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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
 

Climate Data: Insights and Observations

Climate Data Report Cover

Climate Data: Insights and Observations

Prepared for the Pew Center on Global Climate Change
November 2004

By:
Kevin Baumert, Jonathan Pershing, with contributions from Timothy Herzog, Matthew Markoff, World Resources Institute

Press Release

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Jonathan Pershing
Kevin Baumert
Matthew Markoff
Timothy Herzog
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Comments on General Guidelines for Voluntary GHG Reporting - Proposed Rule

Comments by The Pew Center on Global Climate Change Regarding
General Guidelines for Voluntary Greenhouse Gas Reporting – Proposed Rule

February 11, 2004

These comments by the Pew Center on Global Climate Change are written in response to the notice of inquiry by the U.S. Department of Energy (DOE) regarding the “General Guidelines for Voluntary Greenhouse Gas Reporting; Proposed Rule” (68 Fed. Reg. 68204 (December 5, 2003)). The Center appreciates the opportunity to comment on this important issue.

The Center previously submitted comments in response to the notice of inquiry by the U.S. DOE regarding “Voluntary Reporting of Greenhouse Gas Emissions, Reductions, and Carbon Sequestration” (67 Fed. Reg. 30370 (May 6, 2002)). In those comments, the Centerstated that a mandatory greenhouse gas (GHG) reporting and disclosure program is an essential first step in any effort to reduce U.S. GHG emissions, and provided recommendations for the design of such a program. We do not repeat all of our previous recommendations here; rather, we respond specifically to key elements of the proposed revised General Guidelines.

While we appreciate the complexity of the task before DOE and efforts made to address some concerns about the previous 1605(b) program, the Center does not feel these revisions provide the clarity and scope necessary to avoid a future revision. We are particularly concerned with the unequal treatment of real, quantifiable reductions made previously by leading firms, as we discuss below.

Defining Reporting Entities/Boundaries

We appreciate the desire to expand reporting by entities. However, limitations in the way this is done in the proposed Guidelines will impair the effectiveness of the provisions. Certain key terms are not well defined and/or are used inconsistently within the proposed revised General Guidelines.

In particular, the definition of “entity” is too vague. The proposed Guidelines state, “A reporting entity must be composed of one or more legally distinct businesses, institutions, organizations, or households, although reporters are strongly encouraged to define themselves at the highest meaningful level of aggregation appropriate” (68 Fed. Reg. 68216). A reporting entity would be required to provide an “entity statement” that meaningfully defines the operations and facilities covered by its reports, including the names of parent or holding companies not covered, and the names of large subsidiaries or organizational units that will be covered by the entity’s reports, among other details. However, relying on such entity statements would make it impossible for third parties to understand the true U.S. emissions of any firm. Indeed, relatively small components of a corporation may be the only reporters under this definition, which would provide a skewed view of the true entity-wide emissions and make comparison with other firms impossible.

In addition, terms such as “ownership” and “operational control” are not defined adequately in the proposed guidelines. One existing tool that has established clear definitions regarding ownership, control, and other key terms is the Greenhouse Gas Protocol Initiative, which was developed through an international multi-stakeholder process. With respect to choosing accounting and reporting boundaries, we support this GHG Protocol in its assertion that “boundaries should represent the substance and economic reality of the business, and not merely its legal form.”

While the Center believes understanding the true entity-wide emissions is important, availability of less aggregated data would also be helpful for analytical purposes and to inform policy-making. For example, firms providing entity-wide data could be requested to specify facility GHG emissions over 10,000 metric tons of CO2 equivalent (with appropriate exceptions for confidential business information).

Absolute Reductions in Emissions vs. Reductions in Emissions Intensity

While we think that the reporting of emissions intensity data would be interesting, the emissions reduction picture would be incomplete without absolute emissions reduction data presented as well.

Baseline Protection and Transferable Credits

On February 14, 2002, President Bush directed the DOE to recommend improvements to the Voluntary Reporting of Greenhouse Gases Program established under section 1605(b) of the Energy Policy Act of 1992 (“1605(b) program”). In particular, the president “directed the Secretary of Energy to recommend reforms to ensure that businesses and individuals that register reductions are not penalized under a future climate policy [i.e., “baseline protection”], and to give transferable credits to companies that can show real emissions reductions.”

It is not known when a mandatory program to limit emissions of GHGs will be established in the United States or what the design of such a program will ultimately be. Despite these uncertainties, it is important to move forward with GHG reductions, given the long atmospheric lifetimes of GHGs. To stimulate voluntary reductions of GHG emissions today, a GHG reporting program should provide “baseline protection” for companies that have already taken action or are planning to take action to reduce their emissions. These entities should be assured that — in the event of future controls on GHG emissions — they would receive credit for reductions achieved voluntarily. The extent and form of such credit would depend on the design of the ultimate GHG control program. All this is implicit in the President’s February 14, 2002 directive to the Secretary of Energy.

Baseline protection from the first year of reporting and onward should apply to all participating entities that are in compliance with program requirements, and that report emissions for the entire entity – not just for projects or individual facilities – with adjustments made to account for acquisitions, mergers, and other changes in the entity’s operation. An entity’s “baseline” would be emissions reported during its first year of reporting under this program, unless it chooses to select an earlier base year for which there is credible and verifiable information on GHG emissions.

The Center's review of existing statutory authorities indicates that the Executive Branch currently lacks authority to assure that current efforts to reduce GHG emissions will receive credit under a future law. If a baseline protection program is to have binding effect, it must be authorized by law to provide greater assurances to companies that the baseline protection would extend beyond the current Administration. DOE should seek this authorization not only to comply with the president’s directive, but also to strengthen the existing reporting program.

Moreover, DOE has determined that it lacks the statutory authority to create transferable credits for registered emissions reductions. As with baseline protection, DOE should seek the statutory authority to create transferable credits in the interest of complying with the president’s directive and strengthening the existing reporting program.

Registering of Activities Prior to 2003

Under the new two-tiered guidelines, entities may report (but not register) emission reductions achieved prior to 2003. Reductions that were reported to 1605(b) before 2003 could not earn registration status, even if the entities met the new guidelines. The DOE’s decision to distinguish between reductions achieved prior to 2003 and reductions achieved from 2003 is counterproductive and arbitrary. Not only would real, verifiable reductions that occurred before 2003 not be recognized under the proposed system, but entities would have no assurance that a future revision process would not similarly fail to recognize post-2003 registered reductions.

The Center urges that entities be able to register pre-2003 emissions reductions so long as they meet all other requirements of the revised, more stringent 1605(b) guidelines. Many companies have taken responsible actions to curb their GHG emissions and undertake GHG reduction projects over the last decade, due to concern about climate change impacts and in response to the United Nations Framework Convention on Climate Change and various U.S. voluntary programs. A number of these firms acted in good faith reliance on representations from previous government statements suggesting these actions would be rewarded—or at least not punished. These companies should receive credit for their early action. A GHG reporting program should make it possible for such entities to register (and receive baseline protection for) emission reductions and offsets implemented since 1990, so long as the information is certified by the reporting entity and is reported under the established reporting standards. Companies should be able to select any base year in this timeframe for which their emissions are well documented and verifiable.

International Emission Reductions

The proposed revised General Guidelines do not address either the reporting or registering of non-U.S. emissions or emissions reductions. However, the current 1605(b) program guidelines provide for reporting of international activities. The proposed revisions, therefore, take a step backward from the existing guidelines in this regard.

Because GHG emissions have the same warming effect regardless of where on the globe they are emitted, it is useful to encourage the most cost-effective GHG mitigation opportunities even if they are not in the United States. As with our comments above, many leading firms have invested in such beneficial projects at some expense and with careful attention to concerns regarding monitoring and verification. These efforts should be recognized. Therefore, The Center recommends that DOE allow and encourage reporting and registering international projects so long as they: (1) are certified as real, quantifiable, and not resulting in increased emissions elsewhere; (2) are verified by a third party qualified to provide such certification; and (3) pertain only to projects not reported elsewhere in the register.

Conclusion

The Center does not feel these proposed revisions provide the clarity and scope necessary to avoid a future revision. While moving to entity-wide reporting is desirable, the guidelines do not define entities clearly enough. The guidelines fail to provide baseline protection for pre-2003 reductions, and do not provide transferable credits. The guidelines also fail to address international reductions.

The Center believes that a mandatory GHG reporting and disclosure program is the logical next step in any effort to address climate change. Even a voluntary emission reduction program requires mandatory reporting in order to determine the overall efficacy of the voluntary effort. The Center urges DOE to work with Congress to enact mandatory reporting and disclosure.

 

Related materials: Greenhouse Gas Reporting and Disclosure: Key Elements of a Prospective U.S. Program

An Effective Approach to Climate Change

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

by Eileen Claussen, President— Appeared in Science, October 29, 2004
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Climate Change: The Political Challenges

CLIMATE CHANGE: THE POLITICAL CHALLENGES

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

Stanford University Sustainability Days Conference

October 15, 2004

Thank you Jim for that very kind introduction.  Let me begin by thanking the organizers of this conference.  As most of you did, I watched the presidential debates, and I want to tell you how pleased I am that you did not install any blinking-light system on this podium that might force me to babble on and keep repeating myself to fill my allotted time.  

I am going to talk about the politics of climate change—and, more specifically, about the continuing political struggle over this issue.  But I also want to suggest a way to begin to resolve this struggle by taking a fresh look and by framing an agenda that can attract broad support.

But first the struggle itself.  At the core, I believe it is a struggle between the old and the new, between those who want to put off taking action for as long as possible and those who believe we need to act decisively - now.   It is, in essence, a struggle between the past and the future. 

But unlike others of this kind, I believe the climate struggle is unique because the stakes are enormously high.  Here we are talking about what kind of world we leave for future generations, and whether we can avoid environmental impacts that could potentially be catastrophic.  It is a struggle in which we must succeed, and to do so we face the political challenge of finding solutions that can receive the backing of many of the people who are currently on the side of the past. 

As I see it, the opponents of action on climate change fall into two camps.  In one camp are the ideologues.  These are people with a knee-jerk negative reaction to any kind of environmental regulation—or, for that matter, any kind of government regulation.  They are also people who never met an international treaty or institution that they felt was worthy of U.S. support – apart, perhaps, from the International House of Pancakes.  Getting this group to support U.S. action on climate change and/or U.S. participation in any kind of national or global response to this issue is, in short, a lost cause.

More promising are those in the other camp of climate holdouts – the people who perceive that their economic or political interests would be threatened if we were to address this issue in a substantive way.  This camp includes representatives of what I like to call “old industry”—companies and industry sectors whose profits are wrapped up in the status quo.  Both of these groups also include elected leaders—whether in the White House or in Congress—who receive support from them or who are them.   

In the political struggle over climate change, these two camps are up against a group that believes we need to take this issue seriously and move forward.  Many in this group are alarmed about the science and the implications of a warming world, but also perceive real opportunities—both for individual companies and for our nation as a whole—in developing, selling, and using the new technologies that will protect the global climate. 

Past vs. future.  Status quo vs. change.  Profits today vs. new opportunities and a safer world in the days and years to come. 

Where does this struggle stand today?  Well, in the United States at least, the do-nothing crowd have had several historic victories.   The first of these occurred in 1997, when a group of U.S. business interests determined that the international climate negotiations were a threat to their livelihoods and profits. 

It was a time when the nations of the world were entering a final phase in their negotiations over an agreement to limit worldwide greenhouse gas emissions.  And these businesses did not like it one bit. So what did they do?  They launched an enormous advertising campaign, as well as an intense lobbying effort on Capitol Hill.  And, in June 1997, their efforts bore fruit in the form of a Senate resolution known as Byrd-Hagel, a resolution that passed by 95 to 0.  This resolution stated that the United States should not agree to any binding commitments to reduce emissions unless developing countries also agreed to specific commitments, nor should it agree to anything that might harm the economy of the United States.

Obviously, this was a shot across the bow as the United States prepared to participate in the international negotiations that year in Kyoto, Japan.  And, even though the Clinton administration went ahead and negotiated and signed the Kyoto Protocol, the White House never submitted it to the Senate for ratification. In fact, they barely discussed it. Why not? 

Because the Protocol excluded developing nations from any new commitments, and because the Administration could not make a convincing case that there would be no serious economic harm to the United States.  But electoral politics also reinforced this view.  The Clinton Administration did not oppose Byrd-Hagel, and did not work with Congress to garner any support for what it had negotiated.  Negotiating and signing Kyoto was simply a gesture without meaning, a way to show that the difficulties the U.S. experienced in  Rio would not be repeated.  A way to say we did something without really doing anything.  And a way, perhaps, to get elected.

At the same time that the events I have just described were playing out at the national and international levels, a number of brave U.S. business leaders were coming together to acknowledge that, yes, climate change is a problem and that it is in the United States’ interest to do something about it. 

When the Pew Center on Global Climate Change initially announced the formation of our Business Environmental Leadership Council, the council had 13 members.  Today, we have 38.  This is a group that includes everyone from Alcoa, BP and DuPont to IBM, Pacific Gas & Electric and Toyota.  And it has served as an effective foil to the notion that business is universally opposed to forward progress on this issue. 

In the year 2000, the struggle between the forces of change and the forces of the status quo appeared to reach a turning point.  During his run for President that year, then-Governor George W. Bush actually pledged to impose the first-ever restrictions on carbon dioxide emissions in the United States. 

This commitment was not made, as you might expect, in response to the demands of environmentalists but in response to industry.  A group of major power companies had come up with the idea that they would agree to CO2 restrictions if the government would provide some certainty in its regulation of three air pollutants: sulfur dioxide, nitrogen oxides and mercury. 

However, as the President put it when discussing his opponent in the current election about another issue, he was in favor of this idea before he was against it. 

Not long after the inauguration in January 2001, the President reneged on his campaign pledge to regulate carbon dioxide emissions.  For good measure, the Administration also unceremoniously noted that the United States was withdrawing from the Kyoto process.  According to the White House statement, the treaty was dead. 

Why did the President do this?  Well, by now it’s obvious that he was choosing sides in the struggle between the past and the future.  And he was siding with the past.  He was listening to the ideologues and the representatives of old industry, many of whom had supported him in his campaign for the Presidency. 

Ask anyone in this administration for an honest opinion on the issue, and they will tell you that restrictions on carbon emissions in this country are inevitable.  But the goal of the White House and its allies is to put off that day for as long as it is politically possible to do so. 

And so the struggle continues.  But in the wake of the White House decisions on CO2 and Kyoto—and, in many instances, because of these decisions—the side of the struggle calling for change and substantive action has become stronger. 

At the international level, for example, where the Bush administration’s rejection of Kyoto was seen as a real slap in the face, countries rallied around the Protocol in an act of defiance.  And today you have 120 countries signed onto the agreement; its entry into force awaits Russia’s ratification, which is now likely before the end of the year. 

Kyoto may not amount to much in terms of achieving significant reductions in global emissions, but it sends the clearest signal yet that much of the world is on the side of doing something about this problem.  Much of the world, with the notable exception of the United States, is on the side of the future. 

So you have the European Union adopting a carbon dioxide emission trading program.  And you have British Prime Minister Tony Blair showing enormous political will both in putting forward a serious plan to substantially reduce emissions, and in his insistence that climate change will be one of two “big” issues that he hopes to address as the Chair of the G-8 process and the European Union in 2005.   

And it is not just internationally where the advocates of real action are achieving progress in this struggle.  In the United States Senate, we have a bipartisan core of elected leaders who are committed to climate solutions.    

The energy bill passed by the Senate in 2002 and again in 2003 would have established a national climate change strategy and required the largest greenhouse gas emitters to disclose their emissions.  The Senate’s 2002 farm bill, meanwhile, would have  compensated farmers for sequestering carbon.  And, perhaps most importantly, in October 2003, 44 Senators supported the Lieberman-McCain bill, legislation that would for the first time establish modest but binding targets for reducing U.S. greenhouse gas emissions.  This is bipartisan legislation, the first bill to be voted on that would actually reduce greenhouse gas emissions, and its support by a significant number of senators marks an important milestone in this nation’s awakening to the problem of climate change. 

Unfortunately, it takes both chambers of Congress to enact a law, and the House of Representatives is still stuck in the past.  However, even there we are beginning to see some activity: a House companion to Lieberman-McCain, was introduced recently and it currently has 81 cosponsors, 12 of whom are Republicans.

Looking outside of Washington, we see that the forces of change have found new allies in this struggle in state capitals around the country.  Particularly in coastal states, policymakers are justifiably concerned about the toll of climate change on their economies.  Western states are concerned about the prospects of worsening drought.  And, many states plainly see economic opportunities in efforts to address climate change: by producing and selling alternative fuels, becoming exporters of renewable energy, attracting high-tech businesses, or even selling carbon emission reduction credits.

What are states doing to address climate change?  Well, right here in California, your governor recently endorsed proposed regulations requiring a 30-percent reduction in carbon dioxide emissions from motor vehicles sold in the state by 2015.  If the California initiative moves forward—and, survives almost certain legal challenges, I see no reason to think it will not—it promises to pave the way for action by other states.  And, I was pleased to hear that your governor and the governors of Washington and Oregon are discussing additional measures to limit ghg emissions regionally and cost-effectively.

In the Northeast, 9 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, as planned by April of next year, with agreement on a model rule. 
 
These 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.  California’s emissions, for example, exceed those of Brazil.  Ohio’s emissions exceed those of Turkey and Taiwan, and emissions in Illinois exceed those from The Netherlands. 

The struggle between the past and the present is being played out in the businesses community as well.   Many of the companies we work with at the Pew Center are adopting voluntary targets for reducing their greenhouse gas emissions. Consider Dupont, which set a target to reduce its emissions 65 percent below 1990 levels before 2010, and by 2002 had actually reduced their emissions by a stunning 67 percent. I could tell you (but I won’t) about how a lot of other companies are doing similar things.  But I will tell you this – all the companies cite one important motivation for taking on a target - to improve their competitive position in the marketplace.  The bottom line is that increasing numbers of business leaders understand that climate change is a problem, and they are committing their companies to real solutions—even in the absence of U.S. policies. 

What else motivates these companies?  Well, for one thing, many of them are multinational companies.  They have operations in countries that are party to the Kyoto Protocol and that are implementing new regulations and new policies to limit greenhouse gas emissions.  Some may be reluctant to come out in support of tougher policies and regulations in the United States, but these companies understand the science, they see that regulation is inevitable, and in many cases they view the drive for climate solutions as a business opportunity.   

But, of course, voluntary action by selected companies is not enough.  Nor will a state-by-state approach alone get us to where we need to be.  And while a lot of countries are indeed moving forward, the Kyoto Protocol is a baby step at best.  This is where we  stand today.  The past meets the future.  The forces for change are fighting a good fight and gaining ground, but it is clearly not enough.  

This suggests to me that we need to approach this issue in a new way.  We need to confront the political challenges we face head-on, with facts and figures, and, most importantly, with an agenda that can gain broader support. 

I would propose that, in both our global and our national efforts, we need four distinct and complementary approaches. 

The first is one with which we are already familiar: targets and trading.  This is one thing the framers of the Kyoto Protocol got right, ironically at the insistence of the U.S.  By harnessing the power of markets, we can reduce emissions more effectively and more affordably.  Inspired by Kyoto, the European Union is on the verge of launching the broadest emissions trading system ever established. 

It will likely be some time before we establish an economy-wide cap-and-trade system here in the United States—the politics simply aren’t yet ripe.  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 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 on this issue is both practical and affordable. 

Secondly, I think it is critical that we begin to think in terms of key sectors.  Both globally and nationally, two of the largest and fastest-growing sources of emissions are transportation and power.  And it is in these sectors that we have many of those who would like to put off action as long as possible.  Let’s look first at transportation.  The automobile industry is global, and it is highly concentrated.  The 10 largest manufacturers account for 74% percent of the global market.  The vast majority of cars are produced – and used – in a relatively small number of countries.  Major fuel producers are also relatively small in number. 

What if we could get all these key players in a room to agree on a pathway toward a goal of zero emissions from autos in 30-50 years, with some clear milestones along the way?  This is not a proposal to dictate specific technologies – each major manufacturer seems to be going down a different technology path – but a way to set globally consistent performance standards with an end-result that we need if we are to be successful in out effort to address climate change. And at the same time, we could launch an intensive public-private R&D program to help deliver the technologies that will make it possible. 

No, it wouldn’t be easy, and it will be opposed by many who would argue that it is simply too hard.  But is it easier, or smarter, to tackle the problem nation by nation, or state by state? At the moment, there are different auto efficiency or CO2 emission standards or goals in the United States, Canada, Europe, Australia, Japan, China, Korea, and Taiwan.  We also have the proposal from California that, if it goes into effect, will doubtless be followed by other states.  Added to that we have $52 per barrel of oil.  I wonder if the time isn’t close for the private sector to decide that a rational, long-term effort, in which they are “at the table” and can help set the milestones, might not be better than the alternative.  

The power sector, equally important, is very different.  Power supplies are much more distributed -- there are hundreds, if not thousands of players (far too many to put into a room, let alone around a table), and there are many different ways to generate power.  So here we might focus on selected energy sources, the most important of which, both politically and in terms of emissions contribution, is coal.  There is no denying that coal will figure heavily in our energy future.  It is globally available and it is cheap.  Virtually all the new power plants being planned here in the United States will burn coal.  China is projected to add as much as 300 gigawatts of generating capacity over the next 10 years, nearly all of it coal. 

How then do we continue to provide power but minimize the impact on the climate?  How do we shift investment away from traditional coal plants to newer technologies that will be compatible with the efforts underway to capture CO2 emissions and sequester them deep in the ground? Here, too, I think we need a combination: a global R&D effort, and a clear set of mandates to pull new and better technologies into the market.  Many in the coal industry are beginning to see the need for a more proactive strategy, and if they can be assured a place in the future, they may begin to give up the technologies of the past.  

A third kind of strategy we need is one that integrates climate and development.  We cannot expect developing countries to become full partners in the climate effort if it continues to be seen as a purely environmental issue, a constraint on economic growth and development.  Frankly, this is true in developed countries as well.  We need policies that speak both to climate and to core development priorities.  The place to start, I would suggest, is with national energy policies.  Each nation needs to accept that climate change must be one of the drivers of energy policy. 

Here, I think the British are way ahead of most of the rest of the world.  For them, energy policy has three drivers: security of supply, price and climate change, and they have developed an energy blueprint for a 50 year time period that attempts to accommodate all three.  There is no reason why other countries cannot also move forward in this way, and should they do so, I believe we will  begin to see a genuine effort to limit emissions while meeting the energy needs of a growing global economy. 

Finally, because some degree of climate change is now unavoidable, responsible climate policy must also help us to adapt. Climate change is happening, and it is going to accelerate in the years ahead, no matter what we do.  We can minimize its effects, but at the same time we will need to adapt.  Taking a proactive approach is necessary for minimizing future costs. That includes thinking about everything from development patterns and zoning to water systems in a new way.    It is not too soon for governments at all levels and the private sector to begin incorporating climate change risks into everyday investment decisions.   
   
The bottom line is that climate change is not simply an environmental issue; it is fundamentally an issue of economics and development.  And this is why I believe we must succeed in marrying the old and the new:  because we need both sides to succeed.  Those that now perceive that their economic or political interests are threatened are the ones that can ultimately drive this issue, once they see that their interests will also be served by shaping and implementing climate solutions.

But how do we manage this?  To build the coalitions we need, we will have to depend on  a variety of factors: public awareness, media attention, elections, and even the weather.  But we will also have to create approaches that can attract broad constituencies, that can invite people, businesses, governments – everybody – to play a part in this effort, and that can treat everyone fairly and with respect.  And, finally and most importantly, we will need strong political leadership to pull it off. 
 
Are we there yet?  No, but I believe we are making some headway.  Some political leaders are beginning to emerge on this issue, and there is great experimentation with different policy approaches.  We will get closer still as people begin to understand that this is about more than climatology and atmospheric levels of CO2.  This is about all of us, and the choices we make:  the cars we drive, the representatives we elect.  It is a about the future we choose, and the legacy we leave to our children and grandchildren.  Choose well. 

And thank you very much.

Press Release: New Report Examines How Cimate Policies Affect the Cost of Greenhouse Gas Mitigation

For Immediate Release: 
October 13, 2004     

Contact:
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.  


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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: Toward a Sensible Center

Promoted in Energy Efficiency section: 
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The Brookings Institution and the Pew Center on Global Climate Change offer this archived webcast of U.S. Climate Policy: Toward A Sensible Center, a major conference that brought together senators, CEOs, top federal and state officials, and other prominent leaders to debate the future of U.S. policy on climate change
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U.S. CLIMATE POLICY:
TOWARD A SENSIBLE CENTER
June 24-25, 2004
Washington D.C.

Pew Center

WEBCASTS AND TRANSCRIPTS (in PDF)

THURSDAY JUNE 24, 2004 (full transcript)

Welcome
Strobe Talbott
, President, The Brookings Institution (webcast/transcript)

Introduction
Eileen Claussen
, President, Pew Center on Global Climate Change
(webcast/transcript)

Science, Security, and Economics
Moderator: David Sandalow, Environment Scholar, The Brookings
Institution
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
(webcast/transcript)
Question and Answer Session (webcast/transcript)

Climate Change: The Policy Challenge
Joseph I. Lieberman, United States Senate (webcast/transcript)

Technology Solutions
Spencer Abraham, Secretary, Department of Energy (webcast/transcript)
Michael Morris, Chairman, President, and CEO, American Electric Power
(webcast/transcript)
Larry Schweiger, President and CEO, National Wildlife Federation
(webcast/transcript)

Roundtable: Action by States and Business (webcast/transcript)
Moderator: Sally Ericsson, Director of Outreach, Pew Center on Global Climate
Change
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,
West Virginia

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
(webcast/transcript)
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
Change (webcast/transcript)
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)

Press Release: Coping with Climate Change: The Role of Adaptation in the United States

For Immediate Release:
June 15, 2004
                                                             
Contact:  Katie Mandes
703.516.0606 

Adapting to Global Climate Change
New Report Discusses the Ability of the United States to Adapt

Washington, DC — The mainstream scientific community agrees that the earth is warming, the warming is caused primarily by the build-up of greenhouse gases in the atmosphere, and that the warming will continue if we don’t reduce emissions of greenhouse gases. But even if extreme measures could be taken immediately to curtail emissions, the momentum of the earth’s atmosphere is such that the earth will continue to warm for many years to come.

"Unfortunately, we’re already past the point where climate change can be prevented entirely," said Eileen Claussen, President of the Pew Center on Global Climate Change. “Now we need a two-pronged approach that combines reductions in greenhouse gas emissions with policies that will help us adapt to the climate change that is going to occur.”

A new Pew Center report, Coping with Global Climate Change: The Role of Adaptation in the United States, by William Easterling of Pennsylvania State University, Brian Hurd of New Mexico State University, and Joel Smith of Stratus Consulting Inc., discusses the importance of adapting to climate change, the options available for adaptation, and the challenges of implementing them in the United States.

Adaptation will not be an easy or cost-free process, according to the report. Despite the challenges, however, the capacity of the U.S. economy to adapt to climate change is high, because of the broad range of resources (including wealth, technology and information) that can be directed at the problem.

“But the longer we delay," cautioned Claussen,  "the greater the cost will be.”

Even if the country as a whole adapts well, individual regions and communities may still face damages and disruption, and the more quickly the climate changes, the more difficult and costly adaptation will be.  Other regions of the world, particularly developing countries that lack the tools and resources for adaptation are even more vulnerable to the adverse impacts of climate change.

Finally, natural ecosystems, such as coral reefs and coastal wetlands, are facing dire consequences if the climate changes at the rates and magnitude currently predicted. Existing stresses, including habitat loss and pollution, have already weakened the ability of species to adapt by reducing resilience and introducing barriers to migration.  

The report highlights the importance of anticipating the impacts of climate change rather than simply reacting to challenges as they occur.  Making climate-conscious decisions now while designing and investing in long-lived infrastructures, such as water management, transportation and health care systems, will help the United States adapt to climate change later. Government policies can promote the development and adoption of strategies and technologies for adaptation through research, information sharing and institutional reform.

“Reducing greenhouse gas emissions is critical, but that alone will not be enough to protect the United States from climate change,” said Claussen.  “There are actions we can take now that will reduce the severity of some of its worst effects.”

###

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.

Assessment of new EIA Analysis of Amended Climate Stewardship Act

The Center's Assessment of EIA’s Analysis of the Amended (SA.2028) Lieberman-McCain Climate Stewardship Act (S.139)

On June 8, 2004, EIA released its economic analysis of SA.2028, the amended version of S.139: the Climate Stewardship Act introduced by Senators John McCain and Joseph Lieberman. (See evaluation of the original bill.) This amended version, which would hold U.S. greenhouse gas (GHG) emissions at year 2000 levels by 2010, was considered by the U.S. Senate in October 2003. For more information, see Summary of Act.

The original EIA analysis of S.139 was undertaken at the request of Sen. James M. Inhofe (R-OK), with additional analyses requested by the bill’s sponsors. This recent release – additional work analyzing the amended bill (SA.2028) – follows a request from Sen. Mary Landrieu (D-LA). A separate analysis of SA.2028 was previously released by researchers at the Massachusetts Institute of Technology. See our Summary of MIT’s Analysis.

The Center has examined EIA’s analysis of SA.2028 and finds it to be consistent with its earlier approach. However, it is still primarily driven by the underlying key assumptions that result in unrealistically high cost projections.

These key underlying assumptions are:

1. High growth of emissions in the baseline case: The high baseline case is the single most important element in explaining EIA’s high cost projections. EIA’s baseline case assumes high growth in:

  • petroleum use in transport: +46% by 2025;
  • coal-fired electricity generation: +35% by 2025; and
  • the non-CO2 greenhouse gases (GHG), including a 440% increase in emissions of industrial high-GWP gases (HFCs, PFCs, and SF6) by 2025 despite a production slow-down in recent years and considerable uncertainty over future industry-specific trends.

Furthermore, EIA assumes no relevant policies will be enacted over the next twenty years:

  • there will be no further federal or state requirements for criteria air pollutants, and therefore less incentive to rely on cleaner fuels and technologies – even though, for example, President Bush has proposed tougher standards for powerplants through the Clear Skies Act;
  • natural gas prices will remain very high despite proposed policies to increase supply;
  • individual states will do nothing to address GHG emissions – even though the northeastern states are actively developing a program to impose CO2 caps on their powerplants, California is about to impose CO2 tailpipe standards, additional states are developing renewable portfolio standards, and other states are considering similar initiatives; and
  • the federal government will do nothing to address climate change – it will not even implement President Bush’s voluntary GHG intensity reduction target or technology programs.

EIA’s assumptions result in an high baseline case which widens the apparent gap that must be closed to comply with SA 2028, and thereby increases EIA’s cost projection.

2. Limited opportunities to increase efficiency and reduce consumption: EIA still assumes that covered entities in the transportation, building and industrial sectors will do very little to increase their efficiency or reduce consumption under SA 2028. For example, EIA forecasts only a very modest increase in automobile efficiency, from 26.4 mpg to 27.2 mpg by 2025. These assumptions are made despite the fact that the GHG cap-and-trade program established by SA 2028 would create a sustained price signal, which should spur technology improvements, and the diffusion of these technologies into the marketplace.

3. Limited opportunities to reduce non-CO2 GHG emissions: EIA still assumes there are limited opportunities for covered entities to reduce their emissions of the non-CO2 GHGs (methane [CH4], nitrous oxide [N2O], and the industrial high GWP gases [HFCs, PFCs, SF6]). Under this assumption, EIA projects that overall emissions of non-CO2 GHGs from covered sectors would actually increase by around 70% under SA 2028 (note that EIA projects an increase of 230% in the baseline case). In contrast, the MIT analysis (see below) finds that overall non-CO2 GHG emissions would be reduced by around 45%. Particular examples that the MIT model finds for cost-effective reduction opportunities in the non-CO2 GHGs include the industrial high-GWP GHGs (HFCs, PFCs, and SF6) in the semiconductor, magnesium and aluminum sectors, and reducing methane emissions from coal and oil production facilities, landfills and natural gas pipelines.

4. Limited available offsets: EIA assumes that there is only a limited amount of cost-effective offsets available. For example, on domestic sequestration, EIA projects only 112 MTC at under $100/TC will be available; however, a forthcoming report from the Center by Robert Stavins of Harvard University indicates an availability of 300 MTC at under $50/TC. EIA also takes a restrictive view of available international offsets, assuming that trading will only take place with the EU-15 through 2025. This ignores the fact that access to mitigation opportunities in other developed countries and, particularly, in developing countries would greatly increase the supply of inexpensive international credits.

5. Tight natural gas supply: EIA still assumes a very tight supply of natural gas. This assumption would limit one key option for a smooth transition away from highly carbon intensive energy use. However, as shown by EIA’s own evaluation of past reference cases, natural gas has been the fuel with the least accurate forecasts of production, consumption and prices.

 

Pathway towards emissions reductions

Because EIA assumes limited availability of cost-effective efficiency improvements and limited reduction opportunities for non-CO2 gases, the great majority (88%) of required emissions reductions would come from fuel switching in the electricity sector. As any sizeable transition to natural gas would be limited according to EIA’s predicted tight supply, the EIA model predicts the electricity sector would comply by using expensive renewable and nuclear technologies together with premature retirement of some existing coal plants. Such a large-scale and unplanned shift of capital assets would be expensive. This overall story is the same for the amended SA.2028 as for the original S.139 bill, with the only real change from the relaxed cap being a lower requirement for new nuclear units and some greater retention of existing coal plants (in 2010 coal use is up 7% from 2001 levels, falling to 79% of current levels by 2020).

In addition, EIA's analysis is very conservative in its assumptions regarding the diffusion of those high efficiency technologies that already exist. Among other things, EIA assumes there will be less use of combined heat and power and distributed generation technologies under SA 2028 than in the baseline case. EIA is also pessimistic on the market penetration of new technologies – assuming, for example, that by 2025 no hydrogen and no coal-fired IGCC with sequestration plants would be operational despite these being principal objectives of federal energy R&D.

The actual experience of companies on the Center’s Business Environmental Leadership Council that have elected to take on a GHG reduction target is that low-cost, or cost-saving opportunities are often available – even for much more ambitious targets than proposed in the bill. For example, BP set a target of reducing GHG emissions by 10% from 1990 levels by 2010. By instituting an emissions trading program, BP met its target 8 years ahead of time and achieved $650 million of savings over three years for an estimated outlay of $20 million. DuPont has met its target to reduce GHG emissions by 65% between 1990 and 2010 and managed to use 9% less total energy in 2002 than it did in 1990, despite an almost 30% increase in production. Compared to a linear increase in energy with production, this achievement resulted in $2 billion in cumulative energy savings. EIA’s model shares the weakness of many computable general equilibrium (CGE) or “top-down” economic models – it tends not to recognize these opportunities and, as a result, overstates projected costs.

 

Comparison with MIT Analysis

MIT developed two cases that focused on Phase 1 reductions as entailed in SA 2028. However, the first case is actually a CO2-only case. This is much less flexible than SA 2028, but the model still projects the same allowance prices as EIA. (Both studies estimate an allowance price of $125/TC [$34/TCO2] in 2020.) The second MIT case assumes unlimited non-CO2 credits in 2020. (Here MIT projects allowance costs much lower than EIA’s, at $52/TC [$14/TCO2] in 2020.) The MIT analysis allows use of all available cost-effective non-CO2 GHG emission reductions.

In contrast to EIA’s emissions reduction pathway through fuel switching, in the MIT analysis, greater efficiency and reductions in non-CO2 GHGs lead to far less pressure on the electricity sector. With these assumptions, MIT predicts a reduction in natural gas prices compared to the baseline case, and coal use remaining stable at current levels.

Translating these emission reduction pathways to the wider U.S. economy, a fundamental point is that for a similar allowance price, EIA projects macro-economic impacts of 0.22% of GDP, while MIT finds a consumer welfare loss of only 0.02% by 2020. Consumer welfare in this case measures lost consumption (or income) by consumers (as leisure effects are not included), and consumption is the major component of GDP (the other components being investment, government expenditures and imports/exports balance). Consumer welfare is a good measure of the actual impact on the population.

Looking Beyond Kyoto: A U.S. Perspective

“Looking Beyond Kyoto: A U.S. Perspective”

 


Remarks of Elliot Diringer, Pew Center on Global Climate Change
at the Green Week 2004 Conference of the European Commission

Brussels, 2 June 2004

I’d like to begin by offering my congratulations to Commissioner Wallström and to her esteemed colleagues at the Commission for two very welcome and very significant accomplishments. 

First, I would like to congratulate you on the establishment of the EU emissions trading scheme.  It was not so long ago that the very idea of emissions trading was viewed quite skeptically here in Brussels.  Today Europe has not only embraced this alien notion from across the Atlantic, but is leading the world in its practice.

Second, I’d like to offer my congratulations, and my thanks, for the vigorous efforts that led to the recent reaffirmation of Russia’s intent to ratify the Kyoto Protocol.  I don’t imagine the EU has received any official message of thanks or congratulations from my side of the Atlantic.  But as one representing an organization seeking to advance the effort against climate change, I believe President Putin’s declaration is indeed welcome news, and for several reasons. 

One reason is that the Protocol’s entry into force will help ensure that Europe and the other ratifying countries deliver on the commitments made in Kyoto.  And in so doing, they will demonstrate to those who are not yet acting that this is a challenge that can be met.

Second, even if Washington is right now distracted by other concerns, Kyoto’s entry into force will send a strong message to the United States.  It will remind us of the urgent need for action against climate change, and of the importance of acting multilaterally.

Finally, Kyoto’s entry into force will set in motion the diplomatic machinery that could advance us to the next stage in the international effort against climate change.  For we all know that while Kyoto is a start, it is hardly the final answer to global warming.  And while I have just congratulated the EU for pushing ahead with the protocol, it is critical, I believe, that we now start looking beyond Kyoto. 

If the protocol does indeed enter into force, negotiations could begin as early next year toward a new round of commitments.  We should use this opportunity to work toward a new approach – one both broader and deeper, one with the hope of engaging all the world’s major emitters in a long-term effort that fairly and effectively mobilizes the technology and resources we need to protect our global climate.

In a moment I’d like to share some preliminary thinking from the Pew Center on the possible path beyond 2012.  But because no path forward can in the long run succeed without the United States, let me first offer a brief assessment of the situation back home.

Most of you I am sure heard about the big climate change news in the States last week.  Indeed, it was the most widely heard pronouncement on this issue ever in the United States.  I am referring of course to the release of the new movie called “The Day After Tomorrow.”  I have not yet seen it but my son has given me his review.  And it sounds to me as if one could leave the theatre believing either that climate change is pure science fiction – or that it’s real, and that at any moment it could thrust New York City into an instant ice age. 

But while the movie itself might do little to educate people on the real causes and consequences of climate change, or its potential cures, it has drawn enormous media attention to those very issues.  The media are so interested, I think, not simply because Hollywood has produced a new disaster movie, but because there is at long last a genuine debate on climate change underway in the United States.  And this debate, I am pleased to say, is beginning to produce some genuine action.

Before the “Day After Tomorrow,” the event that may have done the most to raise public awareness of climate change in the United States was, oddly enough, President Bush’s rejection of the Kyoto Protocol.  In the three years since, this issue has received growing attention in the media, in boardrooms, in the offices of state governors, and in the U.S. Congress.

The most promising developments have been at the state level.    Several of our largest states, led both by Republican and by Democratic governors, are preparing to cap emissions from power plants, cars and SUVs.  The nine Northeast states – including New York, New Jersey, and Massachusetts – are working toward creating a regional greenhouse gas market.  And California, which traditionally has led the country in demanding cleaner cars, has enacted legislation to limit carbon dioxide from cars and SUVs.  The law is being challenged in the courts by the carmakers, and Governor Schwarzenegger has promised to defend it.  If the new law survives, other states are expected to follow California’s lead.  

These state efforts are important and encouraging, but they must be a prelude only to stronger action at the national level.  Here the most promising development is the introduction of legislation to establish a nationwide greenhouse gas cap-and-trade system.  This legislation, introduced by Senators John McCain and Joe Lieberman, a Republican and a Democrat, is the first proposal ever put before Congress for a mandatory cap on U.S. greenhouse gas emissions.  Recently it won 43 votes in the Senate, several votes short of a majority but a very respectable showing for a first vote.  Senators McCain and Lieberman promise to keep bringing the legislation back, and a companion bill has now been introduced in the House of Representatives.

I must be frank and say that it will be some time still, perhaps years, before such legislation is enacted, regardless of the outcome of our November election.  And that is important to bear in mind as we think about steps beyond 2012.  Because the United States will be in a position to join other countries in a binding international agreement, I believe, only once we have achieved a broad national consensus on just how we are prepared to address this issue at home.

Still, we must begin now to envision such an agreement – one that can work not only for the United States, Europe, and the other industrialized nations, but for developing countries as well.  Last year, the Pew Center organized a series of papers and international workshops on the key challenges in forging a workable approach that can take us beyond Kyoto.  We are not yet at the point of suggesting specific approaches or architectures.  But some important themes emerged from our work last year, and I’d very briefly like to share some of those with you today.

First, a point that emerged over and over again: The basic challenge we face is building political will.  In material terms, of course, the challenge is technological – nothing less, actually, than a global technological revolution.  This revolution must be carried out in the marketplace, because only markets can mobilize the resources and ingenuity that are needed.  But the markets won’t do this on their own.  The direction – the imperative – must come from government.  And that requires political will. 

When and how it materializes depends on a host of factors: public awareness, media attention, elections, even the weather.  But it depends as well on our resourcefulness in fashioning common approaches.  We must ask ourselves: What types of international arrangements can best capture and motivate political will to achieve the broadest possible participation in an effective, long-term effort? 

A second, and related, point is that there is no getting around national interest.  We all know that climate change is a common challenge that must be met through collective action.  But the political reality is that nations will engage in collective action only if they perceive it to be in their national interest.  All parties must try to better understand their respective domestic concerns, and to build a collective framework that assists each in generating greater political will. 

This is, in part, a matter of recognizing that climate is not simply an environmental issue but fundamentally one of economics and development.  And it is in part a matter of reocgnizing that a multilateral approach cannot succeed by attempting solely to remold countries’ behavior from the top down.  It must at the same time recognize and reflect national circumstances from the bottom up.  

This leads to a third point:  We need a more flexible architecture, one that can accommodate a broader range of national strategies.  We must construct a more “variable geometry,” as one of our papers puts it.  The Kyoto Protocol provides a degree of flexibility.  But it employs only one form of mitigation commitment: fixed targets and timetables.  Other approaches are needed.  We need different strategies for developed and for developing countries, and possibly within those groupings as well. 

A fourth point is that, in considering alternative approaches, we should think about targeting action, not only emissions.  The climate effort so far has sought to drive mitigation through measures mandating specific environmental outcomes.  An alternative or complementary approach might instead frame commitments in terms of the kinds of actions that are required.  For instance, having a long-term greenhouse gas concentration target – say 550 parts per million – would be extraordinarily helpful.  But negotiating one would likely be fruitless, and potentially even counterproductive.   Why not instead agree on the types of actions needed to move economies toward the goal of climate stabilization.  For instance: achieving zero net emissions from the power sector, or replacing gasoline with hydrogen, by 2050. 

My fifth and final point is that we must consider the right forum, and the right quorum, for future international efforts.  There are strong rationales for a global approach – from an environmental perspective, from an economic perspective, and from an equity perspective.  But the reality at the moment is one of fragmentation.  A variable geometry could mean for now parallel regimes undertaken within any number of regional or multilateral forums.  It is also possible to envision a different grouping within the existing global framework, something perhaps transcending the present division between developed and developing countries.  If we count the EU as one party – just 12 parties account for nearly 80 percent of global CO2 emissions.  In the long run, some type of global approach is not only preferred but necessary.  The question is whether at this stage something less than fully global might better deliver the political will that is needed.

I offer these thoughts not as hard principles or prescriptions, but rather as broad points worth considering as we chart a course forward, a course that will take us beyond 2012, and beyond Kyoto.  That there is today an international effort against climate change is thanks in large measure to the political will shown here in Brussels, and across Europe.  As we across the Atlantic begin coming to terms with the climate issue, we must all think anew about the best ways to move the international effort forward.  We will need to be open, and we will need to be creative, if we are to forge a common approach equal to the challenge.

Thank you.

Global Climate Change and Coal's Future

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. 

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