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
Leading Source on Global Warming Issues Eileen Claussen Provides Data-Based Information to Inform Federal Decision Makers
Leading Source on Global Warming Issues--Eileen Claussen--Provides Data-Based Information to Inform Federal Decision Makers
Question and Answer with The Pew Charitable Trusts
PEW WIRE: Is human-induced climate change occurring? What scientific evidence exists to substantiate this and what are some anticipated effects of climate change?
CLAUSSEN: Multiple lines of evidence provide independent validation of the reality of anthropogenic climate change. Scientists have observed warming over the past century in the atmosphere, at the earth's surface, and in the oceans as well. These trends cannot be explained without considering increasing atmospheric greenhouse gas concentrations--including those generated from human activities such as the burning of fossil fuels and deforestation. In conjunction with this warming, scientists are also seeing increases in precipitation, retreat of glaciers around the world, reductions in Arctic sea-ice, and the continuation of a long upward trend in global sea-level. There is also some evidence that the world's wildlife are starting to respond to the warming such as earlier reproduction times in plants and animals and changes in the geographic distribution of some species.
PEW WIRE: Can you recap of the political history of climate change?
CLAUSSEN: Governments launched the international effort against climate change with signing in 1992, at the Earth Summit in Rio de Janiero, of the UN Framework Convention on Climate Change (UNFCCC). The convention set an ultimate objective of stabilizing greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Developed countries, agreeing to take the lead, adopted a non-binding aim of returning their emissions to 1990 levels by 2000.
Three years later, recognizing that the voluntary target was insufficient and that most countries would not meet it, parties to the Convention agreed to negotiate new, binding targets for developed countries. Five months before the negotiations were to conclude, in July 1997, the U.S. Senate adopted the BrydHagel resolution, saying the United States should not sign a binding treaty if it would cause undue economic harm or did not include new commitments for developing countries. In December 1997, the Clinton administration agreed to the Kyoto Protocol, setting binding targets for developed countries only (for the United States, 7 percent below 1990 emissions by 2008-2012). (Countries included in Annex B to the Kyoto Protocol and their emission targets.) However, President Clinton did not submit Kyoto to the Senate for ratification.
Shortly after taking office, President Bush rejected the Kyoto Protocol. Despite the U.S. withdrawal, other countries are moving ahead with Kyoto. Japan and the European Union have ratified the Protocol, and Russia is expected to within the next year, meeting the necessary threshold for bringing the treaty into force. In February, President Bush presented a new climate change strategy with a non-binding target of reducing U.S. greenhouse gas intensity (define) 18 percent by 2010. However, this target essentially continues the trends in greenhouse gas intensity reduction seen over the past two decades and translates into a 12 percent increase in actual emissions. It would allow U.S. emissions to rise to 30 percent above 1990 levels by 2010. Click here to view the Pew Center's analysis of President Bush's climate change plan.
PEW WIRE: How does the Pew Center fit into the climate change puzzle?
CLAUSSEN: The Pew Center on Global Climate change is dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. Established in 1998, the independent, non-profit, nonpartisan Pew Center has become the leading voice for concrete, cost-effective action against climate change. We work with top scientists and economists to unravel the complexities of climate change and with government leaders in Washington and abroad to put in place both policy and practical solutions. The Pew Center also works with leading corporations to develop solutions that are both practical and effective. The 38 members of the Business Environmental Leadership Council come together through the Pew Center to develop and share climate change strategies, with a principal focus on market-based approaches. Companies also set emissions reduction targets. BP, for example, met its target to reduce GHG emissions by 10% from 1990 levels in 2010 seven years early and Dupont will reduce emissions by 65% below 1990 levels by 2010. All these facets of the Pew Center mission contribute to our goal of providing a smooth transition to a clean energy economy that ensures both a stable climate and strong, sustainable growth. View a full list of policy, economic, and scientific analysis and reports.
PEW WIRE: Taking into account the political, scientific and economic aspects of climate change, why is now a particularly good time to begin seriously addressing climate change issues?
CLAUSSEN: An immediate signal that initiates action is required in order to provide a smooth and cost-effective transition to a stable concentration of greenhouse gases in the atmosphere--a challenge that will take decades, if not generations, to address. A recent Pew Center brief, The Timing of Climate Change Policy, identifies many compelling reasons to begin taking action now, including: the substantial future climate change that is already inevitable and its potential to generate serious environmental impacts; the opportunity to learn about the economys responsiveness in order to construct an optimal policy path over time; the need to manage possible future GDP losses; and the need to provide time and incentives for a broadly-based technological response to the problem.
The argument that delay is the best strategy for addressing global climate change runs counter to what we understand about technology, the economy and climate science itself. It risks allowing significant escalation of the problem while providing little in the way of a momentum towards a long-term solution. In contrast, moving forward with a real and rational program to reduce greenhouse gases allows us to address this challenge in a way that is timely, consistent, meaningful, and cost-effective. Learning by doing is essential to addressing an issue as complex as climate change, and so we must begin to test approaches now.
PEW WIRE: Looking to the future, what are some effective first steps in reducing emissions?
CLAUSSEN: A mandatory GHG reporting and disclosure program would be an effective first step in any domestic GHG reduction program. Similar to the federal Toxics Release Inventory (TRI) program, a mandatory GHG reporting program would apply to all major sources of GHG emissions and require disclosure of their reports to the public. Such a reporting program would: (1) provide a solid foundation for a U.S. program to reduce GHG emissions, (2) provide the basis for government assurances that companies would not be penalized for their early reductions under a future climate policy, and (3) potentially create a powerful incentive for voluntary reductions. The program should be comprehensive, but should be implemented in phases to allow for the development of widely accepted and sound reporting protocols.
The 107th U.S. Congress has acted upon legislation regarding the tracking and reporting of GHG emissions. Other legislation being considered would require development of a U.S. National Climate Change Strategy with the goal of stabilizing atmospheric GHG concentrations.
In the long-term, an effective emissions reduction program should couple mandatory greenhouse gas reductions with technology development and market mechanisms. Such a program should promote new technologies and practices and provide a foundation upon which to secure long-term emissions reductions (e.g., through a program that caps GHG emissions but allows for trading among entities subject to the cap). Moving forward with a real and rational program to reduce GHGs will allow us to address this challenge in a way that is timely, consistent, meaningful, and cost-effective.
By Eileen Claussen
The New York Times
June 7, 2002
In its business-as-usual approach to climate change, the Bush administration is increasingly out of step not only with other industrialized powers, but also with the growing support in this country for action to prevent global warming. The administration's oddly two-sided report last week to the United Nations brings the White House into the scientific mainstream on the subject - acknowledging that human activity is probably the cause of global warming and that America itself faces serious consequences - but at the same time lays out a strategy ensuring that American emissions of greenhouse gases will continue rising sharply for at least a decade.
Last week the European Union and its 15 member states completed en masse their ratification of the emissions-limiting treaty that President Bush has rejected, the Kyoto Protocol. This week Japan followed suit. Russia expects to ratify by the end of the year, meaning only one or two smaller countries would be needed to put the treaty into effect. (Ratifying countries must account for at least 55 percent of developed country emissions in 1990.)
The administration is also ignoring a growing domestic recognition of the need to act. Persuaded that the risks of climate change are real and that restraints on emissions are inevitable, many American companies are working on carbon reduction. To be sure, many others, especially in the energy and oil businesses, are strongly resistant. But dozens of major corporations like Alcoa, DuPont and Intel are among those setting their own targets for lower emissions. For many, there are financial payoffs, too - improved efficiencies, lower costs and increased sales of energy-saving products.
State governments are also moving ahead. New Hampshire recently became the third state to adopt mandatory controls on carbon emissions from power plants. New Jersey is aiming to reduce statewide emissions by 3.5 percent from 1990 levels in the years before 2005. All six New England states, in a compact with five Eastern Canadian provinces, have pledged to reduce their emissions to 10 percent below 1990 levels by 2020.
Even in Congress, the tide is beginning to turn. Twice as many climate change measures were introduced in the past year as in the previous four years combined, many with strong support from both Democrats and Republicans.
Scientists project that a century's worth of greenhouse gas releases, mostly from burning fossil fuels, have already bought us a few degrees of warming in the decades ahead. The challenge is heading off further warming by gradually weaning ourselves from fossil fuels. This transition to a low-carbon economy will require a new industrial revolution.
We must look to the marketplace to carry it out. Only the market can mobilize the ingenuity, investment and productive capacity needed to develop and disperse new technologies on such a large scale. But the marketplace will deliver only if it perceives a demand, and providing that demand is a role for government.
A modest but logical first step in the U.S. is a measure passed unanimously by the Senate in April encouraging companies to disclose their greenhouse gas emissions voluntarily. If after five years less than 60 percent of emissions are being reported to the public, the measure would change this voluntary reporting system to a mandatory one. A similar approach helped dramatically reduce toxic air and water pollution nationwide. This legislation should be accepted by the House and signed by the president.
Ultimately, though, the market must be driven by policies that set realistic, binding targets for reducing emissions and give companies the flexibility to achieve them as affordably as possible. The Bush administration's own report shows the danger in its remaining stubbornly out of step. The longer the United States waits, the graver the risks - and the cost of averting them.
Eileen Claussen is president of the Pew Center on Global Climate Change.
© 2002 The New York Times Company
Keynote Address By Eileen Claussen, President
Pew Center On Global Climate Change
Environmental Horizons 2002 Conference
University of Illinois at Urbana-Champaign
April 1, 2002
Thank you very much. It is a pleasure to be here for Environmental Horizons 2002. I'd like to commend everyone involved with the University's Environmental Council for putting together such an inspiring and informative program.
There's just one thing missing from the program - an awards ceremony. So I thought I'd begin my remarks today by handing out a few honors. Actually, I was inspired by last week's Academy Awards. I got to thinking about some of the recent developments in Washington on the issue of climate change, and wondered what kind of Oscars I would award to some of the key players. And here's what I decided.
First, I would have to say that the award for best performance in a non-supporting role goes to the U.S. Senate for refusing once again to deal head-on with the question of fuel efficiency standards for American cars and trucks. There's always a lot of tough competition in this category, but this year, the Senate won it hands down.
Next, the award for the best misdirection, and the clear winner this year is the Bush White House for its new climate policy. The Administration did its best to make the policy look meaningful and serious, but anyone who's seen the uncut version knows, unfortunately, that it is not.
Finally, I'd like to offer a special posthumous award to the Clinton administration. For talking big about climate change on the international stage but doing next to nothing about it at home, I present the Clinton White House with the award for best costumes.
In all seriousness, I'm here today to talk about the challenge of global climate change. I believe this is one of the most profound challenges of our time, and I believe it is a challenge that can be met. But it will not be met easily. Because the causes and consequences of global warming cut across every nation, every sector, and every community around the world. And an effective response to global warming requires action in every nation, every sector, and every community around the world. What is needed, in short, is a fundamental transformation in the way we power our global economy. We must, over the next several decades, make the leap from a fossil fuel-based economy to one that runs on clean energy. I'd like to talk today about how to make that happen. And I'd like to talk about the powerful forces that must be brought to bear - the force of technology, the force of the marketplace, the force of government, and finally, the force of individuals and communities around the globe.
Let me begin, though, with the force of science. With this issue, science is always the best place to start because our efforts must rely on the best science possible. So what does the science tell us? First, it tells us that the earth is indeed getting warmer. The 1990s were the hottest decade of the entire millennium, and 1997, '98, and '99 were three of the hottest years on record. Second, this warming trend is almost certain to accelerate. Scientists project an average global increase of two to ten degrees Fahrenheit over the next century - the largest swing in global temperature since the end of the last ice age 12,000 years ago. Third, and perhaps most importantly, the evidence strongly suggests that human activities, in particular the burning of fossil fuels, are largely to blame.
You can find scientists who will dispute these findings. But these three broad conclusions - the earth is warming, this warming trend will worsen, and human activity is largely responsible - represent the overwhelming consensus of the scientific community. They are among the key findings of the Intergovernmental Panel on Climate Change, a U.N. body that draws on the expertise of hundreds of climate scientists around the world. And they were confirmed by a special panel of the National Academy of Sciences asked by President Bush to review the state of climate science.
What, then, does the science tell us about the potential impact of this warming? Put another way, what kind of future are we creating for our children and grandchildren? Some people like to see the bright side of global warming. Lower heating bills in winter, for instance, and longer growing seasons here in the Midwest. But there's good reason to believe that any potential benefits will be far outweighed by the costs.
Rising sea levels will flood coastal areas - a very real worry along portions of the U.S. coastline but a much greater worry for low-lying countries like the Netherlands and Bangladesh. In summer, higher temperatures will mean a greater risk of deadly heat waves. By 2100, for instance, the people of Chicago may be 25 times more likely to endure three straight days of 100-degree heat. Higher temperatures will also mean an increase in extreme weather-more flooding, more drought, and more severe storms. Rain and snowfall patterns will be disrupted, putting water supplies at risk. The Great Lakes are projected to drop 4 to 5 feet over the next 100 years, threatening irrigation supplies for farmers. And the lakes could be 5 degrees warmer, threatening the survival of native species like rainbow trout. Indeed, in the long run, the greatest risk may be the steady unraveling of ecosystems, the support systems for all life on earth.
There are, of course, uncertainties in the science, particularly when it comes to projecting the magnitude and timing of the kinds of impacts I've just described. But these uncertainties cut both ways. Yes, it's possible that the impacts of global warming won't be as bad as we now project. But it's just as likely they will be worse. For instance, most of our computer modeling assumes a linear relationship between rising temperatures and impacts: as the planet warms, the impacts grow worse, proportionately. But many scientists worry about the potential for a non-linear, or catastrophic, event. Last week, scientists reported the sudden breakup of an Antarctic ice shelf the size of Rhode Island. That same kind of event on a much larger scale - for instance, the collapse of the West Antarctic ice sheet - could trigger a catastrophic rise in sea level well beyond what is ordinarily predicted. So, for me, uncertainty in the science is hardly a reason to delay action. Quite the contrary - it's a reason to act now.
What kind of action must we take? For the moment, let's stick with the science. The earth is warming because we are adding carbon dioxide and other greenhouse gases to the atmosphere. Right now, there is about 40 percent more carbon dioxide in the atmosphere than there was at the dawn of the Industrial Revolution. If we continue with business as usual, CO2 levels will be twice the pre-industrial level by the middle of this century. This doubling of CO2 concentrations is the scenario most scientists have relied on in projecting the likely impacts of global warming. But what is now becoming clear is that it will be extraordinarily difficult, if not impossible, to stabilize concentrations at this level anytime within this century. Indeed, it now seems likely that by 2100 greenhouse gas concentrations will be approaching three times the pre-industrial levels. And that suggests that we may well face consequences more severe than those already projected.
Our goal, ultimately, must be to stabilize greenhouse gas concentrations in the atmosphere at levels that are reasonably safe. There is no consensus at the moment on what those levels might be. And this is not a question science can answer for us. The level of risk we as a society are willing to accept is, in the end, more a matter of values. But scientists generally agree that to stabilize concentrations at any reasonably safe level we must over time reduce our emissions of greenhouse gases 50 to 80 percent from current levels. Let me repeat that: we must reduce emissions of greenhouse gases 50 to 80 percent from current levels. Since emissions worldwide are now rising, and are certain to continue rising for some time to come, we clearly have a very long way to go.
How do we get there? What it is going to take, I believe, is nothing short of a new industrial revolution. As I said earlier, meeting the challenge of climate change requires a fundamental transformation in the way we power our economy. We must steadily reduce our reliance on coal and oil - the principal sources of the greenhouse gases we are putting into the atmosphere. And we must make the transition to clean sources of energy that can keep the global economy healthy, and keep it growing, without endangering the global environment. Industrial societies have been through major energy transitions before - we've gone from wood to coal, and from coal to oil. But unlike past transitions, we can't afford to wait for this one to happen on its own. We must make it happen. We must bring to bear the forces necessary to mount this new industrial revolution.
First is the force of technology - or, more accurately, the force of many new technologies. There is no silver bullet. Our ultimate success against climate change hinges on the development and deployment of a vast array of technologies that dramatically reduce the carbon intensity of our economy. Technologies that change how we produce electricity, how we move from place to place, how we farm and manage our forests, how we manufacture products - even how we build and manage our buildings. And the technologies that will enable industrialized countries to make the transition to clean energy must also be adapted and shared with developing countries, so they can leapfrog past carbon dependence and choose a more sustainable path from the start.
Looking at the major energy-using sectors of our economy, you can see on a broad scale the kinds of changes that are needed here in the United States. In the electricity sector, for instance, we need to gradually shift the supply mix away from coal, the dirtiest of the fossil fuels, toward natural gas, which is much lower in carbon, and towards solar, wind and other renewables. In transportation, we have to reverse the decline in the fuel efficiency of our cars and SUVs, because the internal combustion engine will be with us for a while longer and we do have the technology to make it more efficient. But we must also hasten the arrival of its successor, whether it be the hydrogen fuel cell or another technology. In buildings, where we use a third of our energy, smart technologies and smart design can deliver enormous energy savings without sacrificing comfort or quality of life. And finally, in manufacturing, we need to find ways to reduce emissions at every step - from changing inputs to redesigning production processes to reworking the entire product mix.
It's one thing to envision the kinds of technologies we need. It's another thing to make them real. For that, I believe, we must bring to bear a second force - the force of the marketplace. This is true not only because the necessary changes - whether they be new products, new processes, or new sources of energy - must take place within the marketplace. It is also true because only the marketplace can mobilize the investment, the productive capacity, and the ingenuity that is needed. The inspiration behind a new technology may spring from the mind of a scientist, an engineer - or maybe an overachieving undergraduate. But only the marketplace can quickly adapt this new technology to society's needs and desires, can produce and deliver it on a mass scale, and can figure out how to do it at the least possible cost. Just think how efficiently the market has put a cell phone into the hands of so many men, women and children over the last a few years.
So the marketplace, while quite obviously a driving force behind the continued rise in greenhouse gas emissions, must also be a driving force behind the solution. We must put the market to work to protect the climate. And if we do it right, not only the environment will benefit - the market will benefit as well. Many people still think that environmental protection and economic growth are inherently antagonistic goals. I believe they are wrong, and I believe the experiences of the companies we work with at the Pew Center show they are wrong.
One of the things we did when we launched the Pew Center four years ago was to bring together a group of major corporations that support action to address climate change. We call it the Business Environmental Leadership Council. The Council now includes 37 companies - primarily Fortune 500 firms - including Weyerhaeuser, Intel, Boeing, Dupont, Shell and Alcoa. Together these companies employ more than 2 million people and generate revenues of nearly $900 billion a year.
In their efforts against climate change, many of these companies have adopted targets for reducing their greenhouse gas emissions. Dupont, for instance, is working to reduce its emissions 65 percent below 1990 levels by 2010. Alcoa is aiming for a 25 percent reduction. Last month, Lord John Browne, the chairman and CEO of BP, announced that his company had already met its goal of a 10 percent reduction - eight years ahead of schedule - and is now committed to capping emissions at that level through 2012 even though BP's revenues are projected to grow 5.5 percent a year.
We published a study recently that analyzed a number of companies that have taken on voluntary greenhouse gas targets. These targets take many different forms. Some companies are ramping up their use of clean energy or improving their energy efficiency. For instance, Baxter International, a healthcare firm based outside Chicago is boosting its energy efficiency by 30 percent. Other companies are going beyond the production process and pledging to reduce emissions from the products themselves. In Europe, for instance, the major automakers - including, I would note, the American automakers - have pledged to reduce greenhouse gas emissions from their fleets 25 percent by 2008.
Our report took a close look at six of these companies - why they chose to adopt targets, and what their experiences have been. The companies cited several motivations: They believe the science of climate change is compelling, and in time the public will demand strong climate protections. They want to get ahead of the curve by reducing their own emissions, and by encouraging government policies that work well for business. But the companies all cited one other important motivation for taking on a target: to improve their competitive position in the marketplace. And that, in fact, has been the result. Each of these six companies is on track to meeting or exceeding its greenhouse gas goal. Together, they've delivered reductions equal to the annual emissions of 3 million cars. And at the same time, the companies are finding that these efforts are helping to improve operational efficiencies, reduce energy and production costs, and increase market share - all things that contribute to a healthier bottom line.
These voluntary efforts demonstrate that companies can internalize the costs of climate protection. They show how the very act of setting a goal spurs innovation and puts competitive instincts to work in a new direction. They demonstrate the ability of the marketplace to mobilize technology to address climate change. They are commendable, and they are instructive. But they are not enough. For the market will deliver only if it perceives a demand. And for that, we must bring to bear a third force - the force of government.
Government has several critical roles to play in sparking this new industrial revolution. We must look to government, first, to set the goal - to send a clear signal to the marketplace that this is the direction we must go. We must look to government, second, to prime the pump - to provide strategic assistance that will help spawn new technologies and then move them from the laboratory to the marketplace. And we must look to government, third, to keep everyone on track - to make sure we not only stay focused on the goal, but meet it - or face clear consequences. The marketplace can drive the technology; but only if government drives the marketplace.
Let me be clear: I am not advocating a draconian command-and-control system that says do it, and do it this way, or else. We've had enough experience with such approaches to know they won't work here. Rather, I am suggesting a thoughtful strategy that understands, respects and mobilizes the marketplace. I am suggesting a comprehensive but careful mix of measures that provides the marketplace with the necessary incentives - and the necessary flexibility - to get us to our goal, and do it cost-effectively.
So, what kind of signal is government sending the marketplace now? Let's look first on the international side. Over the last year, we saw both the greatest success and the greatest setback since the international effort to address climate change was launched a decade ago. The success was that after years of wrangling, nations finally agreed on a set of rules for implementing the Kyoto Protocol. The Protocol, which was negotiated in 1997, establishes the first binding international limits on greenhouse gas emissions. It points industrialized countries, at least, in the direction of emissions reduction. And it establishes a set of mechanisms to help countries meet their targets by tapping the power of the marketplace. Through a system of greenhouse gas trading, for instance, countries can buy emissions credits from other countries that are able to cut their emissions more cheaply. By harnessing the law of supply and demand, you achieve the greatest environmental return for every unit of investment. This approach, I would note, was written into Kyoto largely at the insistence of the United States, which pioneered the practice of emissions trading.
With the rules for implementing Kyoto now settled, the next step is ratification. The European nations are well on track, while vigorous debates are underway in Japan, Canada and other industrialized countries that face some serious challenges in meeting their Kyoto targets. It's by no means a sure bet, but I would say the prognosis is good for the Protocol to enter into force either this year or next. And that would be a major achievement.
The setback, of course, was President Bush's outright rejection of Kyoto early last year. I don't intend to spend any time here debating the merits of Kyoto, but let me say this: I agree with the President that the Protocol is flawed, but do not believe, as he does, that it is fatally flawed. The reality, though, is that he is the president. And given that, there is virtually no prospect of the United States returning to Kyoto, at least in the short term. The emphasis now must be on building a credible climate program here in the United States - one that, hopefully, can in time converge with the international effort to form a truly global strategy.
The national climate plan announced by President Bush in February is, unfortunately, not an auspicious start. It was encouraging in one respect: The Administration says it will develop rules to ensure that companies voluntarily reducing their emissions receive appropriate credit toward any mandatory measures that might later be put in place. Insofar as this tacitly acknowledges that mandatory measures may in fact be necessary, it represents a measure of progress. But beyond that, the President's plan offers only a promise - a promise that over the next decade the United States will do really no better than it's doing right now.
The President set a goal - a voluntary goal - of reducing the greenhouse gas intensity of the U.S. economy 18 percent by 2012. That means 18 percent fewer greenhouse gas emissions for every dollar of GDP. That sounds good. But when you do the math, you see that an 18-percent reduction in greenhouse gas intensity amounts to a 12-percent increase in actual emissions. The Administration says emissions are projected to grow even more, so the President's goal represents a real improvement. But if you look at data on what's actually happening, you see that greenhouse gas intensity is already improving in the United States, and the President's goal essentially continues the trends of the last two decades. In other words, it's more or less business as usual.
There are, however, signs that this issue is being taken more seriously at the other end of Pennsylvania Avenue. Despite the Administration's lackluster efforts - or, perhaps, inspired by them - there is growing bipartisan interest in Congress in doing something about climate change. In fact, there were nearly twice as many climate change bills introduced over the past year as in the previous four years combined.
These bills cover everything from regulating carbon dioxide emissions from power plants to boosting research and development on alternative fuels. Several would establish a national system for tracking and reporting greenhouse gas emissions - an important first step. The farm bill passed recently by the Senate would provide strong incentives to farmers to adopt practices that suck carbon out of the atmosphere. And Senators Lieberman and McCain plan to introduce a bill later this year to establish a nationwide cap-and-trade system - in other words, to cap greenhouse gas emissions nationwide and let companies buy and sell emissions credits. It's a bold idea - one that frankly I can't see being enacted for some time, probably years. Still, for the first time, Congress is engaged in serious debate about how the United States should meet its responsibilities on climate change.
And beyond the Beltway, we see not just debate, but action. States and local communities, instead of waiting for leadership from Washington, are taking up this challenge on their own. Over the past year, the Pew Center worked with the National Association of State Energy Officials to gather information on state programs that reduce greenhouse gas emissions. In February, we posted the initial results on our web site: a searchable database describing 21 state programs that have delivered real emissions reductions.
Oregon, for example, requires all new power plants to limit or offset their carbon dioxide emissions, making it the first state in the nation to enact mandatory carbon controls. Texas requires that all its electricity providers generate about 3 percent of their power using renewable sources. New Hampshire plans to cut emissions and save $4 million a year through energy-saving retrofits on state-owned buildings. Here in Illinois, a new Clean Energy Community Foundation is helping local governments and community groups improve energy efficiency and promote renewable power. And last fall, Chicago became the first city in America to join a voluntary emissions trading system called the Chicago Climate Exchange. Finally, here's one of my favorite examples: In Pattonville, Missouri, high school students have teamed up with state officials to run their school's boilers using methane captured from a neighboring landfill. Perhaps if we could channel the energies of high school students everywhere we'd have this thing licked.
But most high school students, I'm afraid, are channeling their energies elsewhere. And, unfortunately, so are many governments. Ten years after the Earth Summit in Rio, where nations pledged themselves to the fight against global warming, they are just barely getting started. Governments have yet to deliver a clear, unequivocal message to the marketplace that climate change can no longer be ignored.
What kinds of policies would get the message across? Here in the United States, we need a firm mandate that puts us on the path to long-term emissions reduction. And we need flexible policies that give companies room to find the most cost-effective ways to fulfill that mandate. Internationally, assuming Kyoto does get off the ground, we must start looking well beyond its short-term goals. As with a domestic program, firm mandates that move us toward our goal of stabilizing concentrations of greenhouse gas concentrations in the atmosphere are key. This will take more than keeping those countries committed to Kyoto on a downward emissions path. It will take putting the United States firmly on that path. And it will take moving major emitting countries in the developing world on cleaner energy paths as well. In short, we will need to forge an effective global strategy that combines the force of governments with the force of the marketplace.
So why haven't we made more progress? Because, I believe, we have not yet brought to bear the fourth, and perhaps most critical, force. That is the force of people--the sheer force of public pressure. Like the marketplace, government will deliver only if it perceives a demand. The polling shows that most Americans believe that global warming is real and that more should be done to address it. But those sentiments have yet to translate into an effective call for action. People are concerned, but they're also confused. And many feel powerless in the face of such a monumental challenge.
Let me suggest a few ways in which we do have power if we choose to exercise it. First - and I'm speaking now, of course, to those of you who are so inclined - don't underestimate your power as a citizen to sway your elected leaders. Next time one of your Senators is touring the state, show up at a town hall meeting and ask what he's doing to make our cars and tucks more fuel efficient, or our electricity supply less carbon-intensive. Believe me, it makes a difference. Second, you have power as a consumer. Once you understand the fundamental link between climate change and our use of energy, you can send your own signals to the marketplace. Every time you replace a regular light bulb with a compact fluorescent, or choose a more efficient appliance or car, you express a demand for climate protection. Third, you have power as an investor - at least those among you with something to invest. The more companies are asked by investors about their greenhouse gas emissions, the quicker they will reduce them.
These may seem like small steps, but they can add up. We all bear responsibility here. And only when we accept our responsibility and act on it - as citizens, as consumers, as investors - will government and the marketplace respond. The science, I believe, paints a compelling picture: Future generations face grave risks. The technology to avert those risks is, I believe, within reach. The marketplace has the power to deliver it. But government will demand it only when we do - only when we bring our force to bear.
Thank you very much.
A new climate change strategy for the United States announced by President George W. Bush on February 14, 2002, sets a voluntary "greenhouse gas intensity" target for the nation, expands existing programs encouraging companies to voluntarily report and reduce their greenhouse gas emissions, and proposes increased federal funding for climate change science and technology development. Some elements of the Administration's strategy may provide additional incentive to companies to voluntarily reduce greenhouse gas emissions. However, the Administration's target - an 18 percent reduction in emissions intensity between now and 2012 - will allow actual emissions to increase 12 percent over the same period. Emissions will continue to grow at nearly the same rate as at present.
Greenhouse Gas Intensity Target
Different types of targets can be used to limit or reduce emissions. One approach is an "absolute" target requiring that emissions be reduced by a specified amount. This is the approach taken by both the United Nations Framework Convention on Climate Change (UNFCCC), which set non-binding emissions targets for developed countries and was ratified by the U.S. Senate; and by the Kyoto Protocol, which sets binding targets but was rejected by the Administration.
The Administration's strategy instead sets a target for greenhouse gas intensity: the ratio of greenhouse gas emissions (GHGs) to economic output expressed in gross domestic product (GDP). This approach minimizes economic impact by allowing emissions to rise or fall with economic output; however, it provides no assurance that a given level of environmental protection will be achieved since the degree of environmental protection is measured in relation to GDP. Theoretically a GHG intensity target can lead to a net reduction in emissions, but only if it is sufficiently stringent. The Administration's target - an 18 percent improvement in GHG intensity over the next decade - allows a substantial increase in net emissions.
In 1990, total U.S. GHG emissions were 1,671 million metric tons in carbon equivalents (MMTCE) or 6,128 million metric tons in carbon dioxide equivalents (MMTCO2E). As of 2000, total U.S. GHG emissions were 14.1 percent above 1990 levels, or 1,907 MMTCE (6,994 MMTCO2E).
Although total emissions continued to rise, greenhouse gas intensity in fact fell over the last two decades. Contributing factors include energy efficiency improvements, the introduction of new information technologies, and the continued transition from heavy industry to less energy-intensive, service-oriented industries. In the 1980s greenhouse gas intensity fell by 21 percent. During the 1990s greenhouse gas intensity fell by 16 percent. The Administration's strategy aims to cut greenhouse gas intensity to a level of 151 metric tons carbon equivalent per million dollars of GDP by 2012, 18 percent below its present level. While this would represent a very modest improvement over the "business as usual" emissions projections for 2012 used by the Administration, it appears to continue the same trend of GHG-intensity reductions and GHG emissions increases experienced over the last two decades.
In terms of actual emissions, total U.S. GHG emissions would grow 12 percent by 2012, resulting in GHG emissions of 2,155 MMTCE (7,900 MMTCO2E). Emissions in 2012 would be 30 percent above 1990 levels (1990 is often used as a "base year" because the Framework Convention on Climate Change called for industrialized countries to return to their 1990 levels by 2000). The Administration proposes to achieve its GHG intensity target entirely through voluntary measures. Prior experience has shown that despite the existence of a range of voluntary government programs to encourage early reductions, despite significant actions by individual companies, and despite improvements in greenhouse gas intensity, emissions continue to rise as these gains are outpaced by economic expansion, changing consumer preferences, and population growth. Further, because the target (1) is voluntary, (2) represents only a slight change from the "business as usual" path, and (3) does not appear to advance specific policy solutions, it is unclear how this goal will be translated into actual reductions in GHG intensity across various sectors of the economy. Previous voluntary GHG targets, including the UNFCCC's target of returning to 1990 levels of GHG emissions by 2000, have not been met by the United States.
Voluntary Reporting Programs
The Administration's program calls for expansion of an existing Department of Energy voluntary reporting program, and also calls for the provision of "baseline protection" for those companies making voluntary reductions in advance of potential future requirements. "Baseline protection" would ensure that companies acting to reduce their emissions will have those emission reductions counted towards requirements to limit GHG emissions that may be put in place in the future. In addition, the President directed the Secretary of Energy to recommend reforms to allow the transfer of registered reductions across firms (i.e., trading).
The existing "Voluntary Reporting of Greenhouse Gases Program" is managed by the Energy Information Administration of the Department of Energy under section 1605(b) of the Energy Policy Act of 1992. The 1605(b) program records the company-reported results of voluntary measures to reduce, avoid, or sequester carbon.
Under the current program, organizations voluntarily submit information on their GHG reduction efforts, and the information is entered into a public database. The program allows companies broad discretion in determining the basis for calculating their emissions reductions. Companies must self-certify that their claims are accurate, and outside verification is not necessary. Emissions reduction claims submitted to the program are reviewed for arithmetic accuracy and the clarity of the information presented, but no verification of supporting documentation is required.
For 2000, 222 U.S. companies and other organizations reported to the program that they had undertaken 1,882 projects to reduce or sequester greenhouse gases. Reported emission reductions included 187 MMTCO2E in direct emission reductions, 61 MMTCO2E in indirect emission reductions, 9 MMTCO2E of reductions from carbon sequestration, and 12 MMTCO2E of reductions reported under the EIA 1605EZ form, which does not specify whether reported reductions are direct reductions or indirect reductions.
Reported direct emission reductions under this program represented 2.7 percent of total U.S. GHG emissions in 2000, while reported indirect reductions were 0.9 percent, unspecified reductions were 0.2 percent, and carbon sequestration represented 0.1 percent.
Concerns exist that the current 1605(b) program has limited credibility and scope because companies are allowed broad discretion in calculating emissions reductions, there are no verification requirements, and the vast majority of GHG emitters choose not to report. It is also possible that some of the same reported reductions are reported by more than one entity and are thus double-counted.
The President's program directs the Secretary of Energy to work with other key Cabinet officials to propose improvements to the program to enhance measurement accuracy, reliability, and verifiability.
In addition to 1605(b), a number of other government initiatives had been aimed at getting companies to reduce their GHG emissions voluntarily - efforts largely spurred by the UNFCCC's non-binding target. Some companies that have reduced their emissions voluntarily have participated in these programs. Though voluntary efforts have resulted in significant emissions reductions by some firms, in the aggregate, they have not succeeded at curbing the overall growth in U.S. emissions. In fact, U.S. GHG emissions increased 14.1 percent between 1990 and 2000.
The President announced that his FY 2003 budget provides $4.5 billion for global climate change-related activities, including the first year of funding for a five-year, $4.6 billion commitment to tax credits for renewable energy sources. These numbers are consistent with the Administration's previous FY 2003 budget request, and do not reflect additions to it.
Of this $4.5 billion, $700 million represents an increase relative to last year's budget. Most of the increase ($555 million) is for tax credits, including extending some tax credits that would have expired, expanding the applicability of others, and adding new ones. For example, the Administration proposed to extend the production tax credit for wind energy, expand the applicability of the credit for biomass power, and initiate tax credits for the purchase of hybrid, electric, and fuel cell cars. The budget also includes $150 million for the development of a hydrogen fuel-cell-powered automobile.
The President's FY 2003 budget proposal also appears to continue spending for research on science and technologies relating to climate change, and expands research in some areas (e.g., geological storage of GHGs and understanding of the carbon cycle). The budget also funds climate observation systems, international conservation efforts, and bilateral research initiatives.
Our Domestic Policy Recommendations
A number of potential U.S. domestic policy options are discussed in a policy brief published by the Center, entitled The U.S. Domestic Response to Climate Change: Key Elements of a Prospective Program. That policy brief outlines elements of a domestic climate change program that would: (1) require the tracking and reporting of GHG emissions, (2) promote new technologies and practices, and (3) secure long-term emissions reductions through a flexible mandatory program, such as a mandated cap on GHG emissions with market-based trading of emissions credits.
Bush on Climate Change
February 15, 2002
Copyright © 2002 by World Media Foundation. No portion of this transcript may be copied, sold, or transmitted without the written authority of World Media Foundation.
HOST: Steve Curwood
REPORTERS: Robin White, Bruce Barcott, Allison Dean
GUESTS: Eileen Claussen, Eric Holdsworth, Lynda Mapes
UPDATES: Diane Toomey, Cynthia Graber
CURWOOD: From National Public Radio, it's Living On Earth. I'm Steve Curwood. The long awaited U.S. response to the Kyoto climate treaty, rejected by the White House last year, was unveiled on the 14th. Its blend of voluntary measures and tax incentives to reduce greenhouse gas emissions is drawing both praise and criticism.
HOLDSWORTH: We think the plan is a welcome change and in fact reflects a far more realistic way of addressing the climate issue.
CLAUSSEN: I think the energy intensity target the president talks about is really just business as usual.
CURWOOD: Also some museums are offering audio surrealism. Put on the headphones and let yourself be swept away.
CARDIFF: Sometimes I think there are so many choices in life, that sometimes it's nice to just give it up and say, "Okay, for 15 minutes now, I'm just going to listen to this woman's voice and follow her footsteps."
CURWOOD: Those stories and more this week, on Living on Earth, right after this.
Bush on Climate Change
CURWOOD: Welcome to Living on Earth, I'm Steve Curwood. When the Bush administration rejected the Kyoto treaty on global climate change last year, it said it would offer an alternative. On February 14th, the president finally unveiled his plan to address greenhouse gas emissions. He said the problem with the agreement that almost every other nation has endorsed is the economy.
BUSH: The approach taken under the Kyoto protocol would have required the United States to make deep and immediate cuts in our economy to meet an arbitrary target. It would have cost our economy up to 400 billion dollars, and we would have lost 4.9 million jobs.
CURWOOD: The president said his plan will use a voluntary system of greenhouse gas reductions by industry and nearly five billion dollars in tax incentives for industry and consumers.
BUSH: Our immediate goal is to reduce America's greenhouse gas emissions relative to the size of our economy. My administration is committed to cutting our nation's greenhouse gas intensity - how much we emit per unit of economic activity - by 18 percent over the next ten years. This will set America on a path to slow the growth of our greenhouse gas emissions. And as science justifies, to stop and then reverse the growth of emissions.
CURWOOD: With me now to discuss President Bush's remarks are Eileen Claussen, the Executive Director of the Pew Center on Global Climate Change and the former assistant secretary of state for President Clinton. And Eric Holdsworth, who is Director of Climate Change with the Edison Electric Institute, an association of investor-owned companies that represents the majority of power generators in the US. Thank for joining me.
CLAUSSEN: It's a pleasure to be here.
HOLDSWORTH: Thank you.
CURWOOD: Now from your perspective, Ms. Claussen, what's the good news here in the president's announcement?
CLAUSSEN: Actually I think you have to look long and hard to find very much good news. I think the energy intensity target the president talks about is really just business as usual. Greenhouse gas emissions have been declining per unit of economic output for the last two decades, and his proposed objective would continue that same trend.
CURWOOD: Mr. Holdsworth?
HOLDSWORTH: Well, we think the plan is a welcome change and in fact reflects a far more realistic way of addressing the climate issue: allowing for flexibility and continued economic growth which will help spur and continue the flow of capital, which will lead to the investment and development of the next generation technologies, which are really in the long term perspective one of the most critical areas to address in looking at the issue of climate change.
CURWOOD: Ms. Claussen, tell me how does the president's proposal compare to the targets set by the Kyoto agreement, which would have meant cutting greenhouse gas emissions to seven percent less than what they were in 1990, over the next ten years?
CLAUSSEN: Well, when we calculated what it might mean in terms of actual emissions, we believe that by 2012, which is the end of the first budget period in Kyoto, rather than being seven percent below 1990 levels, which I agree was probably not achievable, we would be about 30 percent above 1990 levels. Which, as I said, is really just business as usual.
CURWOOD: By the way, the president said Kyoto would have cost America nearly five million jobs and 400 billion dollars. How accurate is that, Ms. Claussen?
CLAUSSEN: Actually, that's totally off the charts, in my view. And I say that because he really used the economic models with the assumptions and policies modeled that were totally unrealistic and not reflective of Kyoto at all. That said, I think that the economic analyses that said implementing Kyoto would be free or would even be a profit are equally off the mark.
HOLDSWORTH: While I would agree on the analyses that say Kyoto would be free are off the mark, I think there's a wide range of economic analysis that would back up the president's assertion. Certainly that's been our view of this issue for quite a long time, particularly since the protocol was negotiated, that it would have these massive economic impacts. Which is one reason why we have been so resistant to that type of approach and find the president's approach a refreshing change of pace and perhaps a way that we can get at the issue and start reducing greenhouse gases.
CURWOOD: Now, Mr. Holdsworth, ten year's ago President Bush's father initiated a program that was voluntary, like the one that he's talking about now, that asks companies to monitor their greenhouse gas emissions and think about ways to reduce them, what's different in this plan?
HOLDSWORTH: First of all, the numbers that will be reported will be tighter, there'll be stricter methodology applied, which I think will make those numbers more credible to many people. There's a few other important differences. This voluntary program now actually has a goal attached to it. The earlier one was really a way of encouraging companies to go about reporting emissions reductions, here we have a goal of this 18 percent reduction in emissions intensity over the next ten years, that's a different step. And this voluntary program, the reporting program the president has talked about, will also include baseline protection and what's called credit for early action. In other words, making sure that companies that take action now won't be penalized if there is some other type of regime down the road, perhaps a regulatory approach or even a more aggressive voluntary approach. You'd hate to be penalized for taking actions now and perhaps lowering what your emissions base is down the road. You're being a good actor; you should get credit for that. What the president is talking about would do that, we think that's going to really help encourage and spur action.
CURWOOD: Ms. Claussen, I'll come back to you in just a moment, but let me follow up on Mr. Holdsworth here. Eric, I'm a little puzzled here about the signal that the White House is sending to domestic industry by acknowledging the possibility of mandatory emissions cuts in the future. Why not just face this issue right now?
HOLDSWORTH: Well, I don't think they're acknowledging that mandatory approaches are forthcoming. They've indicated future, perhaps reviewing in 2012 where the situation stands and perhaps taking on additional voluntary measures, additional programs. We certainly would never advocate a mandatory approach as is enshrined in the Kyoto protocol. We don't think that's the right way. We feel this is the right approach and the president's sending a clear signal that voluntary initiatives can work and here's a chance for industry to go and show what it can do.
CURWOOD: Ms. Claussen?
CLAUSSEN: Well, I actually think you need to put some of this in perspective. My colleague here from Edison Electric said that the president's program is different because there is a goal. Perhaps he's forgotten that the 1992 Rio Convention, which was negotiated by the first President Bush, actually had a non-binding goal in it as well, which was to reduce emissions in the year 2000 to 1990 levels. And the bottom line of that with all of the voluntary programs that were initiated over the last decade was that our emissions grew by roughly 15 percent over 1990 levels. So we didn't do a very good job of reducing our emissions or meeting our non-binding goal.
HOLDSWORTH: That is correct that the framework connection contains that aim. That wasn't of course linked to the voluntary program here in the US, the way the president has made this link. But it was a goal, but unfortunately it was again looking at an absolute sort of reduction, returning to a certain year by a certain level. This is an approach that looks at the intensity of the emissions, or your amount of carbon per unit of output, which we think is a better metric, and will allow for continued growth while also helping to slow the growth of greenhouse gas emissions.
CURWOOD: Ms. Claussen, you work with a number of Fortune 500 companies at the Pew Center, you might mention a couple of those for us, and my understanding is that some companies are already significantly reducing emissions on their own initiative. What are they saying about the White House policy now, and how do they think this will affect their business over seas?
CLAUSSEN: Well, we work with 37 major companies, they range from Alcoa and Boeing and Weyerhaeuser on the one hand to United Technologies to American Electric Power, and we cover almost all sectors, mostly big multinational companies. All of them are engaged in some forms of emission reductions. Twenty of them have real targets and programs in place to meet those targets and some of those targets are really ambitious. I mean much more ambitious than the Kyoto targets. I mean you could look at a company like DuPont who's going to be reducing their emissions 60 percent below 1990 levels by the year 2010 and is well on its way to achieving that goal. Alcoa which is going to reduce its emissions by a minimum of 25 percent below 1990 levels by 2010. So there are companies that are doing really serious things to reduce emissions. I think the problem is having 27 or 37 or 50 companies that are reducing emissions is just not enough. And I think that's why we look to some kind of a mandatory program as a way to level the playing field and to actually get all of the actors doing what needs to be done if we are actually going to change the trajectory of emissions.
CURWOOD: How does this effect your multinational members of your association as they operate elsewhere around the world which will be under the Kyoto accord if things go as people say?
CLAUSSEN: All of them will have to comply with whatever domestic programs are implemented in countries in Europe or in Asia to reduce emissions. What it really means I think in a negative way is we're not a party to Kyoto and we're not playing in the same game. They won't be able to look company-wide and decide where the efficiencies could be greatest for emissions reductions. They'll have to look only at plants in countries with hard and fast regulations. So for them, it's an inefficiency and like in many other kinds of cases beyond environment, they are going to have one set of rules in one place and a different set of rules in another place. I think from their perspective they'd much rather have a uniform set of rules.
CURWOOD: Ms. Claussen, you're a former Assistant Secretary of State. Japan and the E.U. have been waiting more than a year to hear a concrete climate policy from the Bush administration. How are they responding to this plan?
CLAUSSEN: I think everyone was slightly confused when it was first announced, because they couldn't understand what a greenhouse gas intensity target meant or what an 18 percent reduction in greenhouse gas intensity actually meant. The reports that I've seen and the conversations I've had suggest that not only is this not a substitute for Kyoto, but it's not an ambitious program and it's barely a program at all. I think that's the reaction abroad.
HOLDSWORTH: I wouldn't think that's going to be the case. I think a number of companies are going to welcome this initiative. The president is obviously on his way to Asia to talk to various Asian nations about it. They've already signed some bilateral cooperation agreements with both the Japanese and the Italians, the Central Americans. In fact, I think that as this moves forward he may find a number of companies getting very interested in this kind of approach. A number of the developed countries I think are very fearful of the Kyoto targets and what's that going to mean to their economy and are frankly looking for an approach that perhaps makes more sense in the face of economic growth.
CURWOOD: Eric Holdsworth is director of climate programs with the Edison Electric Institute and Eileen Claussen is the executive director of the Pew Center on Global Climate Change. Thank you both for joining me today.
HOLDSWORTH: Thank you.
CLAUSSEN: Thank you.
Living on Earth
For Immediate Release:
January 29, 2002
Contact: Katie Mandes
Climate Change Threatens Health of America's Lakes, Streams, Rivers and Wetlands
Washington, DC - Global climate change poses a serious threat to lakes, streams, rivers, and wetlands throughout the United States, according to a new report from the Pew Center on Global Climate Change. The temperature increases and variations in weather patterns projected for the next 100 years will result in changes in the geographic distribution of freshwater fish, interfere with the reproduction of many aquatic species, reduce water quality, and impose added stresses on wetlands and other sensitive aquatic ecosystems.
"The United States' freshwater and wetland ecosystems face multiple threats to their health and stability, including changes in land use, environmental pollution, and the diversion of water for drinking, irrigation, and other uses," said Eileen Claussen, President of the Pew Center on Global Climate Change. "To these threats we must now add the very real and very serious effects of global climate change and its potential to transform the essential character of our lakes, rivers, streams, and wetlands."
The Pew Center report, Aquatic Ecosystems and Climate Change: Potential Impacts on Inland Freshwater and Coastal Wetland Ecosystems in the United States, draws on a variety of sources to summarize researchers' current understanding of the potential impacts of climate change on U.S. aquatic ecosystems. Among the report's key conclusions:
- Increases in water temperatures as a result of climate change will alter the geographic distribution of aquatic plant and animal species. The severity of these impacts may be limited if species can migrate to new areas as climate changes. However, the ability of species to migrate may be compromised by human activities that block migration corridors, potentially causing reductions in biodiversity.
- Changes in precipitation will alter river and streamflows affecting ecosystem productivity and reducing water quality. Populations of aquatic organisms are sensitive to the effects of floods, droughts and other extreme weather events, which are likely to increase as a result of climate change.
- Climate change is likely to further stress sensitive freshwater and coastal wetlands. Wetlands throughout the United States already are adversely affected by a variety of human impacts. Climate change will add to the existing stresses on these fragile ecosystems in a variety of ways-most notably by causing global sea levels to rise and inundate coastal wetlands. Rising global temperatures also will cause the wetland areas of Alaska and Canada to release additional carbon dioxide and other greenhouse gases into the atmosphere.
- Aquatic ecosystems have a limited ability to adapt to climate change. Governments, communities, businesses, and individual citizens can take a number of steps to reduce the likelihood of significant impacts to these systems while improving their ability to adapt to climate change. These include: maintaining riparian forests; reducing pollution from a variety of sources; restoring damaged ecosystems; minimizing groundwater withdrawal; and strategically placing new reservoirs to minimize their ecological impacts.
"Our rivers, lakes, streams, and wetlands support economically important fisheries and provide Americans with clean drinking water, water for irrigation, recreational opportunities, and more," said Claussen. "This report shows that climate change puts all of these services at risk, but it also shows there are things we can do to reduce that risk."
Part of "Environmental Impacts" Series
Aquatic Ecosystems and Global Climate Change was prepared for the Pew Center by N. LeRoy Poff, Mark M Brinson, and John W. Day, Jr. It is the seventh in a series of Pew Center reports examining the potential impacts of climate change on the U.S. environment. Other Pew Center series focus on domestic and international policy issues, climate change solutions, 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, www.c2es.org.
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 conducting studies, launching public education efforts and working with businesses to develop market-oriented solutions to reduce greenhouse gases. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs. The Pew Center includes the Business Environmental Leadership Council, which is composed of 36 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center - it is solely supported by contributions from charitable foundations.
For Immediate Release:
December 20, 2001
Contact: Katie Mandes
New Report on Discounting the Benefits of Future Climate Change Mitigation
Washington, DC - How do we compare the costs of greenhouse gas reduction measures taken today with the future benefits of these actions? How do we calculate the value of investments when benefits will continue to accrue over centuries? These are important questions, because the way we value the benefits of greenhouse gas emission reductions will guide the development of cost-effective solutions to the threat of global climate change. A report released today by the Pew Center on Global Climate Change addresses these crucial questions.
The report, Discounting the Benefits of Future Climate Change Mitigation: How Much Do Uncertain Rates Increase Valuations?, by Richard Newell and William Pizer of the independent nonprofit research institute Resources for the Future, highlights an important variable that often goes unexamined in current climate change models-uncertainty in future interest rates. Climate models incorporate discount rates to compare costs and benefits over time-in essence, they tell us how high future benefits need to be to justify spending a dollar today. Most climate models choose one rate and hold it constant over the time horizon of the model.
This study questions that conventional approach, arguing that future rates are uncertain. The authors demonstrate that acknowledging uncertainty about future interest rates leads to a higher valuation of the future benefits of reducing greenhouse gas emissions today - regardless of the initial rate one chooses. The authors conclude that, by ignoring uncertainty, current approaches used in economic modelling may be consistently undervaluing the future benefits of current climate change mitigation efforts. The report shows that including the effect of interest rate uncertainty in climate models could raise valuations of mitigation efforts by as much as 95 percent relative to conventional discounting at a constant rate.
"This report indicates that immediate action to address global climate change could yield significantly greater benefits in the long-run than conventional economic models have estimated," said Eileen Claussen, President of the Pew Center. "This information will be especially useful for policymakers as they seek to balance near-term mitigation costs with long-term economic and environmental benefits."
This report is the first to be published as a technical report in the Pew Center's economics series. The results of this work - and additional ongoing Pew Center analyses - will be incorporated into a dynamic general equilibrium model in order to better capture the full complexity of the climate change issue.
A complete copy of this report and other Pew Center reports can be accessed from the Pew Center's web site, www.c2es.org.
The full text of this report is accessible on the Internet:
Discounting the Benefits of Future Climate Change Mitigation: How Much Do Uncertain Rates Increase Valuations? Report.
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 conducting studies, launching public education efforts and working with businesses to develop market-oriented solutions to reduce greenhouse gases. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs. The Pew Center includes the Business Environmental Leadership Council, which is composed of 37 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center - it is solely supported by contributions from charitable foundations.
Community Adjustment to Climate Change Policy
Prepared for the Pew Center on Global Climate Change
Judith M. Greenwald, Pew Center on Global Climate Change
Brandon Roberts, Brandon Roberts & Associates
Andrew D. Reamer, Andrew Reamer & Associates
Eileen Claussen, President, Pew Center on Global Climate Change
A Pew Center report series on the economics of climate change has identified many ways in which economic modeling can be improved to more reliably project the costs of greenhouse gas reduction policies. These studies show that better model design – for instance, more realistically portraying technological progress and flexibility in the economy – can yield substantially lower projections for the costs of addressing climate change. They provide strong evidence that a rational climate policy that sets realistic short-, medium-, and long-term goals can achieve significant environmental gains while minimizing economic costs.
At the same time, it is important to recognize that the costs of addressing climate change are likely to fall disproportionately on certain industries, communities, and workers, and to explore ways to minimize these adverse impacts. This report is one of three focusing of these critical transition issues. It draws from past community assistance efforts to recommend ways the government can best assist communities that may suffer economic disruption as a result of climate change policies. A report released simultaneously looks at potential impacts on American workers and a future Pew Center report will evaluate competitiveness issues.
In the case of community assistance, the government has considerable experience assisting communities adversely affected by policies such as trade agreements, defense downsizing, and forest protection. For this report, authors Judith Greenwald, Brandon Roberts, and Andrew Reamer apply lessons learned from previous adjustment programs to the challenges posed by addressing climate change. Specifically, the report examines the risks faced by communities whose economies rely heavily on energy production and energy-intensive industries. The authors conclude that a new federal adjustment program for at-risk communities should be part of U.S. climate change policy. The report recommends that the U.S. government take the following actions:
- Designate and fund the Economic Development Administration (E.D.A.) of the U.S. Department of Commerce to design and implement an economic adjustment program for communities;
- Identify and assist communities that are particularly dependent on energy-producing and energy-intensive sectors before dislocations occur;
- Leverage and integrate additional resources by involving multiple federal agencies and state and local governments through federal and regional task forces; and
- Be flexible in addressing community needs by supporting locally determined, comprehensive strategies for five to seven years after the implementation of new climate policies.
C learly, some steps recommended in these reports will require funding. As policies to address climate change are developed, revenue streams from related fees (e.g., from permit fees or auction revenues) could be used to assist with these programs. Addressing climate change through sound policy will make it possible to achieve our environmental objectives while shielding workers and communities from potential economic harm. The authors and the Pew Center are indebted to Robert Atkinson, Ev Ehrlich, and Phil Singerman for their comments on previous drafts of this report.
The world is becoming increasingly concerned about the risks of global warming from the buildup of greenhouse gases in the atmosphere, but many American decision-makers are worried about the economic impacts of policies that may be needed to reduce U.S. greenhouse gas emissions. The overall size and distribution of the impacts of such policies are uncertain, and depend greatly upon how governments, businesses, consumers, and workers respond to the challenge. Efforts to avert global warming would put some American businesses, workers, and communities at risk of economic dislocation. This paper focuses on how the federal government can best assist at-risk communities. Since the burning of fossil fuels such as coal, oil, and natural gas to produce energy is a major source of greenhouse gas emissions, such communities include those with high reliance on jobs in energy production — say, coal mining in Wyoming, or oil and gas production in Louisiana — and in energy-intensive industries such as steel manufacturing in Pennsylvania.
This is not the first time that important national policies have forced economic change on particular communities. The same story has been told for trade agreements, defense downsizing, and forest protection, for example. In each case, the U.S. government helped affected communities through various forms of economic adjustment assistance. In addition, in the last 20 years, numerous U.S. communities have sought to adapt to wrenching economic change brought about by global competition and recession, both with and without federal assistance.
The United States has substantial infrastructure and experience at the federal, state, and local levels in community economic adjustment. Thus, a foundation is in place for creating a new government program to help communities adversely affected by global climate change policy. Experience in the United States and elsewhere suggests that, although economic adjustment programs do not usually remove the pain of economic disruption, appropriately designed programs can lessen that pain considerably. At the same time, there is substantial room for improvement in existing adjustment efforts.
This paper recommends a new federal adjustment program for communities as part of global climate change policy. Specifically, the United States should do the following: (1) commit to address the problem by designating a single agency, the Economic Development Administration (EDA) of the U.S. Department of Commerce, and authorizing about $550 million dedicated dollars, to design and implement an economic adjustment program; (2) be proactive by identifying communities that are particularly dependent on energy-producing and energy-intensive sectors, and by helping communities to take action before dislocations occur; (3) leverage and integrate additional resources by involving multiple federal agencies and state and local governments through federal and regional task forces; and (4) be flexible in addressing community needs by supporting locally determined, comprehensive strategies for five to seven years.
Such a program would take advantage of available experience and expertise at all levels of government, and would take into account the wide variability in local circumstances and opportunities. By doing so, it would minimize economic dislocation and maximize opportunities to create jobs and protect the environment.
About the Authors
Judith M. Greenwald
Pew Center on Global Climate Change
Brandon Roberts & Associates
Brandon Roberts, president of Brandon Roberts & Associates since 1990, is a public policy consultant specializing in economic and workforce development matters. He works primarily with state- and local-level organizations to develop and implement effective policies and program activities, and to evaluate the benefits of past efforts. He has worked in California, Delaware, Florida, Massachusetts, Michigan, Minnesota, Iowa, Ohio, Oregon, and Washington; in large cities such as Baltimore, Cincinnati, Cleveland, Miami, and Portland; and on a number of projects involving community-based organizations.
Before starting his own consulting firm, Mr. Roberts served as Deputy Director of the Council of State Community Development Agencies in Washington, D.C., where he worked extensively with state economic and community development agencies and helped develop policies and strategies to address the employment needs of low-income individuals. He also has held positions in the U.S. Economic Development Administration and the Executive Office of the President. Mr. Roberts has a BS in government (1975) and a MSP in urban and regional planning (1977) from Florida State University.
Andrew D. Reamer
Andrew Reamer & Associates
Andrew Reamer, Ph.D., is Principal of Andrew Reamer & Associates, a Boston-based consulting firm specializing in economic development and public policy. Dr. Reamer received a Ph.D. in Economic Development and Public Policy (1987) and a Masters in City Planning (1981) from the Department of Urban Studies and Planning, Massachusetts Institute of Technology.
Remarks of Eileen Claussen
President, Pew Center On Global Climate Change
City Club of Portland
December 14, 2001
Greetings and thank you very much. It is wonderful to be here in Portland, and I want to thank the people at the City Club for inviting me to be a part of your Friday Forum. I noticed on the club's schedule that next week's Friday Forum presenters will be the Oregon Repertory singers. I sincerely hope that none of you got the dates mixed up. I always try to be somewhat entertaining in my speeches, but singing a few holiday favorites definitely crosses the line.
Seriously, I'm glad to have the chance to be here today to talk to you about one of the most profound challenges of the 21st century. That, of course, is the challenge of global climate change. I'd like to tell you where we stand right now in the effort to deal with climate change, both here in the United States and internationally. And I'd like to tell you where we are headed - the kind of world we will leave our children and grandchildren if we stick to business as usual. But most importantly, I'd like to tell you where we need to be headed - the path that instead will allow us to pass to future generations a safer, healthier, more prosperous planet. It is not a simple path. For what is needed, I believe, is a second industrial revolution - one that takes us beyond oil and beyond coal to cleaner, more secure ways to power our global economy. Government must have a hand, a strong hand, in launching this revolution. But it can succeed only if our corporate leaders rise to the challenge as well. For while government can set the goals, only the marketplace can spur the innovation and mobilize the resources needed to achieve them. Fortunately, a growing number of forward-thinking companies already are leading the way.
First, though, I'd like to tell you why the state of Oregon holds such a special place in my heart. Some of you, I'm sure, remember back in the 70' s when Oregon became the first state in the nation to require a deposit on bottles and cans. At the time, I was a young staffer in EPA's office of solid waste. And I thought: Hey, they've got a great idea out there in Oregon. We should let other people know about it. So I put together a nifty little pamphlet describing Oregon's groundbreaking program and EPA started distributing it. Well, not everyone agreed that bottle bills were such a grand idea. The beverage industry was, shall I say, unhappy. And they let my bosses know it. I'm told, in fact, that the chairman of Pepsi raised the matter directly with the president. Soon thereafter EPA decided to "loan" me to an obscure office in Congress where I couldn't cause any more trouble. And when I was finally allowed to return, I was assigned a new area of responsibility: sewage sludge.
I'm pleased to say I was eventually able to rise above sewage sludge. I'm also pleased to note that, all these years later, Oregon is still leading the way on the environment. In fact, I know of no state that is doing more to meet the challenge of global warming. Oregon was the first state to enact mandatory controls on carbon dioxide - requiring that all new power plants meet a tough new emissions standard. The city of Portland and Multnomah County were the first local governments in the United States to adopt a plan for reducing greenhouse gas emissions. And through your commitment to light rail and other smart growth strategies, you are demonstrating that protecting the climate goes hand in hand with preserving Oregon's enviable quality of life. These efforts really do reflect the spirit behind the Oregon state motto, "She flies with her own wings." May you soar higher and higher.
But are others joining you in flight? Climate change is by definition a global challenge. And the best efforts of any one city, state or nation will come to naught unless, ultimately, we all act together. We're by no means there yet - not even close. But it might surprise you to learn that we are in fact making headway. The reason this might surprise you is that the one thing most people heard about climate change over the past year was that President Bush rejected the Kyoto Protocol. His decision indeed was a setback. But let's look at what's happened since.
First, let's look at the international picture. For those of you new to this topic, the Kyoto Protocol is an agreement negotiated in 1997 that does two things: it sets targets for reducing greenhouse gas emissions from industrialized countries; and it allows them to meet those targets through market-based strategies like emissions trading. Don't worry. I'm not going to get too far into this. But it's worth taking a minute to understand why these market-based strategies are so important. Basically, they put the market to work to cut emissions as cost-effectively as possible. In other words, they deliver the greatest environmental benefit at the lowest possible cost. And they create market incentives that drive companies to keep coming up with better and cheaper ways to cut emissions. This is how we've tackled acid rain faster and cheaper than anyone ever imagined. Emissions trading is a concept born here in America, and it was the United States that insisted it be part of the Kyoto Protocol.
While Kyoto established a broad framework, the nitty-gritty rules still had to be negotiated before countries could ratify it. A year ago, those negotiations were at a standstill. Then President Bush rejected the Protocol. Suddenly, the rest of the world was rallying to its defense. In negotiations last July in Bonn, and then last month in Marrakech, nations made the tough compromises and worked out the rules. They're not perfect, but they do establish a workable international system for beginning to tackle this problem. The agreements in Bonn and Marrakech have been rightly declared a triumph of multilateralism. They represent a triumph as well for the principle of harnessing the global market to protect our global environment. It's true, Kyoto's targets take us only a decade into the future, and provide only a small fraction of the emissions reductions we must ultimately achieve. But the bottom line is that we have to start somewhere, and much of the world has now established that starting point. The priority now is to ensure the Protocol's swift ratification and entry into force so we can, at long last, begin to deliver on Kyoto's promise and achieve real progress.
What, then, of the United States? With just 4 percent of the world's population, we generate 25 percent of the world's greenhouse gas emissions. Each year, our emissions grow higher. We've rejected Kyoto, yet we have no real strategy of our own. I'm afraid I have little expectation that the Bush administration is prepared to put forward the kind of proposals needed to launch a serious effort, at least not at the moment. Nor, for that matter, was the previous administration. But just as President Bush's rejection of Kyoto helped rally international support for the Protocol, it has stimulated a very interesting and encouraging bipartisan response on Capitol Hill. Suddenly, both Democrats and Republicans seem eager to demonstrate their commitment to tackling climate change.
For instance, Senator Robert Byrd, a leading Democrat from coal-producing West Virginia, and Senator Ted Stevens, a leading Republican from oil-producing Alaska, are teaming up on a bill that would devote billions to researching and developing climate-friendly technology. It also would establish a climate change office in the White House and give the President one year to develop a comprehensive strategy aimed at stabilizing greenhouse gas concentrations in the atmosphere. A first step, but an important one.
Other bills would require companies to track and disclose their emissions of greenhouse gases, an essential step toward building a comprehensive emissions reduction strategy. This is an idea that the White House seems at least open to considering. In the Senate, there's a serious debate brewing over new pollution standards for power plants - in fact, the first real debate at the federal level over the kind of mandatory controls on carbon dioxide that Oregon already has in place. Finally, another bipartisan duo, Senators John McCain and Joe Lieberman, have said they plan to introduce legislation establishing an emissions trading system covering major sources of greenhouse gases throughout the economy. It's hard to imagine a bill like that moving through Congress anytime soon. But the very idea that two such prominent lawmakers would be advocating such a far-reaching strategy was virtually unthinkable just a year ago.
To be certain, there are many in Congress and elsewhere who remain adamantly opposed to concrete action against climate change. Perhaps they assume, in the greatest tradition of laissez-faire economics, that a rising sea level lifts all boats. There are even those who continue to question whether global warming is real. President Bush expressed his own doubts about the science when he first took office. He asked the National Academy of Sciences to undertake a special review. The NAS came back and said, yes, there are some uncertainties in the science. There always will be, I'm sure. But the NAS went on to say that, despite those uncertainties, the evidence for global warming is strong and growing stronger.
Here's what the science tells us. First, the earth is indeed getting warmer. The 1990s were the hottest decade of the entire millennium, and 1997, '98, and '99 were three of the hottest years ever. Second, this warming trend is almost certain to continue. Projections of future warming suggest an average global increase of two to ten degrees Fahrenheit over the next century. Third, and perhaps most importantly, the evidence strongly suggests that human activities, in particular the burning of fossil fuels, are largely to blame.
What will the impacts of this warming be? How will all this affect our children and grandchildren? Some people like to see the bright side of global warming. Lower heating bills in winter, for instance, and longer growing seasons in the Midwest. But there's good reason to believe that any potential benefits will be far outweighed by the costs.
Rising sea levels will flood coastal areas - a very real worry along portions of the U.S. coastline but a much greater worry for low-lying countries like the Netherlands and Bangladesh. Higher temperatures mean an increase in extreme weather-more flooding, more drought, and more severe storms. Historic patterns of rain and snowfall will be disrupted, putting water supplies at risk. Here in the Pacific Northwest, for instance, warmer winters will mean less snow pack in the mountains and an earlier springtime melt. Water shortages are likely to grow worse. Many of our most threatened species and ecosystems will face even greater risk. Declines in river flow, for instance, could destroy any chance of saving this region's precious salmon runs. And hotter, drier summers will stress the forests and pose an ever greater threat of wildfire.
One of the tremendous inequities of climate change is that the people facing the greatest risks are those least able to bear them. Wealthy nations like the United States can find ways to lessen the impact. We can build sea walls to protect our coasts. Our farmers can switch to other crops better suited to a warmer climate. We can strengthen our public health system to guard against diseases like malaria and dengue fever. But poorer nations struggling to feed and house their people cannot so easily adapt. And, scientists predict, they will be the ones hardest hit. For them, prolonged drought doesn't mean parched lawns and water rationing. It means starvation. Rising sea levels won't just be an inconvenience for those with beachfront property. They'll mean mass migrations and increased competition for scarce land. Lest you think this is all conjecture, it's worth noting that the people of Tuvalu, a small island nation in the Pacific, recently decided to abandon their homeland before it's swallowed by rising seas. All 11,000 residents will be relocating to New Zealand beginning next year.
So this is the kind of world that awaits us if we continue on our present course. What is the alternative? What will it take to keep our planet from overheating? Well, quite obviously, it requires dramatically reducing emissions of carbon dioxide and other greenhouse gases that trap heat in our atmosphere. What is the primary source of these gases? The combustion of fossil fuels. So our goal, over time, must be to end our reliance on coal and oil and to develop new sources of energy that can power our growing economy without endangering our climate. Yes, it is a tall order. As I said earlier, it will take nothing short of a second industrial revolution.
Let me be clear: This revolution cannot take place overnight. It will, in fact, take decades. But there are important steps we should take right now to begin the transition. First, we need to be more energy efficient, so we use less energy to achieve the same results. The United States has made significant improvements in energy efficiency over the last decade. But countries such as the United Kingdom, Germany, Japan and Brazil are all far less energy intensive than we are, and we have clearly have much further to go. Some of this could be as simple as turning off the lights, buying a compact fluorescent next time you need a new light bulb, or carefully checking the energy efficiency ratings the next time you buy a new washer or dryer. We also should be insisting on more energy-efficient cars. The technology exists. The new Toyota Prius, a hybrid car that uses both an electric motor and an internal combustion engine, can go more than 50 miles on a gallon of gas. It's proven so popular you have to wait months to get one. If everyone in America drove a hybrid, we would save about 1.6 billion gallons of oil a year - far more than we import from the Middle East.
Improving efficiency is not enough, though. To address climate change, we will also have to emit much less carbon, and this means switching to less carbon intensive fuels. Some fuel switching can be done now, but we need a serious effort to begin laying the groundwork for the fuels of the future. We've been through energy transitions before. In the 18th century, we still relied largely on wood. In the 19th century, the steam engine took over. In the 20th century, we turned to oil. Now we must develop new fuels to meet the needs of the 21st century.
I can't tell you what the fuel of choice should be a hundred years from now. That will depend on the ingenuity of our scientists and engineers; investment decisions made in boardrooms; the unpredictable course of technological development; and the whims of the marketplace. Solar, wind and geothermal power all hold tremendous promise. But one technology that is generating real interest right now is the hydrogen fuel cell.
Fuel cells are what NASA puts on board rockets to generate power in space. They can run on different kinds of fuels. But whatever the fuel source, the only byproduct is heat and water - pure water. In other words, no smog-forming pollutants and no carbon dioxide. Fuel cells could be used to power cars, and many automakers are now engaged in efforts to make fuel cell cars a reality. They could be used to power businesses or homes. Instead of buying electricity from a coal-burning utility, a fuel cell in your basement no bigger than a central air conditioner could generate all the clean power you need. The use of hydrogen to power fuel cells is appealing because there are so many different ways to produce it. Hydrogen can be extracted from coal, oil or natural gas - or, preferably, produced from renewable energy sources. And it can take different forms. Some energy experts envision the day when, instead of filling your car at the gas pump, you'll pick up "fuel in a box" from the convenience store or a vending machine. You could go about 250 miles on a six-pack.
That's just one possibility, and there are many, many more. The point is that if we are to realize them - if we are to discover and pursue the most promising options - we must get started. This second industrial revolution requires technological and economic transformation on an unprecedented scale. And we must begin making investments now to ensure its success.
There are those who say we can't afford to address climate change, particularly when our economy is slowing. I believe they are wrong, for a host of reasons. I could tell you how the economic models they rely on exaggerate the costs of cutting emissions and fail to take into account the full range of benefits. But instead, let me tell you about the concrete experiences of the companies we work with at the Pew Center on Global Climate Change. Thirty-seven major companies are now members of our Business Environmental Leadership Council. These are primarily Fortune 500 companies - names you'd recognize, like Weyerhauser, Intel, Boeing, DuPont, Shell and Alcoa. Together these companies employ more than 2 million people and generate revenues of nearly $900 billion. And through their investments in emissions-cutting and climate-friendly technologies, they are demonstrating that what is good for the climate can be good, too, for the bottom line.
Many of these companies have adopted voluntary targets for reducing their greenhouse gas emissions. We recently released a report that took a close look at six of them. It looked at the reasons why they took on targets, and what the results have been. The companies said one of the motivations for taking on a target was to improve their competitive positioning in the marketplace. And that, in fact, has been the result. Each of the companies is on track to meeting or exceeding its greenhouse gas goal. Together, they've delivered reductions equal to the annual emissions of three million cars. And all the companies are finding that their efforts are helping to reduce production costs and enhance product sales today.
So, yes, I am confident that with smart strategies that tap the power of the marketplace instead of squelching it, that do not expect more than can be delivered, and that take into account capital stock turnover cycles, we can afford to address climate change. In fact, we can strengthen the long-term health of our economy. Whatever the economic indicators for the latest quarter, over the long haul, increased efficiencies can only improve the bottom line. There are real economic opportunities that come with taking action on climate change. It would be a mistake not to seize them.
Before closing, I'd like to say a word about the new concerns now dominating our national agenda. I refer, of course, to the horrible, haunting events of September 11. The security of our nation is now, and will for some time remain, the overriding concern in Washington, and with good reason. As a result, a host of other vital issues - climate change among them - will for now take a lower profile. But I believe those of us working on climate change can still make an important contribution. We can help show how, with the right strategies, we can both protect our nation and advance the fight against global warming. This is most obvious in the case of "energy security." We all know that continuing to rely so heavily on imported oil is a costly mistake. To some the answer is drilling in the Arctic refuge. But whatever your views on the Arctic, it is clear that no amount of domestic drilling will significantly reduce our reliance on foreign oil. If we are serious about energy security - whether or not we're serious about addressing climate change - we must move beyond oil.
So, where are we in the effort against climate change? Internationally, after a decade of difficult negotiations, we are for the first time on the verge of enacting binding emissions limits for all industrialized countries but one. In the United States, despite our refusal to join the rest of the world in the Kyoto Protocol, there is a growing bipartisan recognition that we cannot continue to blithely ignore our responsibilities as the world's largest greenhouse gas polluter. In a growing number of boardrooms, corporate leaders are seeing climate change not only as a challenge but as an opportunity. And in communities like Portland, ordinary citizens are acting locally to meet what is truly a global challenge. We have a long, long way to go. But we have begun. And that is good. Thank you very much.
Worker Transition & Global Climate Change
Prepared for the Pew Center on Global Climate Change
Jim Barrett, Economic Policy Institute
Eileen Claussen, President, Pew Center on Global Climate Change
A Pew Center report series on the economics of climate change has identified ways in which economic modeling can more reliably project the costs of greenhouse gas reduction policies. These studies show that better model design — for instance, more realistically portraying technological progress and flexibility in the economy — can yield substantially lower projections for the costs of addressing climate change. They provide strong evidence that a rational climate policy that sets realistic short-, medium-, and long-term goals can achieve significant environmental gains while minimizing economic costs.
At the same time, it is important to recognize that the costs of addressing climate change are likely to fall disproportionately on certain industries, communities, and workers, and to explore ways to minimize these adverse impacts. This report draws from past worker transition efforts to recommend ways the government can best assist workers who may suffer economic dislocation as a result of climate change policies. A Pew Center report released simultaneously examines potential impacts on U.S. communities, and a future Pew Center report will evaluate competitiveness issues.
In the case of worker transition, the government has considerable experience assisting workers adversely affected by policy choices and market forces. Author Jim Barrett draws lessons from these government programs and outlines the building blocks of a worker transition program that could assist workers adversely affected by climate change policies. The report recommends that such a program include:
- Substantial retraining and/or education for laid-off workers;
- Substantial income support for program participants;
- A bridge to retirement for workers nearing retirement age that maintains their standards of living and retirement benefit levels;
- Maintenance of laid-off workers’ health and pension benefits until they find suitable employment;
- Rapid response programs to ensure prompt service provision, and avoidance of detailed eligibility requirements;
- Advance notice of layoffs when possible;
- Work with unions to inform workers about program availability and to administer services;
- Performance standards that avoid the unintended consequences of the overly simplistic standards used in the past; and
- Requirements and funding for assessments of the program’s effectiveness by comparing outcomes for participants and non-participants, and allowing for mid-course corrections.
Clearly, some steps recommended in these reports will require funding. As policies to address climate change are developed, revenue streams from related fees (e.g., permit fees or auction revenues) could be used to assist with these programs. Addressing climate change through sound policy will make it possible to achieve our environmental objectives while shielding workers and communities from potential economic harm. Pew Center and the author wish to thank Susan Teegarden, Andrew Hoerner, Robert Ginsburg, Ev Ehrlich, Yolanda Kodryzycki, and Les Leopold, who offered helpful comments on previous drafts of this report. The author also would like to thank Brigit O’Brien and Terrel Hale for their research assistance.
With most scientists and politicians agreeing that human-induced climate change is a potentially serious problem, the question of how nations respond to it, if at all, now seems to hinge on the perceived costs of action and inaction. Several attempts have been made to estimate the cost to the U.S. economy of reducing carbon and other greenhouse gas emissions. While there remains substantial debate over the net costs (or benefits) of various policy alternatives, there is little debate over the fact that reducing emissions will have potentially negative impacts for certain sectors of the economy and their workers. Any major reduction in carbon emissions in the United States will almost certainly require a decline in demand for fossil fuels, and, therefore, will result in employment losses in the coal, petroleum, and electricity industries, and possibly other sectors as well.
The question often arises: What policy options are available to address the needs of impacted workers?
The United States has substantial experience with programs aimed at helping workers dislocated both by policy choices, such as trade agreements and environmental regulations, and by market forces, such as the ongoing shift away from manufacturing and toward a service-based economy. The Trade Adjustment Assistance (TAA) program established in the 1960s was designed to aid workers displaced by the effects of international trade, while the Job Training Partnership Act (JTPA) was aimed at workers displaced for any reason. The experiences of these programs can provide valuable guidance for the design of policies aimed at dealing with workers displaced by climate change policies. In 2000, both programs were subsumed by the Workforce Investment Act (WIA), which would serve workers dislocated by climate policies if they were to be laid off today.
Examinations of TAA and JTPA raised important questions about the effectiveness of their training components. Studies have found that the majority of participants who subsequently found jobs were employed in occupations unrelated to their training programs. A closer look at the evidence shows that there can be sizable gains from retraining displaced workers, with some studies finding significant benefits through higher wages at reemployment. The evidence also appears to indicate that the quality of training may be as important as the quantity.
In addition to training and education, another important aspect of worker displacement programs has been income support for participants. Both TAA and JTPA are meant to provide support for their participants, although many, including the vast majority of JTPA participants, received little or no support. Aside from the obvious hardships this can impose on workers and their families, it also had substantial impacts on the ability of the programs to move workers successfully into new jobs. A study of one JTPA program found that over the first year following layoff, program participants earned about 20 percent less than displaced workers who did not join a program. While participants’ earnings recovered substantially over time, the cost of participating in the program, in terms of lost earnings over the first year, represents a substantial barrier to participation.
While some workers likely opted out of programs due to lack of income support or other reasons, some may have been discouraged from participating. The use of performance-based contracts, which pay service providers based on reemployment and wage replacement rates, can give providers the incentive to filter out the workers who are more difficult to place and who might bring averages and compensation down. TAA had substantial problems in serving its intended population as well. One audit found that the eligibility determination process arrived at an incorrect conclusion in over 60 percent of cases.
There are a wide range of lessons that can be drawn from previous programs to help inform the design and administration of a successful program to assist workers affected by climate change policies. A critical, if broad, lesson is that numerous tradeoffs exist that can make designing an effective program difficult. At the same time, some tradeoffs that are assumed to exist may not. Continuing to assume that they do can be equally limiting.
Both TAA and JTPA have tried to strike a balance between providing compensation to workers and providing incentives to leave programs as quickly as possible. For JTPA, those incentives appear to have been too strong. A large majority of eligible workers (as many as 93 percent) never entered programs in the first place. Under JTPA and now WIA, the goal of compensation has been sacrificed in the name of efficiency. However, income compensation and training appear to be complementary, so that increasing compensation can enhance training outcomes and program success. With limited resources, unfortunately, training and compensation appear to be substitutes at least in the budgetary sense.
While providing for substantial retraining is an essential element of a successful transition program, it is no guarantee of success. Despite the relatively long training programs in TAA projects, reemployment outcomes have been disappointing, due largely to inadequate job search and placement services and to mismatches between training programs and labor market demand. Careful design of training programs and the provision of job search and placement services will be critical to the success of a climate change transition program, particularly given the long tenure and deteriorated labor market skills likely to characterize many of the program’s participants.
In addition to some of the larger issues like income support, there are numerous factors in the administration of transition programs that can help determine their success or failure. Some of these issues have already been addressed in WIA. The continuous operation of WIA offices and rapid response teams can help keep the lag time between layoff and program entry low. Addressing layoffs at the earliest possible stage can increase the legitimacy of the program and help workers face the reality of permanent separation from their jobs. This approach increases participation rates and reduces the lag time between layoff and program entry.
To ensure that these workers have access to training options, two conditions must exist. First, training programs must be offered that can serve their needs. Second, training providers must have a limited ability to exclude or discourage clients who are difficult to place. If these conditions are met, it may be possible to employ performance-based standards successfully. To ensure that programs suitable for the hard to place are available, a successful program needs to offer sufficient incentive to trainers to offer such programs. One approach is to offer higher payments for placements of the difficult to place. Rather than offer payment based on the number of people placed, a system could offer payment based on the expected intensity of training required. This approach would offer increased incentives for training providers to design programs for workers who need the most help.
A more fundamental issue is the appropriateness of a program explicitly designed to serve one type of worker and not another. To a laid-off worker, and possibly to society as a whole, it may seem arbitrary to deny or approve benefits based on whether it can be proven that climate change policies contributed to the layoff. Climate change policies may be only one of a combination of causes leading to a layoff, particularly for industries already in decline. Any eligibility restriction based on climate change policies will thus be difficult to implement.
The following elements appear critical to the success of a transition program aimed at helping workers dislocated by climate change policies or other causes:
- Substantial retraining and/or education should be available for laid-off workers.
- The program should provide substantial income support for program participants.
- For those workers nearing retirement age, the program should provide a bridge to retirement that maintains their standard of living as well as their retirement benefit levels.
- The program should maintain health and pension benefits of laid-off workers until they find suitable reemployment.
- To help ensure that services can be provided as quickly as possible, rapid response programs should continue to be employed, and detailed eligibility requirements should be avoided whenever possible.
- The program should encourage advance notice of layoffs when possible.
- The program should work with unions to inform workers about the availability of programs and to administer services.
- The program should establish performance standards that avoid the unintended consequences of the overly simplistic performance standards used in the past.
- The program should require, and provide funding for, assessments of the program’s effectiveness by comparing outcomes for participants and non-participants, and allow for mid-course corrections.