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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
 

Carbon Market Insights Americas 2008

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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 The page you are now on is no longer being updated.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.

 

Download the brief (PDF)

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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

Read the full article

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.

Read more

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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Statement: Dingell-Boucher Draft Legislation Released

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


October 7, 2008

I commend Chairmen Dingell and Boucher for their leadership in producing draft legislation that advances the climate change debate and demonstrates the commitment needed to pass national climate policy in the next Congress. I am strongly encouraged that, even in the midst of challenging economic times, Chairmen Dingell and Boucher remain focused on producing a thoughtful piece of legislation that would reduce U.S. greenhouse gas (GHG) emissions.

I'm especially encouraged by the Chairmen's approach to reducing GHGs through an economy-wide cap-and-trade system. Cap and trade is the most economically efficient way to meet our most urgent environmental imperative. The discussion draft also looks to control costs with sensible mechanisms and to encourage rapid deployment of efficient and low-carbon technologies.

As with any draft, there is room for improvement and refinement, and here I look forward to seeing the debate progress, especially in discussions about the near-term emissions target, trade measures, and appropriate regulatory authorities. I recommend that the final bill include tighter caps requiring that GHG emissions be reduced to 1990 levels by 2020. Also, trade measures should only be considered as a last resort, and not be implemented before 2020 to allow other efforts to protect energy-intensive industries enough time to succeed. Finally, I am concerned about some proposed options regarding the pre-emption of existing state and EPA authority under the Clean Air Act.

That said, I salute the Chairmen for their dedication to tackling this difficult challenge and am anxious to get started on the work ahead.

 

Pew Center Summary of Dingell-Boucher Draft Legislation

Visit the House Energy and Commerce website for other related materials

Click here to read more about climate legislation and cap and trade

Watch Nikki Roy discuss the draft bill and legislative outlook on E&E TV 

Read the statement from the U.S. Climate Action Partnership (USCAP) 

Climate Policy and Natural Gas: A Bridge to a Lower-GHG Future

Speech by Eileen Claussen, President, Pew Center on Global Climate Change

American Gas Association Executive Conference
WASHINGTON, DC

October 6, 2008


I am delighted to be here and to add my welcome to Washington.  

Of course, I am here to talk about global warming, but I can't stay away from politics, and I think it is interesting that, even in the middle of our economic troubles, the presidential and vice-presidential candidates are talking about this issue too.  Governor Palin, for one, has publicly acknowledged that her state is suffering from the effects of higher temperatures.  Polar bears are disappearing, coastal erosion is a problem, her poll numbers are melting … it’s a real mess.  She also said rising sea level is uprooting coastal communities so they have to move inland.  And you know what that means: it’s getting harder to see Russia.  So there goes all that foreign policy experience.

But Governor Palin still isn’t sure of her position on the causes of climate change.  When asked if man had anything to do with it, she said it was a sexist question and women should get some credit too.

The Obama campaign, for its part, already has shown it has the capacity to keep a lid on dangerous emissions. Joe Biden was on live TV for 90 minutes last week and he kept the verbose answers to a minimum and did not "emit" a single gaffe.  That’s quite an achievement.

There was one awkward moment – when the moderator asked what he thought about CAP and TRADE, Biden thought she was talking about Governor Palin's children.    

In all seriousness, Charlie Cook has given you a true insider’s perspective on the 2008 elections and how things are shaping up.  What I want to do today is talk about what all of this means for climate policy – or, more specifically, what we can expect to see in the next year or two as Washington finally comes to grips with climate and energy issues in a serious way.  

We all know that climate legislation has been making the rounds, and the Senate actually considered  a major cap-and-trade bill this summer.  But as I reflect on what is likely to happen in 2009 and 2010, I am reminded of the old Monty Python line … “And now for something completely different.”   

I predict that we will see real legislation, a real debate, and real action on the climate issue in the next Congress .  And what happens on this issue will obviously have important implications for the natural gas industry – which I will discuss in some detail later in my remarks.

But first I want to offer some perspective on the state of play in Washington right now – and where we stand today in the effort to forge a response to one of the most urgent global problems of our time.  

The reality of course, is that at the moment, all of Washington has been caught up in trying to rescue the U.S. economy, and so the question becomes – again – will the immediate crisis trump the need for climate policy?  Many seem to think so, but I have a different view.   

Certainly the new Administration and the new Congress will have a very full plate, but I do not believe that climate policy will fall off the agenda – and there are 4 reasons why I say that.  First, there are very high global expectations (unrealistic expectations, actually ) for what the next administration will do on the climate issue.  Foreign countries are anxious and frustrated with the lack of action by the U.S.; they are hoping for quick and dramatic changes from the new Administration.  If the next President wants to get off on the right foot with the global community, something that will serve us well on a variety of  critically important foreign policy issues, it is imperative that we craft and pass reasonable national policy, and that we engage constructively with the rest of the world on a global framework for action.   

Second, there is momentum and pressure from corporate America and from the states.  In the midst of this economic meltdown, the Western Climate Initiative unveiled their design recommendations for their regional cap-and-trade program – the most aggressive design to date in the U.S. - and RGGI, the consortium of northeastern states, held their first auction on Thursday Sept. 25– ringing the opening bell on Wall Street no less!  In total - 24 states are currently involved in regional cap and trade programs.  And corporate America is ready for the certainty that a well-designed national policy will afford them.  

Third, the Supreme Court decision in Massachusetts v. EPA paves the way for a more traditional “command and control” regulatory approach to addressing greenhouse gases.  Continued inaction is not an option.  If federal legislation doesn’t move, an approach based on existing Clean Air Act authorities is more likely – and yet less cost-effective – than a greenhouse gas cap-and-trade program.  And as this summer’s DC Circuit decision vacating the CAIR rule illustrates, it’s not clear that EPA can choose a more flexible and cost-effective approach such as emissions trading – or determine an allocation under a cap – in the absence of specific authorizing legislation.   So traditional standards (at least under some parts of the Clean Air Act) are the more likely outcome, a scary thought for many in industry and in the Congress.

And finally, and most important of all, we cannot have a growing, competitive economy without both a comprehensive energy policy and a sound climate policy.    A good climate policy will drive private and public investment in new, cleaner technologies, create jobs, and help us to transform our dependence on foreign energy supplies. Conservation and efficiency will help stabilize the climate, and make us more energy secure.  Moving forward with alternative, renewable technologies will decrease our carbon footprint and harness our innovation agenda.  Doing whatever we can to make use of existing cleaner, greener technologies, whether expanding our use of nuclear energy, or mounting a crash effort to demonstrate carbon capture and sequestration, or expanding our supplies of natural gas, have to be a part of our energy and climate policy.  Because without a major effort in all of these areas, I do not believe our economy will rebound, I do not see us being globally competitive, and I see us spending far more of our tax dollars in responding to the serious effects of a changing climate than we would spend preventing them.   

And, happily, since this economic crisis erupted – both Senator Obama and Senator McCain have reaffirmed their commitment to addressing climate and energy policy, including working for passage of a greenhouse gas cap-and-trade bill.   

So – while I believe some will try to use the current economic situation to obfuscate and delay – I do not think they will succeed.   Certainly, it  will be a challenge getting people to pay attention to climate change. But the bottom line is we have to.  We don’t have any other choice.  And to the extent that we can make the connection between protecting the climate, decreasing our dependence on foreign energy supplies,  and advancing the economy, I believe we will be successful.  

Now back to the state of play.   I am sure that all of you followed what happened in the Senate this summer on the Lieberman-Warner bill.  Whether you agreed with the specifics of that measure or not – and believe me: we had our share of concerns about the bill, as I am sure many of you did … But the specifics aside, this was truly an historic moment: the first time ever that comprehensive climate legislation came to the Senate floor out of a committee.  

And how did the Senate greet this historic opportunity, this unique chance to engage in a civil and substantive debate about how best to get this nation on track toward reducing its contribution to climate change?  

The answer is they engaged in a knock-down, drag-out partisan fight over Senate procedures.  Because of an unrelated dispute over judicial nominations, opponents of the bill dispensed with Senate courtesy and forced the reading of the entire 492-page bill into the Senate record.  It took nine hours.  

Now, if you are going to take up nine hours of the public’s time reading aloud on the Senate floor, the least you could do would be to read from the classics, or Harry Potter, or perhaps Chicken Soup for the Soul of an Aggrieved Public.  The Climate Security Act of 2008 was, sad to say, not a page-turner.  And the wasted opportunity, and the wasted time that these shenanigans entailed, are even more galling when you consider that Congress wasted no time this summer passing bills recognizing National Corvette Day and the National Day of the American Cowboy.  

But still … but still there was the fact that bipartisan climate legislation had been voted out of committee and reached the full Senate.  And it was an important reminder of how far we have come on this issue in the last ten years.  

When we started the Pew Center in 1998, many people in the United States still viewed climate change as unimportant, unproven and undeserving of a lot of public debate.  Now, ten years later, Washington is moving ever-closer to developing a national plan for reducing U.S. greenhouse gas emissions, many U.S. states and cities have adopted innovative climate strategies of their own, and we have two major-party presidential candidates who both are committed to taking serious action on this issue.  For all their differences, John McCain and Barack Obama agree on the salient facts about climate change.  They agree that this is a real and an urgent problem, that it is caused in large part by human activity, and that the United States must focus on solutions.  And they even agree, albeit with some differences, on the broad outlines of a solution: a strong domestic cap-and-trade law coupled with U.S. support for a global climate change agreement.  Where there is a real difference is when you contrast the McCain and Obama positions to what’s happened in the last eight years.  

So we have come a long way indeed.  And one of the main reasons we’ve come this far, as I see it, is because of people like you.  All across this country, there is an ever-expanding contingent of business leaders who are saying they trust the science on this issue and it’s time to act.   


Today, the Pew Center’s Business Environmental Leadership Council includes 42 companies representing roughly $2.8 trillion in market capitalization and more than 3.8 million employees.  It is the largest U.S.-based association of companies committed to climate change policy and business solutions.  Members come from a range of sectors, including oil, high technology, diversified manufacturing, transportation, aluminum, electric and gas utilities, chemicals, healthcare, insurance, financial services -- and, of course, natural gas.  Our members include Exelon, PG&E and other natural gas industry leaders.


These companies share our belief that climate change is an urgent problem that will affect our economy and our communities in profound ways in the years and decades to come.  And they believe, and I quote: “The United States should significantly reduce its GHG emissions through economy-wide, mandatory approaches,” including a “flexible, market-based cap-and-trade program.”


Last year, many of these same companies took their advocacy on this issue to a new level when they joined with the Pew Center and others to form the U.S. Climate Action Partnership.   The USCAP group has issued a cap-and-trade proposal with specific targets and timetables—a real plan of action to slow, stop and reverse U.S. emissions. In addition to cap and trade, the group has embraced an array of other policies aimed at building a low-carbon energy economy.


So we have seen enormous progress, in large part because of business leadership on this issue.  But, of course, we still have an enormous amount of ground to cover.  And now people are looking ahead to what will happen – or, more precisely, what must happen – in 2009 and 2010. 


And so here’s my prediction: The Pew Center anticipates that the next President, whether it is John McCain or Barack Obama, will propose a framework for achieving substantial reductions in U.S. greenhouse gas emissions, including a cap-and-trade program, during the first half of 2009.  We expect Congress to begin debate on comprehensive climate legislation in the same timeframe, and we believe it is likely that a cap-and-trade bill will be signed by the President during the 111th Congress.  
As of January 20, 2009, the date of the next president’s inauguration, the question driving the U.S. debate on this issue will not be whether we need comprehensive, mandatory action, but how to do it right.  And the major challenge facing the next Administration and Congress as they seek to answer this question will be to resolve the cost and spending issues associated with comprehensive climate action.  


How can we minimize and contain the overall costs of a mandatory program?  How can we provide relief for those who will be most affected – including energy-intensive industries that will face higher fuel prices, regions of the country that rely on less climate-friendly sources of energy, and consumers who will face higher prices for electricity?  How can we reduce administrative costs and bureaucracy?  And, last but not least, how should we spend and invest the estimated trillions of dollars in future allowance value that could flow to the government, the private sector and consumers under a cap-and-trade regime?


Answering these questions will not be easy, which is why the next President and Congress should get to work right away.   And, of course, the questions I have asked are only the beginning.  Of great interest to all of you will be how our leaders here in Washington address specific questions having to do with natural gas.  And that’s where I want to focus in the remainder of my remarks.  


The Pew Center soon will be publishing a paper on the coverage of natural gas emissions under a cap-and-trade regime.  According to this paper, combustion-related GHG emissions from natural gas are 16 percent of total U.S. GHG emissions.  The largest source of emissions from the burning of gas is industry, accounting for 5.3 percent of total U.S. GHG emissions, followed by the power sector, at 4.4 percent.


Clearly, regulating and reducing GHG emissions related to the use of natural gas has to be part of any solution to climate change.  But the question, again, is how to do this effectively and fairly … how to do it right.   


This is a question that has spurred a very intense and very impassioned debate – well, as impassioned as you can get, I suppose, when throwing around terms like “points of regulation” and “allowance allocation provisions.”  


Seriously, the debate has been intense because these are important decisions with wide-ranging implications for your industry and for our economy as a whole.  And one of the biggest decisions that lawmakers will have to make has to do with the point-of-regulation issue.   The issue, as you know, is this: Should we regulate natural gas-related emissions on the upstream side – at the point where gas is produced and processed and distributed to consumers?  Or should it happen downstream – where gas is actually used?  


Well, to adapt the classic round, “Row Row Row Your Boat,” I say the chorus right now should be “thoughtfully down the stream.”  The Pew Center supports downstream regulation as the short-term answer to the point-of-regulation question.  And I say “thoughtfully down the stream” because we need to think carefully about how to do downstream regulation right.  More specifically, I agree with the AGA that it is impractical to include small-volume consumers of natural gas as part of any emissions cap.  Rather, we believe that any cap-and-trade measure that becomes law should cover downstream emissions from large users in the industrial and power sectors.


Over time, we believe local natural gas utilities should become responsible for meeting a cap on emissions related to the service they provide to residential and commercial customers.  This will make them “covered entities,” to use the legislative lingo.  (As an aside, I think it’s interesting that the only other statutes using the term “covered entities” are those governing indecent exposure.)


How many facilities would this kind of downstream approach cover?  Well, let’s do the math …


Our forthcoming paper estimates that fully 54 percent of the natural gas consumed for combustion in the United States is consumed at facilities producing more than 10,000 metric tons of greenhouse gases each year.  If we set that volume of emissions as the threshold for new regulations governing large users of natural gas, our paper says it would cover about 7,000 manufacturing facilities, plus 500 gas-only power plants and 750 or so compressor stations.  That adds up to about 8,250 facilities that would be regulated for their downstream CO2 emissions from natural gas consumption.


Accounting for co-ownership of these facilities and other factors, the paper comes up with a final estimate of 5,382 entities to be regulated under this approach.  Add the largest 150 LDCs, which account for 95 percent of gas throughput, and you get 5,532 covered entities – a number that could clearly be accommodated within a larger cap-and-trade program.  At the Pew Center, we believe the best choice is to include these large LDCs right now, but we recognize there are differing opinions.  The AGA has said that LDCs should not necessarily be included as covered entities now, and I hope that in the spirit of compromise we can agree that LDCs should at least be phased in.  Whether we phase them in or not, the largest LDCs are certainly an appropriate point to regulate the gas industry over time if we are looking at downstream emissions.


But at the same time that we are discussing “points of regulation” and all these other technicalities, we also need to consider something else – and that is how to better support natural gas as a bridge fuel to a more climate-friendly energy supply.


This is a real opportunity for your industry – this is not a “bridge to nowhere” that we are talking about.  Natural gas provides a bridge to the future.  To the extent that you can deliver gas at a reasonable cost, you can be part of the solution to climate change.


But here’s the problem: this industry cannot come close to fulfilling its role in protecting the climate without a strong policy push from Washington.  If natural gas is to play a role in helping us reduce greenhouse gas emissions, we need to keep it affordable, and we need policies to help make this happen – policies to help expand our natural gas infrastructure, policies to keep costs down, and policies to increase natural gas supply.


And we also need policies to help make natural gas even more efficient as a fuel source.  This industry is doing great things  to promote increased energy efficiency.  And America’s natural gas companies are funding programs that help their residential and commercial customers reduce their natural gas use by 9.5 trillion BTUs per year.  The resulting reduction in CO2 emissions: 500,000 metric tons every year.  


From home energy audits and cash rebates to low-interest financing for high-efficiency natural gas appliances, your industry offers consumers an array of tools to help them get a better handle on how much energy they use, and reduce it.  Today, according to AGA’s own data, the average American home uses one-third less natural gas than in 1980.  This has happened even as demand for energy has risen, and it can be explained in part because consumers are installing energy-saving windows and insulation, buying more efficient appliances, and taking other steps they might not have taken in the absence of incentives and active encouragement from America’s natural gas utilities.


Take PG&E, which I already mentioned is a member of the Pew Center’s Business Environmental Leadership Council.  PG&E offers its gas customers a rebate of up to $300 toward the purchase of an energy-efficient natural gas furnace, up to $400 toward the cost of sealing leaky ductwork, and up to $150 per 1,000 square feet for insulation.  That is real money, and a real incentive for PG&E’s gas customers to do their part to save energy and protect the climate.


This is important and commendable work.  But we can do more, with  tightened product and equipment efficiency standards, stronger building codes, and more.  We also need to make sure that natural gas utilities have the right economic incentives to promote efficiency.  The bottom line is this: Utility profits should not take a hit when customers use less natural gas.  The government needs to step up its support for innovative utility rate designs that encourage increased energy efficiency.


And this is why industry partnerships are so important.  The Pew Center has been proud to stand beside our business partners in the U.S. Climate Action Partnership and advocate for sensible solutions to climate change.  And we feel there is much more room for additional partnerships on this issue – between NGOs and business, and among business and NGOs and government.  With active industry involvement, I strongly believe that we can develop not just the right technological solutions but also the right policy solutions – solutions that make sense given the issues that all of you face in your businesses each day.


In just one month, the election will be over and a new President-elect and Congress will begin the work of preparing to take their seats at either end of Pennsylvania Avenue, just blocks away from where we sit today.  They will have a lot on their plates – a lot of people coming after them to do their bidding on issues from the economy and health care to energy and climate change.  And my challenge to you is this: as an industry, natural gas needs to do everything in its power to make absolutely certain that the climate issue receives the attention it deserves.  


We will not have another chance like this … and the longer we wait to act, the harder and more expensive this problem will be to solve.  Indeed, some say we have a window of just a few years.  We are going to need to use all of the persuasive power we have – all of the contacts, all of the political savvy – to make the case for workable solutions to the climate problem – solutions that combine all of the tools we have at our disposal to reduce greenhouse gas emissions.  Natural gas is one of those tools – and a crucial one.  We just have to help our leaders figure out how to use it right.  


Thank you very much.

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