inducements for private industry to invest in RDD&D with mechanisms such as investment tax credits. Indirect policies that can support technology deployment include standards that require a minimum performance or a market share requirement, and programs that identify and certify top efficiency performers in the marketplace. Funding sources for technology programs include appropriations from general revenues and dedicated revenues, perhaps from climate- or energy-related sources such as allowance auctions or dedicated energy taxes. Regardless of the source, funding must flow through and to multiple institutions that manage, select, and perform the actual RDD&D options. Each institutional option has strengths and weaknesses.

Download the brief (PDF)

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U.S. Election and Prospects for a New Climate Agreement

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By Elliot Diringer
October 2008

This article was first published by the Heinrich Böll Stiftung Transatlantic Climate Policy Group.

After years of stalemate in the international climate negotiations, the inauguration of a new U.S. president presents an opportunity for a genuine breakthrough.  Both John McCain and Barack Obama support mandatory limits on U.S. greenhouse gas emissions, and both favor renewed international engagement.  But unrealistic expectations about how quickly the United States will move – and how far – could severely damage prospects for any sort of agreement next year in Copenhagen.

An effective post-2012 climate agreement is impossible without the United States, the world’s largest economy and largest historic emitter.  Europe was able to persuade other developed countries to push ahead with initial commitments under the Kyoto Protocol despite the U.S. withdrawal.  But there appears very little appetite among those countries to take on new, stronger commitments without the United States, and even less prospect of commitments by the major developing countries.

Fortunately, there is at long last real momentum for stronger efforts to reduce U.S. emissions.  While skeptics remain, the political establishment has largely accepted the scientific consensus that human-induced warming is underway and must be addressed.  Many states are taking mandatory steps to reduce emissions; 24 states have entered into regional initiatives to establish cap-and-trade systems.  Many corporate leaders are calling for mandatory federal action, and Congress is seriously debating the establishment of an economy-wide cap-and-trade system more than twice the size of Europe’s Emissions Trading Scheme.

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by Elliot Diringer, Vice President for International Strategies— Published by the Heinrich Böll Stiftung Transatlantic Climate Policy Group, October 2008
Elliot Diringer
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