Federal

The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
 

Political Climate Change

Full Article (PDF)

by Truman Semans, Director for Markets and Business Strategy at the Pew Center--Appeared in Petroleum Economist, September 2005
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Summary of Bingaman Climate and Economy Insurance Act of 2005

In June 2005, Senator Jeff Bingaman (D-NM) drafted a proposal to impose mandatory limits on greenhouse gas emissions, based on the recommendations published by the National Commission on Energy Policy (NCEP). A draft bill of the proposal was named the “Climate and Economy Insurance Act of 2005,” although the bill was not formally introduced into Congress.

The Act would require the Secretary of Energy to set emissions intensity targets for years starting in 2010, and to translate these intensity targets into an annual cap on greenhouse gas emissions (GHGs). The cap would apply to “upstream” fuel producers and other entities including manufacturers, importers and emitters of non-fuel GHGs, and would provide for trading of emissions allowances between covered sources. The Act includes a safety valve price that may be paid in lieu of an allowance, limiting the cost of compliance, but also allowing emissions to rise above the established cap. The Energy Information Administration (EIA) projects that, at the safety valve price recommended by NCEP, emissions would exceed the target caps after 2016 and rise through the foreseeable future, though at a somewhat lower rate than projected under a “business as usual” scenario. (See graph of emissions according to the cap, and actual expected emissions due to use of the safety valve.)

Target: Each year’s target cap would be calculated on the basis of “emissions intensity,” defined as the total amount of covered GHG emissions divided by the forecasted Gross Domestic Product (GDP). In 2006, the Department of Energy (DOE) would calculate the target cap for each calendar year from 2010 through 2019 by (a) projecting the emissions intensity expected for 2009 (based on EIA’s projections of GDP and GHG emissions), (b) reducing that amount annually by 2.4% to arrive at the “emissions intensity target” for each year through 2019, and (c) multiplying the year’s emissions intensity target by the GDP forecasted for that year to arrive at an absolute emissions cap. In 2016, DOE would issue the target caps for 2020 through 2024 using the same procedure, but with a 2.8% reduction rather than 2.4%. The procedure would be repeated every five years, but could be modified under the Congressional Review procedure.

Allowances: The Act would annually require regulated entities to submit an allowance or pay the safety valve price for each ton of GHG emissions. Regulated entities include regulated fuel distributors (natural gas pipelines, petroleum refineries, coal mines of a certain size, natural gas processing plants, and fuel importers) and non-fuel regulated entities (producers or importers of HFCs, PFCs, SF6, or N2O; cement or lime producers; aluminum smelters; and various other non-fuel-related emitters). Fuel distributors would submit allowances based only on their covered fuels, while non-fuel entities would submit allowances based only on their non-fuel-related GHGs.

Allocation of Allowances: The bill specifies the amount of allowances that would be allocated for free, with 91% of emissions allocated in 2010, gradually dropping to 87% allocated after 2019. The Secretary of Energy would distribute the allowances to regulated entities and other affected sectors in such a way that offsets—but no more than offsets—expected losses of profits attributable to this program. One percent of allowances would be provided to organizations assisting affected workers. A small percentage of allowances would be auctioned rather than allocated, starting with 5% in 2010 and rising to 10% after 2019. Each year, an additional 3% of allowances would be reserved for offsets and 1% for early reductions. Any undistributed allowances would be auctioned.

Cost-Reducing Mechanisms: The most important cost reducing mechanism would be the provision allowing any entity to avoid submitting allowances by paying the “safety valve” price, starting at $7/ton-CO2 in 2010, and annually rising in price by a nominal 5% (i.e., not adjusted for inflation). As mentioned, this would assure an upper bound on costs, but also make it highly likely that emissions each year after 2016 would exceed the target caps. In addition, to minimize the cost of the program, allowances and credits could be sold, exchanged, purchased, or transferred. Credits, which could also be submitted in lieu of an allowance, would be distributed to entities that geologically sequester combustion-related carbon dioxide, export covered fuels or non-fuel GHGs, use covered fuels as feedstocks, or otherwise destroy non-fuel GHGs. A pilot program for international offset projects would be established to distribute the 3% of annual allowances reserved for offsets. Each year, 1% of the allowances would be made available to entities that reduce or sequester emissions before the initial allocation period, as demonstrated through reports to the EIA’s Voluntary Reporting of Greenhouse Gases Program (1605(b)).

Congressional Review: By January 2015 and every 5 years afterwards, the President would establish an interagency group to review and make recommendations regarding this program and any similar programs underway in China, India, Brazil, Mexico, Russia, Ukraine, or any OECD country. Recommendations may include modifications to the rate of emissions intensity improvement or the rate of safety valve price increases, along with the feasibility of including other non-regulated entities, or modifications to the percentage of allowances auctioned.

Monitoring and Reporting: DOE would establish procedures for reporting and monitoring emissions, and would determine eligibility for credits, offsets and early-reduction allowances.

Penalties: A regulated entity that failed to submit an allowance would pay an amount equal to three times the safety valve price for each allowance not submitted. Failure to comply would bring civil and criminal penalties.

The Act would also create a trust fund to support climate change adaptation and early technology deployment, with provisions for conservation, zero- or low-carbon energy technologies, advanced coal technologies, cellulosic biomass, and advanced vehicles. A subtitle on International Programs would facilitate the deployment of clean energy technologies in developing countries.

Comments on Draft Technical Guidelines for the Voluntary Reporting of Greenhouse Gases (1605(b)) Program

Comments by The Pew Center on Global Climate Change  Regarding Draft Technical Guidelines for the Voluntary Reporting of Greenhouse Gases (1605(b)) Program

June 27, 2005

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 “Draft Technical Guidelines for the Voluntary Reporting of Greenhouse Gases (1605(b)) Program” (70 Fed. Reg. 15164 (March 24, 2005)). The Pew Center appreciates the opportunity to comment on this important issue.

The Pew 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)), as well as the “General Guidelines for Voluntary Greenhouse Gas Reporting; Proposed Rule” (68 Fed. Reg. 68204 (December 5, 2003)). These comments on the Draft Technical Guidelines follow an additional response to the “Interim Final, General Guidelines for the Voluntary Reporting of Greenhouse Gases (1605(b)) Program” (70 Fed. Reg. 15169 (March 24, 2005)), submitted separately.

We appreciate the attempt that has been made to develop a comprehensive program for greenhouse gas reporting. The use of a ratings system is a promising approach for addressing the wide range of GHG emission situations facing industries and sectors that a reporting system should cover. However, the values established for the various methodologies may result in inequities between registered reductions and may unintentionally disadvantage some industries or entire sectors. Likewise, other decisions have been made about which entity has the right to register particular emission reductions both within and across sectors. Where the range of stakeholders can reach agreement on equitable arrangements for allocation and reporting of emissions reductions, we recommend DOE consider adopting these arrangements. The Pew Center recommends that the first reporting period be considered a trial to determine how well the guidelines support sufficient and equitable participation in the registration of real reductions.

Following the first period, these Guidelines should be re-evaluated based on reporters’ experiences with (and the extent of participation in) the program in all sectors and revised in the light of these experiences. Finally, existing discrepancies between the General Guidelines and the Technical Guidelines (for example, discrepancies in accounting methods specified for geological sequestration) should be resolved prior to the Guidelines becoming final.

Comments on General Guidelines for the Voluntary Reporting of Greenhouse Gases Program

Comments by the Pew Center on Global Climate Change Regarding Interim Final, General Guidelines for the Voluntary Reporting of Greenhouse Gases (1605(b)) Program

June 27, 2005

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 “Interim Final, General Guidelines for the Voluntary Reporting of Greenhouse Gases (1605(b)) Program” (70 Fed. Reg. 15169 (March 24, 2005)). 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)), as well as the “General Guidelines for Voluntary Greenhouse Gas Reporting; Proposed Rule” (68 Fed. Reg. 68204 (December 5, 2003)). While some of the issues raised in previous comments have been addressed in the Interim Final Guidelines, many significant points have not. The Center considers the issues reiterated below to be essential for the establishment of a successful program to reduce U.S. greenhouse gas emissions.

Mandatory reporting

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.

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 more transparent and helpful if absolute emissions reduction data were published alongside intensity data.

Entity boundaries

We appreciate the effort to clarify the definition of an “entity” to be used in entity-wide reporting. However, the fact that reporters retain the flexibility to establish their own approach to entity definitions—rather than requiring reporting at the highest (parent company) level in the U.S.—is likely to provide a skewed view of true entity-wide emissions and make comparison across firms impossible. Additionally, a future mandatory program might be based on the emissions of individual facilities within entities, therefore that information would also be useful to incorporate into this system.

Registering of Activities Prior to 2003

Perhaps of greatest concern is the limitation of registered reductions to post-2002 activities. 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. While we understand the desire to measure progress toward the President’s goal of reducing emissions intensity 18% from 2002 levels, allowing entities to register reductions that occurred before 2002 would not detract in any way from the ability to measure reductions that have occurred since 2002.

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 such as this one that have encouraged early action. 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.

Press Release: New Reports Detail Challenges and Opportunities for Climate Change and Buildings, Electricity Sectors

Press Release
For Immediate Release:  June 16, 2005

Contact:  Katie Mandes
703.516-0606                                           

BUILDINGS, ELECTRICITY AND CLIMATE CHANGE
New Reports Detail Challenges and Opportunities

Washington, DC —The U.S. buildings and electricity sectors—which together account for the largest portion of our economy’s physical wealth and enable almost every activity of our daily life – also account for approximately half of our nation’s CO2 emissions.  Effective long-term climate change policy in the U.S. must address emissions from these two sectors.  

Two new reports released today by the Pew Center on Global Climate Change identify a number of technologies and policy options for GHG reductions in both sectors.  The first report is Towards a Climate-Friendly Built Environment, written by Marilyn Brown, Frank Southworth and Therese Stovall of Oak Ridge National Laboratory.  The other is U.S. Electric Power Sector and Climate Change Mitigation, written by Granger Morgan, Jay Apt, and Lester Lave of Carnegie Mellon University.

Long capital stock turnover, regulatory uncertainty and diverse and often competing interests all contribute to the difficulty of reducing GHGs from these two sectors.  These reports find that a portfolio of affordable technology and policy options exist to completely transform the high-emitting buildings and electricity sectors to low-GHG emitting sectors over the next 50 years.  However, the long lead time required to develop new technologies, deploy available technologies, and turn over capital stock, means that policies need to be launched now to create the impetus for change. Efforts must be sustained over time to achieve the deep reductions required.

"The importance of these two sectors to both the U.S. economy and to the issue of climate change cannot be over-stated,” said Eileen Claussen, President of the Pew Center on Global Climate Change, “This research shows that we can achieve enormous reductions in the building and electric sectors, but only if we craft a clear and comprehensive policy to guide them."

Some insights that emerge from the reports are:

  • Policies are needed to enable meaningful GHG reductions from these sectors. The diverse and fragmented nature of the buildings sector, and the current state of regulatory uncertainty in the electricity sector prevent many available GHG reduction options from being adopted in the market in the absence of policies.
  • Significant increases in R&D and deployment policies are essential if we hope to significantly reduce GHGs from these sectors. A significantly expanded R&D program is needed in the U.S. to develop new technologies, and deployment policies are needed to push and pull available fuels and technologies into the market in the near and long term.
  • An elimination of most GHGs from these sectors is possible over the next 50 years. If managed properly, the electricity sector could undergo a complete capital stock turnover to low or non-GHG emitting generation sources over the next 50 years; while buildings in the U.S. could become net low-GHG energy exporters in the same time frame – but government policies are essential to provide clear policy direction in order to drive the massive public and private investments and choices necessary to enable such a future.
Solutions Series

This report is part of the Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change. In 2003, the Solutions series released the first of its sectoral reports, Reducing Greenhouse Gas Emissions from U.S. Transportation, written by David L. Greene of Oak Ridge National Laboratory and Andreas Schafer of the Massachusetts Institute of Technology. Other Pew Center series focus on domestic and international policy issues, environmental impacts, and the economics of climate change.

A complete copy of this report—and previous Pew Center reports—is available on the Pew Center's web site, /global-warming-in-depth/all_reports/.

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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.

Oxford Energy Forum: Keeping the Nuclear Power Option Open

Judith M. Greenwald, Director of Innovative Solutions at the Pew Center, Discusses Keeping the Nuclear Power Option Open
(This article appeared in Oxford Energy Forum, May 2005)

Introduction:

Addressing the challenge of global climate change will require a sustained and comprehensive commitment to climate-friendly policies and investments throughout the world. Such policies and investments must be focused on enabling a transition to a low-carbon economy through a significant reduction in annual greenhouse gas (GHG) emissions by 2050. A commonly stated goal is to stabilize the atmospheric concentration of carbon dioxide (CO2) at twice its pre-industrial level. Such a “decarbonization” in the context of increasing global demand for energy would necessitate an increase of roughly 100 to 300 percent of present-day worldwide “primary power” consumption from non-CO2-emitting sources such as renewables, nuclear power, the use of fossil fuels with carbon capture and sequestration, and energy efficiency improvements.

Achieving this transition depends on both near-term and long-term actions...

A discussion with Judith Greenwald, Director of Innovative Solutions at the Pew Center— Appeared in Oxford Energy Forum, May 2005
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Congressional Testimony of Eileen Claussen: Regarding the Climate Change Technology Deployment in Developing Countries Act of 2005 (S.883)

TESTIMONY



STATEMENT BY EILEEN CLAUSSEN, PRESIDENT
PEW CENTER ON GLOBAL CLIMATE CHANGE


REGARDING THE CLIMATE CHANGE TECHNOLOGY DEPLOYMENT
IN DEVELOPING COUNTRIES ACT OF 2005 (S.883)

Before the International Economic Policy, Export and
Trade Promotion Subcommittee, The Foreign Relations Committee
United States Senate

Washington, DC
May 19, 2005

 

Mr. Chairman and members of the subcommittee, thank you for the opportunity to testify on the Climate Change Technology Deployment in Developing Countries Act of 2005 (S.883) introduced by the chairman.  My name is Eileen Claussen, and I am the President of the Pew Center on Global Climate Change.

The Pew Center on Global Climate Change is a non-profit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change.   Thirty-nine major companies in the Pew Center’s Business Environmental Leadership Council (BELC), most included in the Fortune 500, work with the Center to educate the public on the risks, challenges and solutions to climate change. 

Global climate change is real and likely caused mostly by human activities.  While uncertainties remain, they cannot be used as an excuse for inaction.  Temperatures at the Earth’s surface increased by an estimated 1oF over the 20th century.  The 1990s were the hottest decade of the entire century; perhaps even the millennium, and 1998, 2001, and 2002 were three of the hottest years ever recorded. The growing scientific consensus is that this warming is largely the result of emissions of carbon dioxide and other greenhouse gases from human activities including industrial processes, fossil fuel combustion, and changes in land use, such as deforestation.   Projections of future warming suggest a global increase of 2.5oF to 10.4oF by 2100, with warming in the United States expected to be even higher.  This warming, along with the associated changes in precipitation and sea-level rise, will have important consequences for the U.S. environment, economy and security.

 I believe there are three things we in the United States must do to reduce the real and growing risks posed by global climate change: First, we must enact and implement a comprehensive national program to progressively and significantly reduce U.S. emissions of greenhouse gas emissions in a manner that contributes to sustained economic growth.  While I am happy to elaborate on this point, that is not my intent today.  Second, we must strengthen our efforts to develop and deploy climate-friendly technologies and to diffuse those technologies on a global scale.  That is the primary thrust of the bill before you today.  And third, the United States must work with other countries to establish an international framework that engages all the major greenhouse gas-emitting nations in a fair and effective long-term effort to protect our global climate.  I would like to return to this point later in my testimony and offer specific ideas on how this third critical challenge can best be met.  First, though, let me discuss the specifics of the Hagel bill.

We must strengthen efforts to develop and deploy climate-friendly technologies on a global scale.  Standards of living are expected to rise in developing countries over the next few decades, and, as they do, energy demand will rise.  China, for example, expects to build 544 gigawatts of new coal capacity between 2003 and 2030, far more than current coal capacity in the United States.  Shanghai predicts a quadrupling of cars and trucks by 2020, and car sales in Delhi have risen 10% per year since the mid-1970s.  If we are going to address the climate change problem, the huge growth in energy demand in developing countries has to be as climate-friendly as possible. 

Sen. Hagel’s bill is intended to address exactly that challenge.  The bill would have the Department of State identify the top 25 energy users among developing countries, describing among other things the quantities and types of energy they use, and the greenhouse gas intensity of their energy, manufacturing, agricultural and transportation sectors.  The bill would require the development of a technology strategic plan, and provide for at least ten demonstration projects to promote the adoption of technologies and practices that reduce greenhouse gas intensity in developing countries.  The bill would identify potential barriers to the export and adoption of climate-friendly technologies.  All of these would be useful activities.

I would, of course, like to offer a few suggestions.

 First, we should tailor the assistance provided to developing countries to their needs.  It is in the interest of the United States for developing countries to develop, and thereby to increase the health and well-being of their people, and it is important to recognize that the path each country takes in its development will vary.  Our efforts to promote the deployment of climate-friendly technologies will occur in the context of these varying paths to development.  Rather than viewing climate-friendly technology deployment as an exercise in funding demonstration projects or increasing technology exports, our objective should be to integrate climate-friendly activities into national strategies for economic growth, poverty reduction, and sustainable development.  We should be helping developing countries build their capacity to assess clean energy options and establish policy frameworks that will favor such options even after our funding assistance is gone. 

The reality is that the highest priority for most developing countries is economic growth and development.  Energy policies and plans are critical to achieving those priorities.  Making climate change one of the drivers of energy policy, as the United Kingdom has done, will move us toward meeting our goal of a stable climate.  It is in this context that we should support and promote efforts by the largest developing countries to identify specific goals for limiting their emissions of greenhouse gases – recognizing that their goals may vary in form, content and timing.  One way to do that would be to require that the largest developing countries, in agreeing to receive assistance under this bill, would establish goals consistent with their development strategies, and periodically report progress towards meeting them. 

Second, we would recommend tracking progress under this bill not only in terms of greenhouse gas intensity, but in terms of actual greenhouse gas emissions.  Measuring intensity is useful in that it allows us to distinguish a reduction in emissions that results from a genuine improvement in the technology from a reduction due to reduced production.  Intensity reduction, however, is not a surrogate for emission reduction, and our objective of achieving a stable climate must entail actual emission reductions.  We therefore should be tracking our progress in those terms.

I would respectfully suggest that Senator Byrd’s International Clean Energy Deployment and Global Energy Markets Investment Act of 2005 (S.745) takes a useful approach to the issues I have just mentioned.  It might be beneficial to merge these aspects of the Byrd bill with the Hagel bill.

 An international technology deployment program, such as the Hagel bill, can only be effective in the context of an international framework that engages all major emitting countries in the effort against climate change.  So even more critical, I believe, is the third challenge I identified at the outset: establishing a fair and effective international framework to engage all major emitting countries in the effort against climate change.

   Through an initiative called the Climate Dialogue at Pocantico,  the Pew Center has engaged with policymakers and stakeholders from around the world in a wide-ranging examination of specific options for advancing the international climate effort.  I would like to share with you some of the insights and observations emerging from this ongoing dialogue.

 First, there is no getting around national interest.  Climate change is a collective challenge.  However, the political reality is that nations will join in meeting this collective challenge only if they perceive it to be in their national interests.  A multilateral framework must therefore recognize and accommodate the very real and significant differences among nations.  The key here is flexibility.  We need a framework flexible enough to allow different countries to undertake the different types of strategies best suited to their national circumstances.  To accommodate different types of strategies, we must allow for different types of commitments.  For instance, a quantified emissions limit may be appropriate for some countries, while for others some form of non-quantified policy commitment may be more feasible and effective.  Also, commitments could apply economy-wide, or they could be structured around specific sectors.

 There are many possibilities and the time to begin considering them is right now.  In its present form, the Kyoto Protocol extends only to 2012.  Under the terms of the Protocol, parties must begin consideration of new commitments this year.  This process will begin when climate negotiators meet later this year in Montreal.  While the United States is not a party to the Protocol, it can, if it so chooses, exert great influence on the pace and direction of these discussions.  Other countries would very much welcome the United States’ engagement.  Most have come to accept that the United States will never be a party to the Kyoto Protocol.  And they understand that a truly effective international approach – one with the full engagement of the United States and the major developing countries – will require moving beyond Kyoto.  The Administration has thus far taken the position that it is premature to discuss post-2012 options.  Quite to the contrary, it is essential that we begin now, with the United States fully and constructively engaged.

 Toward that end, I believe the most powerful step the Senate could take to reestablish U.S. leadership on this vital global issue would be to revisit and update the sense of the Senate on the future of the international climate effort.  As we all know, Senate Resolution 98 of the One Hundred Fifth Congress – the Byrd-Hagel resolution – has had a profound influence on the climate debate here and abroad.  As the international climate effort enters a new stage, a new Senate resolution can again shape the debate.  It can help ensure that the United States is at the table and define the terms of U.S. engagement; and, in so doing, it can help achieve the best possible outcome.
 
I would strongly encourage the Foreign Relations Committee to consider, and to report to the full Senate, a resolution advising the Executive Branch to work with other nations, both under the Framework Convention and in other international fora, with the aim of securing U.S. participation in agreements consistent with the following four objectives:

First, to advance and protect the economic and national security interests of the United States.  Potential climate change impacts such as chronic drought, famine, mass migration, and abrupt climatic shifts may trigger regional instabilities and pose a growing threat to our national security interests.  Addressing climate change, on the other hand, can greatly strengthen U.S. security by reducing our reliance on energy imports.  Sea-level rise and other climate impacts pose a direct economic threat as well, to U.S. communities and to U.S. businesses.  On the other hand, our response to climate change, if not well conceived, could pose a different sort of economic burden.  It is imperative that we both avoid the economic consequences of climate change, and minimize the costs of addressing climate change.

Second, to establish mitigation commitments by all countries that are major emitters of greenhouse gases.  Ideally, a global challenge such as climate change should be met with a full global response.  What is most critical at this stage, however, is getting the largest emitters on board.  Twenty-five countries account for 83 percent of global greenhouse gas emissions.  Seventeen of them are also among the world’s most populous countries, and twenty-two are among those with the highest GDPs.  To be truly effective, these major emitters must be part of the solution.  While we cannot expect all these countries to act in the same way, or necessarily in the same timeframe, we believe that all must commit to take action.   

Third, to establish flexible international mechanisms to minimize the cost of efforts by participating countries.  The United States has led the world in demonstrating that well-designed market-based approaches can achieve the greatest environmental benefit at the lowest cost.  U.S. negotiators fought rightly and successfully to build market mechanisms into the Kyoto architecture.  U.S. economic and business interests will be best served by an international climate strategy that uses emissions trading and other mechanisms to ensure that our efforts are as cost-effective as possible.   

And, fourth, to achieve a significant long-term reduction in global greenhouse gas emissions.  Our initial efforts to address climate change, both domestically and internationally, can be at best first steps.  But in taking these steps, we must remain cognizant of our ultimate objective – stabilizing the global climate – and we should craft policies and agreements robust enough to drive and sustain the long-term efforts needed to achieve it.
 
I believe these four principles form a solid foundation for constructive U.S. engagement and urge that they be incorporated in a new Sense of the Senate resolution.  Moreover, such a resolution strikes me as being very much within the spirit of the Hagel bill and could well be taken up as an amendment to it.

 In closing, the most important thing Sen. Hagel has done in writing S.883, and that the subcommittee has done in holding this hearing, is to join the question of how best to address climate change.  As Senator Hagel has said, “Achieving reductions in greenhouse gas emissions is one of the important challenges of our time.”  And: “We all agree on the need for a clean environment and stable climate.  The debate is about solutions. The question we face is not whether we should take action, but what kind of action we should take.”  I thank and commend Sen. Hagel for placing these issues before you, and thank the subcommittee for the opportunity to testify.  The Pew Center looks forward to working with the committee and Sen. Hagel on S.883 and on any future climate change legislation.

The European Union Emissions Trading Scheme (EU-ETS): Insights and Opportunities

Download the full White Paper here (PDF Format).

The European Union Emissions Trading System (EU-ETS) is a landmark environmental policy, representing the world’s first large-scale greenhouse gas (GHG) trading program, covering around 12,000 installations in 25 countries and 6 major industrial sectors. The EU-ETS offers an opportunity for critical insights into the design and implementation of a market-based environmental program of such size and complexity. In addition, key lessons based on actual experiences of emissions trading will include the cost of emissions reductions, the implications on competitiveness of sectors and firms, and the development of new technologies and efficiency opportunities.

This analysis discusses the background to the EU-ETS in the context of ongoing emission abatement efforts and policy initiatives to meet EU-25 member state targets under the Kyoto Protocol. The key elements of the EU-ETS are detailed, focusing on its timetable, sectoral coverage, methodology for distributing emission allowances, provisions for banking, opt-outs, opt-ins and pooling mechanisms, the procedures for monitoring and verification, and the compliance mechanisms.

The paper then turns to the current status of the EU-ETS, focusing on the ongoing national allocation plans, and discussing key remaining uncertainties, namely the readiness of all parties to trade, linkages to other trading programs, availability and use of project-based allowances, the impact of Russian emission credits, strategies of new Central and Eastern European member states, the compliance role of governments, progress in emissions reductions from sectors outside the EU-ETS, and finally the importance of expectations of future targets and prices.

This paper concludes with early conclusions from this first large-scale GHG emissions trading program. The EU-ETS is up and running with significant trading volumes; it looks set to deliver real (vs. BAU) but modest reductions; these reductions are focused on the power sector; and ongoing concerns remain regarding detrimental impacts on industry competitiveness and the impact of higher electricity prices. Key remaining challenges include the remaining implementation issues of this novel trading system, and to retain political support for the EU-ETS in the years ahead. Key insights from the EU-ETS will include the price, traded volume and cost-savings from GHG trading, the longer term implications of the EU-ETS for technology development and the progression of global climate change policies, and direct lessons for U.S. policy makers as they debate domestic GHG trading proposals.

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Innovative Approaches to Climate Change: A State-Federal Workshop

Promoted in Energy Efficiency section: 
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A two-day workshop on innovative State and Federal approaches to climate change.

February 7th and 8th, 2005
St. Regis Hotel
923 16th and K Streets, N.W.
Washington, D.C. 20006

Presentations

Opening Panel
Steve Owens, Director, Arizona Department of Environmental Quality

William Ross Jr., Secretary, North Carolina Department of Environment and Natural Resources

Gina McCarthy, Commissioner, Connecticut Department of Environmental Protection
(pdf)

Panel #2. Regional initiatives
Regional Greenhouse Gas Initiative: Nancy Seidman, Director, Bureau of Waste Prevention, Massachusetts Department of Environmental Protection (pdf)

West Coast Governors’ Global Warming Initiative: David Van’t Hof, Governor’s Sustainability Advisor, Oregon Governor’s Office (pdf)

Powering the Plains: The Honorable Jon Nelson, North Dakota State Representative
(pdf)

Western Governors’ Association’s Clean and Diversified Energy Initiative:
Craig O’Hare, Special Assistant for Renewable Energy, New Mexico Energy, Minerals, and Natural Resources Department (pdf)

Kevin Moran, Washington DC Office Director, Western Governors’ Association (pdf)

Lunch keynote speaker
Daniel Richard, Senior Vice President for Public Affairs, PG&E Corporation

Panel #3. Electric Utility Solutions Part A
Paul Hudson, Chairman, Public Utilities Commission of Texas (pdf)

Paul Kjellander, Chairman, Idaho Public Utilities Commission

Jay Braitsch, Director of Strategic Planning, Office of Fossil Energy, U.S. Department of Energy and Jackie Bird, Director, Ohio Coal Development Office (pdf)

Panel #4. Transportation
Eileen Tutt, Special Assistant to the Deputy Secretary for External Affairs, California Environmental Protection Agency (pdf)

Tyler Duvall, Deputy Assistant Secretary for Transportation Policy, U.S. Department of Transportation

Marlin Gottschalk, Senior Policy Advisor, Environmental Protection Division, Georgia Department of Natural Resources (pdf)

Keynote dinner speaker
The Honorable Jim Cooper, United States House of Representatives

Panel #5. Electric Utility Solutions Part B
Lola Spradley, former Speaker of the House, Colorado General Assembly

David Stewart-Smith, Assistant Director for Energy Resources, Oregon Department of Energy (pdf)

Robert Scott, Director, Air Resources Division, New Hampshire Department of Environmental Services (pdf)

Edward Garvey, Deputy Commissioner, Energy and Telecommunications, Minnesota Department of Commerce (pdf)

Panel #6. Solutions in agriculture and forestry
Alec Giffen, Director, Maine Forest Service (pdf)

Dan Desmond, Deputy Secretary for Energy and Technology Development, Pennsylvania Department of Environmental Protection (pdf)

Cydney Janssen, former Assistant Director of the Nebraska Department of Agriculture (pdf)

Lunch Keynote Speaker:
David Miller, Director of Research and Commodity Services, Iowa Farm Bureau Federation (pdf)

Panel #7. Cross cutting themes and lessons learned: Congressional staff perspectives
Energy: Bob Simon, Democratic Staff Director, Senate Energy and Natural Resource Committee (pdf)

Environment: Tim Profeta, Legislative Assistant and Counsel, Sen. Joseph I. Lieberman

Agriculture: Aaron Whitesel, Legislative Assistant, Sen. Richard Lugar

Wrap Up
Barry Rabe, Professor, Gerald R. Ford School of Public Policy, University of Michigan

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