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
Press Release: New Report Explores Ways to Encourage Consumers To Buy Energy-Efficient Home Appliances
For Immediate Release:
October 31, 2000
Contact: Katie Mandes, 703-516-4146
Dale Curtis, 202-777-3530
New Report Explores Ways to Encourage Consumers To Buy Energy-Efficient Home Appliances
Washington, DC - Public policies to encourage turnover of aging home appliances and purchases of more efficient models could help reduce the emissions linked to global warming, according to a new report released by the Pew Center on Global Climate Change.
"The economics are generally attractive for consumers to upgrade to energy-efficient models when they replace old or broken appliances," said Eileen Claussen, President of the Pew Center on Global Climate Change. "But without targeted public policies, consumers may be unaware of the potential cost savings and environmental benefits of doing so."
"This important Pew Center report illustrates how the use of energy-efficient appliances can help combat climate change," said Jeff Fettig, President and CEO, Whirlpool Corporation. "At Whirlpool, we believe that sound policy can stimulate companies to produce more energy-efficient products and encourage consumers to buy them."
"At Maytag, the extraordinary consumer acceptance of our Neptune washer provides clear evidence that consumers will purchase environmentally friendly appliances if those products also provide superior performance," said Lawrence J. Blanford, President, Major Appliance Division, Maytag Corporation. "Consumer education programs, such as the recent Boston washer study conducted by the Department of Energy and Maytag, bring the message to consumers that they and the nation benefit when they replace their older, less efficient appliance with a newer, high efficiency model."
The report, entitled "Global Warming and Appliances: Increasing Consumer Participation in Reducing Greenhouse Gases," was written by two leading experts in the field: Everett Shorey of Shorey Consulting, Inc. and Tom Eckman of the Northwest Power Planning Council.
The paper frames the policy issues by identifying the major home appliances that require the most electricity, such as refrigerators, clothes washers, and room air conditioners. Then it analyzes the economic ramifications for consumers of various appliance purchase options. Next it identifies important consumer characteristics to be considered at different stages in the appliance purchase process. Finally, it reviews past attempts to influence consumer choice through public policy initiatives and suggests how new initiatives could be targeted more effectively.
- Well crafted programs including rebates, publicity, and assistance in disposing of old appliances appear to motivate consumers to replace refrigerators before the end of the expected life of the appliance. It is likely that the refrigerator experience can be generalized to other appliances.
- There is little or no evidence that consumer tax credits are effective in influencing a significant number of consumers to change their purchasing behavior.
- Energy labels and the US EPA's Energy Star logo are good indicators of cost-effective and energy-efficient appliances, but the labels in themselves are insufficient to cause substantial change in consumer purchasing practices.
The more successful programs offer insights that should drive the development of any future programs:
- It is much easier to influence consumers who are actively engaged in appliance purchases than to influence the general public.
- Retail appliance salespeople have significant influence on consumer choice. Incentives aimed at the salesperson, coupled with simple sales tools, can steer consumers in the direction of energy-efficient appliances.
- Direct financial incentives for consumers may not be necessary.
The appliance report is the second in a new series of reports aimed at identifying solutions to the challenges presented by climate change. Other Pew Center series focus on domestic and international policy issues, environmental impacts, and the economics of climate change.
A complete copy of these and other Pew Center reports can be accessed from the Pew Center's web site, www.c2es.org.
About the Pew Center: 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 a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, leads the Pew Center. The Pew Center includes the Business Environmental Leadership Council, a group of large, mostly 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.
The Kyoto Mechanisms and Global Climate Change: Coordination Issues and Domestic Policies
Prepared for the Pew Center on Global Climate Change
Erik Haites, Margaree Consultants Inc.
Malik Amin Aslam, ENVORK Research And Development Organisation
The Kyoto Protocol sets greenhouse gas emissions limits for 2008-2012 for 38 developed coun-tries. Developing countries have no emissions limits. The Protocol also creates three "mechanisms" that enable countries to reduce the cost of meeting their emissions limits. The nations of the world are now negotiating the detailed rules for implementing the Protocol, including the three Kyoto Mechanisms.
A number of countries have made specific proposals to restrict the use of the Mechanisms to achieve environmental or equity objectives. Other countries are arguing for an unrestrictive approach to improve economic efficiency. In addition, the lack of integration among the three Mechanisms may inadvertently restrict or bias their use. Finally, the extent to which countries may avail themselves of the Mechanisms depends both on the rules for the Mechanisms and on the domestic policies adopted by the developed countries to meet their commitments.
This report evaluates proposed rules for implementing the Kyoto Mechanisms in terms of their implications for equity, environmental integrity, and economic efficiency, and discusses coordination of domestic policies with the Kyoto Mechanisms. The authors conclude that:
The Kyoto Mechanisms have the potential to dramatically reduce the costs of meeting the Kyoto commitments. The Kyoto Protocol allows nations to fulfill part of their emissions reduction obligations by purchasing emissions reductions from other nations. Because greenhouse gases (GHG) lead to global effects, it does not matter, from an environmental perspective, where GHG reductions occur. However, because countries and businesses face widely differing control costs, it matters greatly from an economic perspective where GHG reductions occur. Hundreds of analyses using a wide array of economic models agree that the costs of controlling GHG emissions are significantly lower if emissions trading is permitted than if each nation has to meet its emission reduction responsibilities domestically. The broader the trade possibilities, the lower the costs of control.
The rules should allow substitution among the different Mechanisms. Some countries have proposed limiting substitution (fungibility) among the three Mechanisms. Others argue that the Protocol does not allow full fungibility. To limit such substitution, the rules governing use of the Mechanisms would have to be very restrictive. Even then countries could develop means to circumvent the restrictions. It would be better to simply allow substitution among the Mechanisms.
The rules for International Emissions Trading should allow "legal entities" (emitters, emissions brokers, etc.) to participate. Legal entities should be allowed to participate in emissions trading, just as they are allowed to participate in Joint Implementation, the Clean Development Mechanism, and international trading of other goods and services. If governments rather than legal entities trade, the potential efficiency gains of trading cannot be realized because governments do not know the compliance costs faced by the emitters. If the international rules don't allow legal entities to participate, individual governments could circumvent those rules, if they wish, by establishing internationally tradable "obligations to transfer." Rather than encourage the development of complex legal devices, countries should simply agree to allow legal entities to participate in emissions trading.
Lack of harmonization among the three Mechanisms may inadvertently restrict their use. There will be differences in design among the Mechanisms because their purposes vary. For example, only one of the three Mechanisms is designed to promote sustainable development in developing countries. However, an important objective of each of the Mechanisms is to allow legal entities and nations to use the most cost-effective means available to comply with their domestic and international obligations. Differences in rules among Mechanisms that are unrelated to differences in their purposes reduce economic efficiency and should be minimized to the extent possible.
Significant penalties for non-compliance and effective enforcement of those penalties are crucial to the environmental integrity of emissions trading. If the penalties for non-compliance with national emissions limitation commitments are relatively weak, emissions trading enables a country to benefit financially through non-compliance. Such behavior reduces the value of the allowances held by governments and legal entities. Liability proposals seek to limit the extent of such non-compliance by limiting sales to allowances expected to be surplus to the seller's compliance needs. Liability proposals differ in their environmental effectiveness, their economic efficiency, and their impact on the timing of transactions. Negotiators should adopt rules that are maximally effective in encouraging compliance with minimal increase in cost or environmental risk.
The Mechanisms are most amenable to use by countries that adopt domestic cap and trade systems. Countries will need to implement domestic policies to control emissions by different sources if they are to meet their emissions limitation obligations. The cost of compliance with domestic policies can be minimized by giving sources access to the Kyoto Mechanisms to the extent allowed by the international rules. Use of the Mechanisms is easiest to structure for participants in a domestic cap and trade system. However, the Mechanisms could be used, albeit with some difficulty, by countries that adopt emissions taxes or that specify the means of compliance through some types of regulations or negotiated agreements.
Land Use & Global Climate Change: Forests, Land Management, and the Kyoto Protocol
Prepared for the Pew Center on Global Climate Change
Bernhard Schlamadinger, Joanneum Research, Austria
Gregg Marland, Environmental Sciences Division, Oak Ridge National Laboratory, USA
Eileen Claussen, President, Pew Center on Global Climate Change
Allowing nations to receive credit under the Kyoto Protocol for using lands and forests to store carbon has been, and will continue to be, controversial until key issues are settled. The Protocol sets forth a partial system for including land-use change and forestry, and negotiators are left with the difficult task of closing potentially important gaps in the rules. Without specific crediting rules, countries can posture for interpretations that could allow them to weaken commitments made under the Protocol. With this situation in mind, the Pew Center commissioned this report to identify key issues in the debate regarding terrestrial carbon.
Report authors Bernhard Schlamadinger and Gregg Marland examine how forests and other lands can be managed to slow the rate of increase in atmospheric carbon dioxide levels, review how the Kyoto Protocol deals with forests and other land uses, and identify outstanding issues that must be resolved if the Protocol is to be implemented.
The report finds the following:
- Forests and the way we manage them provide significant opportunities to assist in climate control efforts.
- The Kyoto Protocol includes land use, land-use change, and forestry, but it does so selectively: sometimes awarding credits for increasing carbon stored through forest and land management, and sometimes not; sometimes charging decreases in carbon stocks (e.g., as a result of deforestation) against national commitments, and sometimes not. As currently crafted, the system is only a partial one and requires further clarification and practical, effective implementation methodologies if potential benefits from land management are to be realized.
- A climate control effort that includes forests needs to account for carbon dioxide both released and absorbed, and it needs to do so in a balanced manner that only rewards activities that contribute to slowing the rate of increase of atmospheric carbon dioxide.
While not a panacea, storing carbon could be an important part of a menu of options aimed at slowing the build-up of atmospheric carbon dioxide levels.
The authors have been part of the writing team for the Intergovernmental Panel on Climate Change’s Special Report on Land Use, Land-Use Change, and Forestry, and acknowledge the importance of discussions and interactions with other experts during that process in helping shape this report. Discussions within IEA (International Energy Agency) Bioenergy, Task 25 (Greenhouse Gas Balances of Bioenergy Systems) were also an important source of ideas and feedback. The Pew Center and authors are grateful to Don Goldberg, Mark Trexler, Kristiina Vogt, and Murray Ward, who reviewed the manuscript in draft form, and to Sandra Brown for her guidance as an expert consultant on this report.
There is increasing concern that the Earth's climate is changing because of the rising concentration of greenhouse gases in the atmosphere. The United Nations Framework Convention on Climate Change (UNFCCC), drafted in 1992, expresses this concern, and the Kyoto Protocol, negotiated in 1997, sets forth binding targets for emissions of greenhouse gases from developed countries. The Kyoto Protocol represents considerable progress in building a global consensus on how to confront the growth of greenhouse gas concentrations in the atmosphere, but it also contains many ambiguities and leaves many issues that need to be resolved before it can be implemented.
The Kyoto Protocol sets quantitative targets for countries to reduce their emissions of greenhouse gases to the atmosphere, but it recognizes that the same goal can be achieved by removing greenhouse gases from the atmosphere. There are opportunities to reduce the rate of build-up of atmospheric carbon dioxide (CO2 ) through land management activities, referred to as Land Use, Land-Use Change, and Forestry (LULUCF) activities. These opportunities include slowing the loss of carbon from plants and soils — e.g., through reduced rates of deforestation — and encouraging the return of carbon from the atmosphere to plants and soils — e.g., by planting trees (afforestation and reforestation) or improving management of forests or agricultural soils.
This paper explores whether LULUCF activities provide the same long-term benefit for the climate system as does reducing emissions from fossil-fuel combustion; sketches the development of international negotiations on LULUCF issues; looks at the consensus negotiated so far on this issue; and examines the ambiguities of the Kyoto Protocol, the issues yet to be resolved, and the decisions yet to be made before the Protocol can serve as an effective international instrument. An effective instrument would encourage countries to manage the terrestrial biosphere in a way that minimizes net emissions of greenhouse gases while serving other goals such as sustainable development.
Important issues when designing incentives for land-based climate-change mitigation are whether net carbon sequestration can be considered permanent; whether there will be excessive leakage — a phenomenon where, for example, efforts to protect or increase forests in one place hastens their loss elsewhere; whether the potential for LULUCF activities is sufficiently large to offer real opportunity for reductions in atmospheric CO2; and whether analytical techniques permit an accurate measure of carbon gained or retained (or lost) in terrestrial ecosystems.
LULUCF activities differ from emission reductions from fossil fuels because their overall potential is limited by the lands available and the amount of carbon that can be stored per unit of land (“saturation”); and because carbon offsets in the biosphere are at risk of being lost at a later time, whereas emission reductions from fossil fuels not burned in one year do not generally trigger greater emissions in a subsequent year (“permanence”). Saturation is relevant especially in the long term (several decades). Options for addressing the lack of permanence of terrestrial carbon stocks exist and are discussed in this paper.
Several articles of the Kyoto Protocol address land management issues. Article 3.3 provides that some LULUCF activities — afforestation, reforestation, and deforestation (ARD) — will be accounted for in determining compliance with national commitments to reduce greenhouse gas emissions. Many negotiators did not want to sanction credits without actions. Consequently, credits in the LULUCF sector are restricted not just to ARD, but to those ARD activities that are directly human-induced, and then only to activities that are initiated after January 1, 1990. Article 3.4 outlines the procedure for including additional LULUCF activities in commitment periods after the first (i.e., after 2012), and in the first commitment period provided that activities have taken place since 1990.
Implementation of these articles is confounded by a lack of definitions for words like “reforestation” and “forest,” and the implications of choosing among commonly used definitions are very large. The precise definitions of terms and the rules for taking account of carbon emissions and removals due to LULUCF activities will have different impacts on different countries depending on: 1) the nature of their forests, 2) whether or not the LULUCF sector is currently a source (net emitter) or sink (net remover) for atmospheric CO2, and 3) the expected emissions balance of the LULUCF sector over the coming decades. The LULUCF provisions in the Kyoto Protocol can only be implemented once the accounting rules have been determined. Inevitably there is a problem when the commitments have already been agreed to, but agreement on the opportunities and rules for meeting those commitments has not yet been fully reached.
Implementation of the LULUCF provisions of the Protocol raises at least six principal issues for domestic LULUCF activities:
- What is meant by a “direct human-induced” activity?
- What is a forest and what is reforestation?
- How will uncertainty and verifiability be dealt with?
- How will accounts deal with the issues of (non)permanence (sequestration reversed by emissions at a later date, e.g. if a new forest is destroyed by a catastrophic event) and leakage?
- Which activities beyond ARD, if any, will be included, and what accounting rules should apply?
- Which carbon pools and which greenhouse gases should be considered?
The last point includes the issue of whether and how to consider that harvested materials from forests can result in an increasing stock of carbon in long-lived wood products and landfills. The Kyoto Protocol does recognize that greenhouse gas emissions will be reduced when sustainably-produced biomass products are used in place of fossil fuels or energy-intensive materials. Biomass fuels, for example, can be used in place of fossil fuels, and construction wood can be used in place of other, often more energy-intensive, materials such as steel or concrete.
In addition to encouraging certain domestic LULUCF activities, the Protocol, through Articles 6 and 12, provides for mitigation projects in other countries and trading of emission credits. When projects involve only developed countries (Article 6), emission reductions or enhancement of sinks that are credited to one country are subtracted from the assigned amount of the other, and there is no change in the global total of assigned amounts. Projects involving both developed and developing countries (Article 12), referred to as clean development mechanism (CDM) projects, result in an increase in the global total of assigned amounts because credits are added to the assigned amounts of developed countries whereas, in the absence of emission limits in developing countries, no subtraction takes place elsewhere. It is therefore critical that the credits result from real emission reductions, or sink enhancements, that go beyond what would have happened without the project. Herein arises the concept of “additionality.”
Article 12 of the Kyoto Protocol does not specifically include or exclude LULUCF projects. At least two important, project-level issues for LULUCF remain to be addressed:
- Will LULUCF activities in developing countries be accepted in the CDM and, if so, which activities?
- What accounting mechanisms are appropriate if LULUCF projects in developing countries can generate emission credits but there is no responsibility for debits if the carbon is subsequently lost?
The potential for increasing carbon stocks in the terrestrial biosphere might be limited compared to total greenhouse gas emissions, but their impact could be considerable in relation to the reductions necessary for compliance in the first commitment period (2008-2012). However, not all changes in carbon stocks in the biosphere are treated equally in the Protocol, some yield credits or debits and some do not. It is inevitable that a system cannot be optimized by treating only a portion of that system, and the definitions and rules for LULUCF will have to be carefully crafted to provide incentives for increasing carbon stocks while recognizing the other important roles played by the terrestrial biosphere and its products. It is, however, important that the transaction costs associated with these rules are not so high that they discourage participation toward the ultimate objective of stabilizing atmospheric CO2. If all of this can be achieved, improved management of the terrestrial biosphere can provide an important contribution toward meeting climate-change objectives, and the Kyoto Protocol can provide incentives for improved management of the terrestrial biosphere.
Press Release: New Studies Highlight Opportunities for Reducing Emissions While Maintaining Economic Growth
For Immediate Release:
May 23, 2000
Contact: Juan Cortinas (202-777-3519)
Katie Mandes (703-516-4146)
New Studies Highlight Opportunities for China, Brazil and Argentina to Reduce Emissions While Maintaining Economic Growth
WASHINGTON, D.C. — The Pew Center on Global Climate Change released today three new studies that outline realistic opportunities for China, Brazil and Argentina to address the challenge of climate change. The reports are part of a six report series that examines ways to reduce emissions in developing countries without compromising economic growth.
China, Brazil and Argentina are becoming leaders among developing nations in the international climate change debate and the case studies demonstrate the effectiveness of different policy approaches to emission reductions. In the latest reports, the authors use a linear programming model to conduct an assessment of the technological options available to each country for supplying new electric power generation through 2015.
"These reports are particularly noteworthy because of the geographical and economic importance of each nation examined. They highlight the different challenges and circumstances that developing nations face in addressing environmental problems," said Eileen Claussen, President of the Pew Center on Global Climate Change.
The three previous reports released in the series included an overview piece entitled Developing Countries and Global Climate Change: Electric Power Options for Growth and an examination of the electric power sectors of India and Korea.
Following is a brief overview of each report's findings, recommendations and conclusions:
The Developing Countries and Global Climate Change: Electric Power Options in China report was completed by the Beijing Energy Efficiency Center and the Battelle Advanced International Studies Unit. With annual releases of over 918 million metric tons of carbon dioxide into the atmosphere, Chinese decisions affecting energy development and emissions mitigation will significantly impact world climate. The report assesses the current and future state of the power sector to meet projected demand through 2015 under several scenarios
The Chinese analysis yielded several insights:
- Due to the heavy reliance on coal-fired power generation, baseline carbon dioxide and sulfur dioxide emissions from thermal plants will more than double by 2015.
- Increasing demand-side energy efficiency by 10 percent could reduce carbon dioxide and sulfur dioxide emissions by 19 and 13 percent, respectively, in 2015, while lowering costs.
- Expanding the availability of low-cost natural gas through market reforms could reduce emissions of carbon dioxide and sulfur dioxide in the power sector by 14 and 35 percent, respectively, by 2015, and increase costs by only 4 percent compared to the baseline.
- Accelerating the penetration of cleaner coal technologies could help China reduce sulfur dioxide and particulate emissions, but the associated impact on carbon emissions would be minimal and the cost would increase by 6 percent.
Developing Countries and Global Climate Change: Electric Power Options in Brazil, was developed by the Federal University of Rio de Janeiro, Energy Planning Program, Center for Technology, and the Battelle Advanced International Studies Unit. The study points out that Brazil produces relatively few greenhouse gas emissions relative to its size and population. This is mainly due to the dominant role of hydropower in electricity generation. Yet its greenhouse gas emissions could be expected to quadruple, as it changes its fuel mix over the next 20 years.
The Brazilian case study also revealed that:
- Many new investors may favor natural gas-fired combined-cycle plants that would increase carbon dioxide emissions from 3.4 million tons in 1995 to 14.5 million tons in 2015.
- Further tightening of local environmental regulations and adoption of renewable energy policies could reduce carbon dioxide and sulfur dioxide emissions by 82 percent and 75 percent, respectively, by 2015.
- Creating a carbon-free power sector would require an additional $25 billion in cumulative costs by 2015.
The last report in the series is entitled Developing Countries and Global Climate Change: Electric Power Options in Argentina and was developed by the Bariloche Foundation also working with Battelle. The report finds that the market reforms the country has been implementing since the early 1990's provided mixed, but on balance, positive environmental results. The country's electric power demand is expected to more than triple over the next 15 years, yet its emissions of greenhouse gases, do not have to increase at the same rate. It finds that investments in natural gas combined-cycle plants and renewable energy sources could provide a prudent path for energy development and environmental protection.
The report also found several key opportunities, including:
- Adopting policies that favor renewable energy sources and nuclear power would cost $32 billion by 2015 and would decrease carbon dioxide emissions from 14 million tons in the baseline to 11 million tons in 2015.
- Increasing energy efficiency would reduce total costs by $6.3 billion and carbon dioxide, sulfur dioxide and nitrogen oxide emissions would all decline 20 percent compared to the baseline.
A complete copy of each report 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 nation's largest philanthropies and an influential voice in efforts to improve the quality of America's environment. The Pew Center supports businesses in developing marketplace solutions to reduce greenhouse gases, produces analytical reports on the science, economics and policies related to climate change, launches public education efforts, and promotes better understanding of market mechanisms globally. Eileen Claussen, former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, is the President of the Pew Center.
The Pew Center includes the Business Environmental Leadership Council, which is composed of 21 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 :
April 25, 2000
Contact: Katie Mandes (703-516-4146)
Kelly Sullivan (202-289-5900)
Climate Change Conference Reveals Innovation and Progress Across The Private Sector Worldwide and In Many Governments
WASHINGTON, D.C. — The opening of a two-day international conference today, sponsored by the Pew Center on Global Climate Change and the Chatham House/Royal Institute of International Affairs, served as a showcase for many of the most far-reaching innovations that businesses and governments are undertaking to address the challenge of global climate change.
"In the United States, climate change policies have been hotly debated but little action has been taken," said Eileen Claussen, President of the Pew Center on Global Climate Change. "Fortunately, there is substantial progress being made — by governments abroad, businesses here and around the world and by state and local governments here at home."
To complement the conference, the Pew Center on Global Climate Change also is publishing a special supplement on climate change in tomorrow's Washington Post. Significantly, the piece includes statements by 13 Chief Executive Officers (CEOs) of some of the world's leading companies, all members of the Pew Center on Global Climate Change's Business Environmental Leadership Council (BELC), acknowledging that climate change is a real problem that demands action by the public and private sector.
Among these statements are:
"Enron supports market-based initiatives that create efficient, cost-effective and environmentally sound energy systems," says Dr. Kenneth L. Lay, Chairman and CEO, ENRON. "As a company, we are taking steps to provide the world with clean energy solutions and implementing systems to manage greenhouse gas emissions. Our belief in the synergies between state of the art energy management practices and sound environmental policies have translated into effective pre-construction measures for our new headquarters building, which we expect will save $10 million and reduce greenhouse gas emissions by 34,000,000 lbs (or 17,000 tons) per year."
"Technology and innovation move us forward as people on earth," says George David, Chairman and CEO, United Technologies Corporation. "Environmentally benign fuel cells, built by United Technologies for every American space mission ever, may be the next great innovation to power our cars and our homes. A concerted public and private effort will make huge reductions in global climate change impacts for our nation and our world. All we need is the will."
Additional statements by the following CEOs are included in the supplement:
Göran Lindahl, President and CEO ABB Group, Dr. E. Linn Draper, Jr. Chairman of the Board, President and Chief Executive Officer American Electric Power, Harry M. Jansen Kraemer, Jr. Chairman and Chief Executive Officer Baxter International Inc., Ralph Peterson President and Chief Executive Officer CH2M Hill, Charles O. Holliday Chief Executive Officer DuPont, J. Wayne Leonard Chief Executive Officer, Entergy, Paul A. Yhouse President and CEO Holnam Inc., Robert D. Glynn, Jr. Chairman, CEO and President PG&E Corporation, Tag Taguchi, President, Toyota Motor North America, David R. Whitwam Chairman and CEO Whirlpool Corporation, Steven R. Rogel Chairman, President and CEO Weyerhaeuser Company Profiles.
Also included in the supplement are examples from these corporations highlighting their actions to mitigate climate change. Some examples include:
BP Amoco believes in adopting a precautionary approach to climate change. BP Amoco intends to reduce its greenhouse gas emissions by 10 percent of 1990 levels by 2010 and has implemented a greenhouse gas emissions trading system across all its businesses to achieve this target cost effectively. Its portfolio of activities includes collaboration in research and policy development, growing its solar business and promoting flexible market instruments.
By 2010 DuPont intends to reduce global carbon equivalent greenhouse gas emissions by 65 percent and hold energy use flat - in both instances using 1990 as a base year. The company also plans to be using renewable resources for ten percent of global energy use by 2010.
Featured speakers at the conference include:
- John Prescott, Deputy Prime Minister, United Kingdom
- Jan Pronk, Minister of Housing, Spatial Planning and the Environment, The Netherlands
- Robert Hill, Minister for the Environment and Heritage, Australia
- Theodore Roosevelt, IV, Managing Director, Lehman Brothers, Inc.
- Rodney Chase, Deputy Group Chief Executive, BP Amoco
T he Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the nation's largest philanthropies and an influential voice in efforts to improve the quality of the U.S. environment. The Pew Center is conducting studies, launching public education efforts, promoting climate change solutions globally and working with businesses to develop marketplace 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 21 major, largely Fortune 500 corporations working with the Center to address issues related to climate change. The companies do not contribute financially to the Center, which is solely supported by charitable foundations.
More information on climate change and the Pew Center on Global Climate Change, can be found at www.c2es.org.
Press Relase: Corporate and Government Leaders Focus On Global Climate Change At Washington Conference
For Immediate Release:
April 12, 2000
Contact: Kelly Sullivan, 202-289-5900
Katie Mandes, 703-516-4146
Corporate and Government Leaders Focus On Global Climate Change At Washington Conference
Developing Country Perspectives Roundtable To Conclude The Conference
WASHINGTON, D.C. — Senior decision-makers and leaders will gather on April 25th and 26th in Washington, D.C. to participate in the "Innovative Policy Solutions to Global Climate Change" Conference. The international conference will discuss the proactive initiatives governments and the private sector are implementing in industrialized countries and key questions related to program design and implementation.
The Pew Center on Global Climate Change and the Chatham House/Royal Institute of International Affairs will host the conference at the Willard Inter-Continental Washington Hotel. Featured speakers are:
- John Prescott, Deputy Prime Minister, United Kingdom
- Jan Pronk, Minister of Housing, Spatial Planning and the Environment, The Netherlands
- Robert Hill, Minister for the Environment and Heritage, Australia
- Theodore Roosevelt, IV, Managing Director, Lehman Brothers, Inc.
- Rodney Chase, Deputy Group Chief Executive, BP Amoco
Governments and the private sector are beginning to address the climate change challenge because they recognize that the problem and its consequences cannot be ignored. The conference will highlight the measures that are being implemented to address global climate change," said Eileen Claussen, President of the Pew Center on Global Climate Change. She will deliver the opening and closing remarks at the conference.
The conference also includes various discussion panels on the climate change problems. State and local policies to help alleviate climate change, energy and transportation policies, and competitiveness and trade effects on climate change are among the topics the international gathering will address.
The conference will conclude with a Roundtable Discussion, co-sponsored by the Pew Center and the Shell Foundation Sustainable Energy Programme. The Developing Country Perspectives on climate change discussion will be chaired by Bakary Kante of the United Nations Environment Programme and will feature Luiz Gylvan Meira Filho, Espen Ronneberg and other distinguished individuals from various developing countries. There is no fee to register for the Roundtable.
The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the nation's largest philanthropies and an influential voice in efforts to improve the quality of the U.S. environment. The Pew Center is conducting studies, launching public education efforts, promoting climate change solutions globally and working with businesses to develop marketplace 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 21 major, largely Fortune 500 corporations working with the Center to address issues related to climate change. The companies do not contribute financially to the Center, which is solely supported by charitable foundations.
For more information on the Innovative Policy Solutions conference, the Developing Country Perspectives Roundtable, or on the Pew Center on Global Climate Change, please visit the Center's web site at www.c2es.org.
Address by Eileen Claussen President
Pew Center on Global Climate Change
San Francisco, CA
February 23, 2000
Thank you very much. It is a pleasure to be here. While I know this is really a speech on global warming, you will find that I have drawn some of my inspiration from Alice in Wonderland. And so I would like to start with a quote that I believe really sets the stage for my remarks, where Alice asks the Cheshire Cat "Would you tell me, please, which way I ought to go from here?" "That depends a good deal on where you want to get to," said the Cat. "I don't much care where---" said Alice. "Then it doesn't matter which way you go," said the Cat. "---so long as I get somewhere," Alice added as an explanation. "Oh, you're sure to do that," said the Cat, "if only you walk long enough."
I bring up this quotation because I believe that, on the issue of global climate change, it is truly important to get somewhere, and walking long enough is clearly not the answer. What I want to do today is to reach through the looking glass and pull the issue of global climate change out of the wonderland where it too often resides. And I want to paint a picture for you of exactly where things stand in the global effort to meet what may be the most important challenge of the 21st century.
I want to talk to you first about the science of global climate change. I also want to talk about how the growing scientific consensus around this issue is forcing many countries around the world to pay attention and to do something—both unilaterally and by continuing their work on an international treaty designed to reduce global greenhouse gas emissions. In addition, I want to talk about the United States and what we as a nation are—or, more precisely, are not—doing to move this issue forward. And I want to leave you with an understanding that the one sector of our society where people seem to taking concrete steps to address this issue is in the American business community.
The Science of Global Climate Change
So let me begin by talking briefly about the science of global climate change. And let me quote something else from Alice in Wonderland that I think wonderfully illustrates some of the discussion we've seen in recent years on the question of whether or not climate change is real. This from Alice's encounter with Tweedledum and Tweedledee.
"I know what you're thinking about," said Tweedledum, "but it isn't so, no-how."
"Contrariwise," continued Tweedledee, "if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic."
Although there are still some who argue like Tweedledum and Tweedledee that "it isn't so, no-how," the truth is it's becoming harder and harder to brush aside the possibility—indeed, the reality—of global climate change. Over the last two to three years, we have seen a remarkable shift in the discussion of this issue. Even many former skeptics now acknowledge that it is happening in some way—or, at the very least, that it is something we should be concerned about.
While this attitude shift may be in part a consequence of the strange weather we've been having around the world, the main reason people are paying more attention to this issue of late, without a doubt, is the science. And, more specifically, the growing scientific consensus that global warming is so.
So, at the risk of sounding like your ninth grade science teacher, I want to take a minute to talk through some of the scientific issues involved in climate change. The earth's atmosphere, as we all know, is made up mainly of oxygen and nitrogen, but it also contains other naturally occurring gases, including water vapor, carbon dioxide, methane and nitrous oxide. It is these gases that are responsible for the natural greenhouse effect without which the earth would be about 34 degrees colder than it is now.
For years scientists have noted that atmospheric concentrations of greenhouse gases have been rising, particularly since the late 1800s. The primary reason: human activities such as the burning of oil, coal and natural gas. Since 1860, atmospheric concentrations of carbon dioxide alone have increased by 30 percent.
At the same time, the average surface temperature around the globe also has been rising—by anywhere from 0.72 to 1.44 degrees Fahrenheit over the last century. This finding was affirmed just last month by a panel of the National Academy of Sciences, which asserted that the warming trend has accelerated during the past 20 years.
In their analyses of these and other data, most of the world's best scientists agree on two things:
First, they agree that the earth will continue to warm. Last year, we at the Pew Center commissioned a report predicting that future changes in global-mean temperatures will be two to seven times more rapid than the changes we saw in the 20th century. We concluded that the earth will warm by 1.5 to 6 degrees Fahrenheit by the year 2100. That is in addition to the warming we have already seen.
The second thing that most of the world's best scientists agree on is that human-induced greenhouse gases will be at least partly responsible for the continuing warming trend.
I don't want to oversimplify the consensus that exists here. There remain significant uncertainties (such as how the formation and dissipation of clouds affect the climate). And there are still some skeptical scientists, although their numbers appear to be dwindling. The biggest question today, however, is not whether there is, or will be, a change in the global climate, but rather what the effects of that change will be, where they will be felt, and when.
What do we know about the effects of global climate change? If the predictions are right about the amount of warming we will experience over the next century—and I have seen nothing to suggest they are not—it is quite clear we will see a rise in sea level of anywhere from 6 to 37 inches. This will be caused by two things: the first is the fact that water expands when it is heated, and the second is that global warming will result in the melting of some glacial ice.
California, of course, will not be able to escape the effects of the rising sea levels brought on by global climate change. You could see flooding of low-lying property, loss of coastal wetlands, erosion of beaches, saltwater contamination of drinking water, and decreased longevity of low-lying roads, causeways, and bridges. Rising sea levels also could increase the vulnerability of coastal areas to storms and associated flooding.
OK, so what about the weather? What sorts of changes are we likely to see there? Based on projections by the Intergovernmental Panel on Climate Change and results from the United Kingdom Hadley Centre's climate model, by the year 2100, temperatures in California could increase by about 5 degrees Fahrenheit in the winter and summer and slightly less in the spring and fall. Researchers project increases in precipitation of anywhere from 10 to 50 percent in the spring and fall here in California, with somewhat larger increases in winter.
Another weather issue that has been in the news of late is extreme weather—or, more precisely, the potential role of global climate change in increasing the incidence of extreme weather events. Measuring changes in daily precipitation extremes around the world can be highly uncertain, but there is some evidence suggesting an increase in the frequency of wet extremes—not a happy prospect in a state that in recent years has added the mudslide to the list of natural disasters that keep Americans up at night.
Now please don't get me wrong. My objective here is not to scare you about the future or to give you a laundry list of possible or probable environmental effects, but simply to suggest this: we know enough about the science and the environmental impacts of climate change to begin taking steps to address its consequences now. We all live in worlds where we analyze risks, make decisions, and take appropriate actions based on our risk assessments. This issue is clearly at a stage where we must move beyond denial and debate, and focus ourselves on rational action, based on what we know from the science.
The World Responds
It was the strengthening scientific consensus about global climate change—a consensus that is even stronger today—that brought 150 nations together in Kyoto, Japan in 1997 to negotiate a framework for reducing greenhouse gas emissions around the world.
The Kyoto Protocol essentially requires developed countries to reduce or limit their emissions of greenhouse gases in relation to their emission levels in 1990. It also permits the use of various "flexible mechanisms" that can assist these countries in reaching their legally binding targets in a cost-effective manner. These mechanisms include: international emissions trading; joint implementation, which allows countries to receive credit for emission-reduction projects undertaken in other developed countries; and the Clean Development Mechanism-which allows trading in certified emission reductions between industrialized and developing nations. Fifty-five countries representing 55 percent of all developed country greenhouse gas emissions must ratify the Kyoto Protocol for it to enter into force.
The international negotiations that produced the Kyoto Protocol are still under way. Many terms in the original Protocol were left undefined, just as many of its provisions were not adequately explained. Issues that remain up in the air, so to speak, are: the structure and definition of the flexible mechanisms I mentioned; how to handle the issue of carbon sequestration, or the application of land use and forestry practices to help reduce atmospheric carbon dioxide; and how to establish a compliance regime—in other words, how does the world go about policing this enormously complex international agreement?
But despite the continuing negotiations, much work is under way to move forward with the emission reductions that are required under the Kyoto Protocol. I will give you a few examples:
The United Kingdom is now in the process of planning a domestic emission-trading experiment.
The Danish government already has secured legislative authority to implement a trading program of its own, and similar programs are under development in Norway and Sweden.
Looking elsewhere, the Germans are implementing a modest tax program, and a parliament in the Netherlands has approved a more traditional program that draws on a variety of policies and measures in an effort to curb emissions.
Last but not least, Japan, as a major player in the development of the Kyoto framework, is viewing this issue from a competitiveness standpoint and is developing strategies for its own emission reduction programs.
Whether any of these countries' efforts will work, or how well they will work, remains uncertain. But they do reflect serious attempts to experiment and move forward, to take necessary risks, and to determine what approaches ultimately will be successful.
The U.S. Government: AWOL on Warming
So what about the United States? What is our government doing to ensure that the necessary emission reductions are made? Before I answer this question, let me remind you that we are responsible for 25 percent of global emissions of these pollutants. This in a country that is home to less than 5 percent of the global population. If international leadership on this issue should come from anywhere, it should come from us.
But leadership is not coming from us. It is rare both in Washington and on the presidential campaign trail for the discussion of this issue to get past the question of whether to support the Kyoto Protocol or whether to declare it dead. What the discussion has not touched on—and should—is the further development and implementation of programs that would change the expected trajectory of our nation's greenhouse gas emissions. The U.S. Congress, in particular, appears determined to let absolutely nothing happen that would even remotely suggest that the United States is concerned about this issue. And while there have been several climate change bills introduced in the Congress, the prevailing wisdom is to view any effort to move forward on this issue as a quote-unquote "backdoor" attempt to implement the Kyoto Protocol and therefore to block it.
And what about the White House? President Clinton, in the budget he submitted in February, proposed spending $2.4 billion on various clean energy and energy conservation projects designed to -quote--"combat global climate change." This is important and politically safe, but it is clearly not enough. And how it will fare in the Congress remains to be seen.
The reality is that this White House has done very little since signing the Kyoto Protocol to make the treaty's goals and its mechanisms for reducing emissions a fundamental part of U.S. policy. Instead, the Administration regularly cites the leadership of U.S. businesses and local governments as evidence of our nation's commitment on this issue. As a former member of the Administration, it pains me to say this, but the White House is simply not doing what's needed to make this issue the national priority it should be. As Gertrude Stein put it, "There's no 'there' there."
U.S. Stumbling Blocks: Economics and Fairness
What, you may ask, is driving our elected leaders' reluctance to meet the challenge of global climate change in a serious way? I would like to suggest that there are two issues at the heart of the debate. And, while these issues are significant, my belief is that they have not been framed in ways that are honest or open to solution.
The first issue relates to the economic costs of action to reduce emissions. We all have heard the joke that economists have predicted nine of the last five U.S. recessions. And it is hard to argue with the premise of the joke when one looks at the varying predictions that have been made about the potential impacts of achieving the Kyoto targets on the U.S. economy. Interest groups across the ideological spectrum have produced markedly different results from economic models that are not that different in their structure but that use very different assumptions to achieve the results these groups want to achieve. And the only result that is truly achieved is confusion.
How do we get beyond this confusion? We get beyond it by admitting that the models we are using-even when stripped of assumptions that bear no resemblance to reality-are not infallible. For example, our ability to quantify the risks of not taking action to address global climate change is still in its infancy. In addition, we have yet to meet the challenge of modeling technological innovation--as far as I know, no economic model would have predicted the information technology or communications revolutions we are now witnessing.
I am not mentioning these things to suggest there will be no costs to the United States should we act decisively to reduce emissions. There is almost always a cost associated with major changes to the economy. What I would like to suggest is that a fixation with 10-year-out predictions of increases or decreases in the U.S. GDP really misses the mark. To argue, as some have done, that the costs will be catastrophic and that entire industrial sectors will immediately be wiped out is less than honest, as is the argument that major reductions can be achieved at no cost. What the United States should be concerned about are the impacts that are likely to occur in certain industries, certain labor categories, and certain regions of the country. The questions we should be asking have to do with: 1) how we can minimize these impacts; and 2) what we can do to deal with those impacts that we are not able to minimize—in other words, the impacts that remain.
The second issue that has become a roadblock to progress in the United States is the issue of developing country commitments. Is it fair, people ask, for the United States to have to abide by the Kyoto targets while competitors such as China, India and Mexico get a quote-unquote "free ride?" One fear is that American jobs will be lost to these and other countries because their production costs will be lower. But lost in the debate is the reality that fairness demands a decisive U.S. response for two reasons. First, because the United States is responsible, both historically and currently, for more emissions than anyone else. And second, because the United States, unlike many other countries, plainly has the ability to pay to reduce its emissions.
The reality, whether we like it or not, is that most developing countries are unlikely to agree to binding emission reduction targets that would take effect in this decade. The primary reason for the reluctance of these countries to "join in" is concern about their economic growth and its relationship to energy use, at least in the early stages of development. There is also a view in these countries that those who bear the historic responsibility for the problem of mounting atmospheric concentrations of greenhouse gases should act first.
But the developing world's opposition to targets cannot be allowed to hide the fact there is movement on this issue among these countries—movement that many of the opponents of the Kyoto Protocol prefer to ignore:
China, for example, which has dramatically lowered its energy consumption per unit of output over the last decade, is on a path to continue making significant energy-saving improvements over the decade to come.
Privatization of the electricity sector is moving forward in India, where competition is expected to increase the use of natural gas and lower greenhouse gas emissions.
And Korea is beginning to plan for opening up its power sector to competition, again with a projected increase in the use of natural gas.
In these and other developing nations, investment decisions made in the power and transportation sectors in the coming years will have a significant impact on global greenhouse emissions for decades to come. And the reality is that many opportunities exist for lowering these countries' emissions. In other words, binding commitments for these countries may not be possible, but significant action to lower emissions from their expected path may very well be. And that, in turn, would lay the groundwork for environmentally sustainable economic growth, something that is in everybody's interest.
To those in the U.S. Congress and elsewhere who continue to insist that China and other developing nations should have to live by the same requirements as the industrialized world as we work to reduce global greenhouse emissions, I say fairness demands we think differently. I believe that the 1992 Framework Convention on Climate Change, the agreement that led to the development of the Kyoto Protocol and was ratified by the U.S. Congress, took the right tack in asserting that industrialized countries should—quote—"take the lead" in reducing emissions. The Convention went on to state that developing countries have a right to development, even though their development will surely increase these countries' greenhouse gas emissions.
Does this mean we should expect nothing of the developing world as we work to reduce emissions in the years ahead? Of course not. I believe strongly that the world should take advantage of emission reduction opportunities where they exist—and whether they exist in industrialized or developing countries. The real issue, therefore, is not how to pressure developing countries into accepting binding emission reduction targets in this decade. Rather, the issue should be how to influence the character of the investments made in these countries so that they become more climate-friendly.
Moving Forward: American Businesses Take the Lead
If we want ideas for how to move forward on this issue in a proactive way, we should look to many of the American businesses that have accepted the need for strong action to reduce greenhouse gas emissions and are working to do so.
In late 1999, as many of you may know, the Ford Motor Company announced it was resigning from a coalition of oil companies, auto makers, electric utilities and others who stubbornly argue that we still don't have enough evidence to know whether or not global warming is real—and that we shouldn't do anything serious about it until more is known. Word of Ford's decision was followed closely by the news that Daimler Chrysler also would be leaving the group known as the Global Climate Coalition. The companies' moves were seen as an indication of the growing acceptance of the reality and the urgency of this issue—even in the nation's corporate boardrooms—and as yet another sign of a growing consensus for rational action to reduce U.S. greenhouse gas emissions.
But the fact is that many American businesses have long been way ahead of our government in their willingness to acknowledge and work on this issue. This progressive stance became obvious when a large group of mostly Fortune 500 companies became affiliated with my organization, the Pew Center on Global Climate Change, to help forge a consensus response to the problem. The Pew Center's Business Environmental Leadership Council now includes 21 companies with combined annual revenues of more than $550 billion. Working together, these companies developed a joint statement asserting that in the new millennium—quote—"one of our most important challenges at home and abroad will be addressing global climate change as we work to sustain a growing global economy."
"One of our most important challenges." That is an enormously powerful statement coming from these companies, which include such household names as American Electric Power, Boeing, BP Amoco, Lockheed Martin, Shell International, Sunoco, Toyota, United Technologies and Whirlpool. And, in making this statement, these companies announced publicly that they:
Accepted the science of global climate change;
Would establish their own emission reduction targets--and meet them;
Viewed the Kyoto Protocol as a first although incomplete step to addressing the issue internationally; and
Believed that addressing climate change can be compatible with sustained economic growth in the United States.
Some of the member companies of our Business Environmental Leadership Council have already announced their emission reduction targets, all of which are at least as stringent as those in the Kyoto Protocol. One large company affiliated with the Pew Center, DuPont, has established a goal of reducing emissions to 65-percent below 1990 levels by 2010, with an additional commitment of obtaining 10 percent of their energy needs from renewable sources. This is a stunning target, far in excess of the 7-percent reduction required for the United States as a whole in the Kyoto Protocol.
The commitment of DuPont and these other companies is an important reminder that there are many steps industry can and should be taking now to reduce greenhouse gas emissions. But it is important to realize that industry alone cannot solve this problem. The public, too, has an important role to play. And, while there is remarkable consensus among the public that global climate change is an important issue and an issue we should be doing something about as a nation, Americans have yet to translate this general concern into their behavior in the marketplace.
Here are a few polling numbers to illustrate my point. A 1998 survey conducted for the World Wildlife Fund revealed that nearly 60 percent of Americans believe global warming is happening now, and another 26 percent believe it will happen in the future. According to the survey, fully three-quarters of the public want the United States to take action to reduce emissions of carbon dioxide as a way to address the problem.
But when confronted with product choices, the climate-friendly road is often not the road taken. Why else would more than 50 percent of all new car choices be four-wheel drive SUVs?
I believe these numbers illustrate that there is a difference between caring about this issue and actually doing something about it. And in the same way that the American public expresses concern about our changing climate but stops short of taking actions that might help turn the situation around, many of our elected leaders—no doubt tapping into the public mood—get away with talking a good game about climate change but avoid taking serious action to address it. And the result is that the private sector is the only place right now where we see the combination of caring and commitment that is needed to move this issue forward.
Moving Forward: A U.S. Agenda
How can the United States government get back on track and assume its rightful leadership role in meeting the challenge of climate change? The answer is by forging a national policy designed to deal seriously and responsibly with this issue. Let me suggest four items to place at the top of the U.S. agenda.
The first item should be to depoliticize and depolarize this issue in Washington. American businesses need to know what will be expected of them in the future. If we can move beyond political agendas and focus on economically sound, stable, and serious actions to reduce greenhouse gas emissions, we will provide a platform for business planners to look ahead. And that will allow them to develop cost-effective investment strategies that will permit the needed replacement of capital equipment with greenhouse-friendly technologies.
Our second agenda item should be to design a straightforward system that will legally recognize the contributions of corporations that take early action to reduce greenhouse gas emissions. Put very simply, these companies need to know that reducing their emissions now won't put them at a competitive disadvantage down the line.
Our agenda for the next decade also should include some serious planning for how we as a nation will reduce our greenhouse gas emissions over the long haul. We know there are policies and programs that can lower the costs, and we should analyze and discuss all the alternatives. We know there are likely to be sectors of the economy that will be more affected than others. And we know we need to balance our environmental and economic goals in ways that minimize the costs and impacts, and that treat those who will be adversely affected in ways that are fair and equitable. But despite knowing all this, we haven't even begun to discuss a national plan of action. What we need is not a debate about Kyoto—a prospect that delights the opponents of serious U.S. action on this issue because they believe they will win it. Rather, we need to start discussing what has to happen to address the challenge of global climate change in ways that are smart and fair and that give us a competitive edge.
And finally, we need to continue to work abroad to make the Kyoto Protocol into an instrument that is worthy of U.S. ratification, and that is a step along the path toward a genuinely global solution to what is clearly a global problem.
At the World Economic Forum meeting in Davos, Switzerland last month, the business and government leaders in attendance were polled about the greatest challenge facing the world at the dawn of this new century. The winning answer was climate change—a clear indication that there is a real understanding among the world's movers and shakers that we need to do something. So what needs to happen now is for all of those movers and shakers to move from understanding to action and to shake up their governments so they meet this challenge head-on.
I began these remarks with a couple of quotes from Alice in Wonderland, so let me close with one, too. When Alice is playing on the Queen's croquet ground, she becomes very uneasy about the game and her fellow players. The story continues:
"I don't think they play at all fairly," Alice began, in a rather complaining tone, "and they all quarrel so dreadfully one can't hear oneself speak—and they don't seem to have any rules in particular; at least, if there are nobody attends to them."
Unfortunately, I think the current discussion of global climate change and what to do about it too often resembles the chaos and unruliness of the queen's croquet game. And I believe our priority in the months and years ahead—both in the United States and internationally—should be to provide some rules and direction to guide the players as we all work together to meet this global challenge.
Address by Eileen Claussen, President, Pew Center on Global Climate Change
Whenever I appear before an international group such as this, with people from different countries who speak different languages, I am reminded of a joke I first heard long ago. We all know that if you can speak three languages, you're trilingual. And if you can speak two languages, you're bilingual. But what are you if you can speak only one language? Why, you're American, of course.
Today, I would like to speak to you as an American, but as an American who has been in close contact with others around the world on the topic of global climate change. And I would like to base my remarks on an American expression. That expression is "reality check." It means taking a moment to reflect on what is really happening in the world. And it means being truthful with ourselves and others about what we are capable of achieving. A reality check is an affirmation of yet another American expression-an expression that our mothers repeated again and again while we were young. "Honesty is the best policy," they would tell us. And, of course, there was no doubt that they were right. They were our mothers, after all.
And the reality is that honesty is the best policy when we are addressing the issue of global climate change. It was honesty about the risks of a changing climate that brought 150 nations together to negotiate a framework for reducing greenhouse gas emissions around the world. In the same way, today we all need to be honest about what we can achieve and when-and about how best to move forward so that future generations don't look back and wonder why we couldn't work together to meet this global challenge.
In the time that I have with you tonight, I want to talk about some of the issues that the United States, Germany and other nations need to be more honest about in order to achieve real progress in addressing the challenge of climate change. I also would like to offer a realistic view of what is happening on this issue in the United States-in both the public and private sectors, as well as among the media and the general public. And I will close with some recommendations about how to move the global dialogue on this issue forward and achieve real progress.
Getting Real: What We Can Achieve
So let us begin with a few reality checks. From my perspective, there are three issues that our governments need to be more honest about as the world addresses the challenge of climate change in the months and years ahead. The first is the timeframe in which the world can achieve entry into force of the Kyoto Protocol. The German government-which, to its infinite credit, has been out front on this issue for years-is urging entry into force in 2002. Although this is surely an admirable goal, the honest truth is that it is unlikely to happen.
While it is certainly true that many European countries are anxious and willing to ratify the Protocol in the near term, some of them-such as the Netherlands-have said that the United States must ratify at the same time. Ratification by non-European countries such as Japan, Canada and Australia also is unlikely without U.S. action on this issue. And here is the reality check: Given the current mood and political situation in Washington, U.S. ratification of the Kyoto Protocol-in the near term at least-is about as likely as hell freezing over. And if hell did freeze over, I am certain that many in the U.S. Congress would make every effort to attribute it to nothing more than normal climatic variations.
Another reason why entry into force in 2002 is unlikely is the sheer volume of work that remains to be done. We should not diminish the complexity or the importance of establishing environmentally effective, private sector-friendly rules for the Kyoto mechanisms; or of determining how to handle the sequestration of carbon in trees or soils; or of establishing a compliance regime that is both meaningful and fair. It is absolutely essential that these issues be addressed in an honest and an effective way. The system we create is likely to be in place for many, many years. Completing all of these jobs this year to give countries the time that would be required for entry into force in 2002 is both unrealistic and unlikely.
The second thing that our governments need to be realistic and honest about is the ability to meet the targets in the Kyoto Protocol if entry into force comes later in this decade. Reality check number two, therefore, is this: For the United States at least, meeting the targets in the existing timeframe will be impossible.
Even if we saw a profound shift in Washington on this issue in the next one or two years, the United States will not be able to achieve the Kyoto targets as they are currently drawn for the simple reason that administrative process in our county can be enormously time-consuming. For the Kyoto Protocol to become U.S. law, the Senate would have to grant its advice and consent; both Houses of Congress would have to pass implementing legislation that would then have to be signed by the President; and a designated Agency would have to draft rules and regulations that would have to go through formal notice and comment procedures before they could be finalized and then implemented.
Given that such legislation and regulation would clearly result in regional and sectoral economic impacts, the odds of all this activity occurring by 2008 are very small indeed.
Lest you think that my doubts are reserved to my own country, I firmly believe that the United States will not be alone in its inability to move fast enough to meet the Kyoto targets. Surely, there is much effort on this issue in Europe and elsewhere, but even in the countries that have fully embraced the importance of reducing emissions, it is not a given that the targets can be met, particularly with current programs. And I would venture to say that the likelihood that these targets will be met will decrease as people and governments become convinced that the United States will not be able to meet its targets.
This brings up the third issue that we all must be realistic and honest about, which is the serious engagement of the developing world. The reality, whether we like it or not, is that most developing countries are unlikely to agree to binding emission reduction targets that would take effect in this decade. This is based in part on their fear that emission limitations would place unacceptable constraints on their economic development. It is also based on their view that, even among environmental issues, climate change is less of a priority than such things as reducing local air and water pollution.
But the developing world's opposition to targets cannot be allowed to hide the fact there is movement on this issue among these countries. For example:
Privatization of the electricity sector is moving forward in India, where competition is expected to increase the use of natural gas and lower greenhouse gas emissions.
Korea is beginning to plan for opening up its power sector to competition, again with a projected increase in the use of natural gas.
And China, which has dramatically lowered its energy consumption per unit of output over the last decade, is on a path to continue making significant energy-saving improvements over the decade to come.
In these and other developing nations, investment decisions made in the power and transportation sectors in the coming years will have a significant impact on global greenhouse emissions for decades to come. And the reality is that many opportunities exist for lowering these countries' emissions from a business-as-usual trajectory. In other words, binding commitments for these countries may not be possible, but significant action to lower emissions from their expected path may very well be. Indeed, this is already happening in some countries.
So there they are-three issues that the governments of the United States, Germany and other nations need to get real about in order to push this discussion forward. The timeframe for entry into force. Whether the existing Kyoto targets can be met. And the serious engagement of the developing world. If we follow our mothers' advice and are honest with one another about these issues, I believe we will go a long way to ushering in the next phase in the global effort to meet the challenge of climate change-a phase that will move us from rhetoric to reality and from discussion to action.
The View from the U.S.
Just as it is important to understand what is truly happening on this issue in developing countries, I believe it is also critical that everyone clearly understand the current situation in the United States. While there is still bickering within and outside the U.S. government about: 1) whether climate change is even real; and 2) what the United States should do about it and when, the reality is that the American news media is devoting more attention than ever before to the topic of climate change, the American people accept that it is something that demands our government's attention, and American businesses are moving ahead on their own in the absence of government action.
Let me talk briefly about the news media first, because I believe this is a very important development. Based in part on the growing consensus among scientists that global climate change is real-and in part as well on the fact that 1997, 1998 and 1999 were the three hottest years on record-the U.S. news media has devoted increasing attention to this issue over the last year or two.
In a television news report just last month, CBS correspondent Jim Axelrod reviewed some of the likely effects of global climate change-including rising sea levels and shifts in water resources. He also made note of a likely increase in global temperatures that he suggested, rightly or wrongly, was already evident in the early January hot spell that hit much of the country and had residents of Washington, DC, jogging in shorts and t-shirts. The correspondent concluded his report with this observation:
"Such thoughts used to be called "doom and gloom" by many. Now, however, a growing number of scientists are hearing the critics, looking at the data, and saying it's a forecast that can't be ignored."
The U.S. television networks are not alone in drawing fresh attention to the risks of global climate change. The Washington Post, in a January editorial entitled "Warming to Reality," issued its own warning that-quote-"reckless inaction in the face of global warming is the costliest of all options." And, in the American news media's turn-of-the-century rush to identify the critical issues of the new millennium, global climate change was always front and center.
No doubt in response to the news media's increasing attention to this issue, the American public is more willing than ever to accept that global climate change poses a real threat and that action is needed to avert a crisis.
A September 1998 survey conducted for the World Wildlife Fund revealed that nearly 60 percent of Americans believe global warming is happening now, and another 26 percent believe it will happen in the future. According to the survey, fully three-quarters of Americans want the United States to take action to reduce emissions of carbon dioxide as a way to address the problem.
In an effort to determine whether these opinions carry over into the realm of national decisionmakers and opinion leaders who influence U.S. policy, the Pew Center did its own survey in March 1999. We conducted nearly 450 interviews with staff members in Congress, industry association leaders, corporate decisionmakers in the affected industries, media representatives, economists, scientists and policy experts across the country-in short, a fairly comprehensive sample of the wide assortment of quote-unquote "elites" who are in a position to influence U.S. action-or inaction-on this topic.
What did we find? Well, to our surprise, we found that these elites are even more likely than the general public to believe that global warming is happening now. We also found broad support among elites for U.S. action to reduce carbon dioxide emissions. Even the Kyoto Protocol-the target of often-harsh criticism from many in Congress--attracted strong bipartisan support. More than one-third said the agreement actually would help our economy and create new jobs because we would develop new technologies that would help reduce our greenhouse emissions.
Business Accepts the Challenge
The belief that progress on this issue can be compatible with sustained economic growth in the United States-and may even contribute to that growth-is one reason there is increasing acceptance among U.S. businesses of the need for strong action to reduce emissions.
In late 1999, as many of you may know, the Ford Motor Company announced it was resigning from a coalition of oil companies, auto makers, electric utilities and others who stubbornly argue that we still don't have enough evidence to know whether or not global warming is real-and that we shouldn't do anything serious about it until more is known. Word of Ford's decision was followed closely by the news that Daimler Chrysler also would be leaving the group known as the Global Climate Coalition. The companies' moves were seen as an indication of the growing acceptance of the reality and the urgency of this issue-even in the nation's corporate boardrooms-and as yet another sign of a growing consensus for rational action to reduce U.S. greenhouse gas emissions.
But the fact is that many American businesses have long been way ahead of the U.S. government-and even ahead of the media and the general public-in their willingness to acknowledge and work on the issue of global climate change. This progressive stance became obvious when a large group of mostly Fortune 500 companies became affiliated with my organization, the Pew Center on Global Climate Change, to help forge a consensus response to the problem.
The Pew Center's Business Environmental Leadership Council now includes 21 companies with combined annual revenues of more than $550 billion. Working together, these companies developed a joint statement asserting that in the new millennium-quote-"one of our most important challenges at home and abroad will be addressing global climate change as we work to sustain a growing global economy."
"One of our most important challenges." That is an enormously powerful statement coming from these companies, which include such household names as American Electric Power, Boeing, BP Amoco, Lockheed Martin, Shell International, Toyota, Enron, United Technologies and Whirlpool. And, in making this statement, these companies announced publicly that they:
1) Accepted that there was enough known about the science of global climate change to warrant action;
2) Would establish their own emission reduction targets--and meet them;
3) Viewed the Kyoto Treaty as a first although incomplete step to addressing the issue internationally; and
4) Believed that addressing climate change can be compatible with sustained economic growth in the United States.
Some of the member companies of our Business Environmental Leadership Council already have announced their emission reduction targets, all of which are at least as stringent as those in the Kyoto Protocol. One large company affiliated with the Pew Center, DuPont, has established a goal of reducing emissions to 65-percent below 1990 levels by 2010, with an additional commitment of obtaining 10 percent of its energy needs from renewable sources. This is a stunning target, far in excess of the 7-percent reduction required for the United States as a whole in the Kyoto Protocol.
The commitment of DuPont and these other companies is an important reminder that there are many steps industry can and should be taking now to reduce greenhouse gas emissions. Unfortunately, however, the fact that these forward-thinking companies are acting of their own volition and without a clear sense that their actions will be rewarded in the marketplace is a reminder of something else. And that something else is the lack of leadership the U.S. government has taken on this issue, particularly at home, where a government framework for reducing U.S. emissions is sorely needed.
The U.S. Government: A Lack of Leadership
The U.S. government's lack of leadership is especially unfortunate because the United States is the largest emitter of greenhouse gases in the world--responsible for 25 percent of global emissions in a nation that comprises less than 5 percent of the global population. If leadership on this issue should come from anywhere, it should come from the United States.
But leadership is not coming from the United States. It is rare both in Washington and on the presidential campaign trail for the discussion of this issue to get past the question of whether to support the Kyoto Protocol or whether to declare it dead. What the discussion has not touched on-and should-is the further development and implementation of programs that would change the expected trajectory of our nation's greenhouse gas emissions. The U.S. Congress, in particular, appears determined to let absolutely nothing happen that would even remotely suggest that the United States is concerned about this issue. Virtually every budget item that deals with emission reductions is viewed by many in Congress as a quote-unquote "backdoor" attempt to implement the Kyoto Protocol and is therefore voted down or pushed aside.
What, you may ask, is driving the U.S. government's reluctance to deal with this issue in a serious way? I would like to suggest that there are two issues at the heart of the debate. And, while these issues are significant, my belief is that they have not been framed in ways that are honest or open to solution. The first issue relates to the economic costs of action to reduce emissions; the second centers on developing country participation. In my view, these are the chief stumbling blocks to serious action on this issue in the United States. Only by confronting them head-on will we be able to mount an effective response to the challenge of global climate change-both in the United States and throughout the world.
So let me begin with the economics. There is a popular joke in the United States that says economists have predicted nine of the last five U.S. recessions. And it is hard to argue with the premise of the joke when one looks at the varying predictions that have been made about the potential impacts of achieving the Kyoto targets on the U.S. economy. Interest groups across the ideological spectrum have produced markedly different results from economic models that are often not that different in their structure but that use very different assumptions to achieve the results these groups want to achieve. And the only result that is truly achieved is confusion.
How do we get beyond this confusion? We get beyond it by admitting that the models we are using-even when stripped of assumptions that bear no resemblance to reality-are not infallible. The complexity and time frame of the climate change problem stretches the capabilities of even the most sophisticated economic models on the benefits side. And the ability of models to quantify the value of reducing the risks of climate change is still in its infancy. On the cost side, models are still confronted with a series of challenges, the most important of which is anticipating the pace and direction of technological progress. As far as I know, no economic model would have predicted the information technology or communications revolutions that we are now witnessing. Nor have any models anticipated the decoupling of economic growth and carbon emissions that has occurred in the United States in recent years.
I am not mentioning these things to suggest there will be no costs to the United States should it act decisively to reduce emissions. There is almost always a cost associated with major changes to the economy. What I would like to suggest is that a fixation with 10 or 20-year-out predictions of increases or decreases in the U.S. GDP really misses the mark. To argue, as some have done, that the costs will be catastrophic and that entire industrial sectors will immediately be wiped out is as dishonest as the assertion that the economy can effortlessly achieve major emission reductions at no cost. What the United States should be concerned about are the impacts that are likely to occur in certain industries, certain labor categories, and certain regions of the country. The question is how these impacts can be minimized over time--and with careful transitional planning.
The second issue that has become a roadblock to progress in the United States is that of developing country commitments. I call this the "fairness issue." Is it fair, people ask, for the United States to have to abide by the Kyoto targets while competitors such as China, India and Mexico get a quote-unquote "free ride?" One fear is that American jobs will be lost to these and other countries because their production costs will be lower. But lost in the debate is the reality that fairness demands a decisive U.S. response for two reasons. First, because the United States is responsible, both historically and currently, for more emissions than anyone else. And second, because the United States has the ability to pay the costs of reducing our emissions.
Also lost in the debate about global climate change in the United States-and this may be even more important-is the question of what the problem actually is, and how it can most effectively be addressed. As I suggested earlier, emissions in developing countries will grow as these nations industrialize, and the infrastructure that will support this growth--for power generation and transportation, in particular--will set in place the global emissions trajectory for decades to come. So the real issue is not how to pressure these countries into accepting binding emission reduction targets in this decade. Rather, the issue should be how to influence the character of this infrastructure investment so that it becomes more climate friendly. We should look to our export credit agencies and to private investors for the tools to accomplish these objectives.
So what is the world to do? We have all these difficult issues on the table, and yet we all understand-or at least most of us do-that we need to start acting to address this global challenge as soon as possible. I already have laid out some of the steps I believe need to be taken in order for this discussion to move forward and in order for Germany, the United States and other nations to move from discussion to action. These include being honest about the Kyoto targets and timetables even while working to complete the Kyoto framework; devoting more attention to encouraging progress on this issue in the developing world; and fostering discussion in the United States and elsewhere of some of the fairness and economic issues that must be resolved in order to build support for strong and decisive action.
But what about the Kyoto Protocol itself? I would not be honest if I didn't tell you there are many voices in the United States that have proclaimed that Kyoto is dead-some of them with the same satisfaction as the characters in the American movie "The Wizard of Oz" who dance and sing to celebrate the demise of the wicked old witch. But I believe it is important for all of us to remember that while some of those who have said Kyoto is dead come from industries that would be negatively affected by any regime to control greenhouse gases, others have much less, if anything, at stake. At issue for these critics are the complexity of the Kyoto framework, and the stringency of its targets and timetables.
Of course, the reality about the fate of the Kyoto Protocol is that it is unlikely to be cast aside even if it does not deliver on its first set of emission reduction targets. But at the same time, we all must accept that Kyoto remains a work in progress.
This leads me to one final reality check: Making the Kyoto Protocol into an agreement that can deliver on the promise of reducing the risk of global climate change will, in all likelihood, take longer than from now until the meeting this November in The Hague. The delegates should do what they can at that meeting, but they cannot and should not expect that all of these issues will be resolved. And, just because it takes longer than everyone hoped does not mean the Kyoto framework is not valuable and ultimately viable. In fact, I believe that structuring the framework more definitively into one that has realistic timetables and targets and is environmentally effective, economically sound, and-yes-fair will go a long way to improving its chances of success, whether we have agreement this year, next year or the year after that.
In the meantime, I am not suggesting that the governments of the world stand around and wait for a better document on which to base their work on this issue. The reality is that the United States and other governments should be implementing substantive programs now that seriously respond to the overall Convention goal of stabilizing atmospheric concentrations of greenhouse gases at levels that will prevent dangerous interference with the climate system. And it is heartening to see the initiatives that have been taken by Germany since the negotiation of the Kyoto Protocol.
A priority for the United States, I believe, should be to design a straightforward system that will recognize and give credit to corporations that want to take early action to reduce greenhouse gas emissions. Put very simply, these companies need to know that reducing their emissions now won't put them at a competitive disadvantage down the line.
In addition to addressing the early action issue, the United States must start planning seriously for how it will reduce greenhouse gas emissions over the long haul. I cannot state more emphatically that what is most important now is the trying. In the United States, in Germany, and throughout the world, we need to experiment with different approaches to reducing greenhouse gas emissions-for example, by testing both national and company-specific emissions-trading regimes, or by imposing carbon taxes. We need to establish clear procedures for inventorying and verifying emission reductions, something that many in the private sector are already working on. And we must begin to build the capabilities and the institutions we will need when a full-fledged international regime does come into effect.
These will not be easy or painless goals to achieve, but the reality is that we need to achieve them. There is no escaping our responsibility to address the challenge of global climate change in an effective and, of course, an honest way. We all have a higher authority to answer to on this issue. That's right, our mothers. And we all need to work together to make them proud.
Thank you very much.
Legislation Needed - Before It's Too Late
By Vicki Arroyo Cochran
Director of Policy Analysis
Pew Center on Global Climate Change
Article written for the Washington Post Special Section on Climate Change
October 25, 1999
Two core principles of the companies that comprise the Pew Center's 21-member Business Environmental Leadership Council include: "We accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences," and "Businesses can and should take concrete steps now in the U.S. and abroad to assess opportunities for emission reductions, establish and meet emission reduction objectives, and invest in new, more efficient products, practices and technologies."
However, in our current climate policy vacuum, responsible businesses are sent mixed messages. While the science demands immediate action, the lack of a clear policy framework makes it risky for firms to act.
Voluntary "early action" legislation would encourage businesses and other entities to reduce their contributions to climate change at the earliest possible time. Legislation is needed because while two international agreements related to climate change have been negotiated, neither has yet resulted in binding international or domestic restrictions on greenhouse gas emissions.
In 1992, the Framework Convention on Climate Change was negotiated in Rio in response to growing concern about the future of the earth's climate. As of September 1999, 180 countries have agreed to take action to mitigate climate change with the goal of stabilizing greenhouse gas concentrations at levels that would prevent dangerous human interference with our climate system. The U.S. and other developed countries agreed to reduce their emissions to 1990 levels by the year 2000. Most countries, including the U.S., will miss this target. In recognition of the Convention's limited effectiveness, the Kyoto Protocol to the Convention was negotiated in 1997. Emissions reduction targets ranging from 8% below- to 10% above- 1990 levels of six greenhouse gases were negotiated for 39 developed countries. The U.S. agreed to a target of 7% below 1990 levels.
The details of the Protocol's mechanisms and compliance regime have yet to be negotiated, and U.S. ratification is not moving forward. In the meantime, unprecedented amounts of long-lived greenhouse gases continue to build in our atmosphere. Every day lost creates an even greater hurdle in achieving the necessary reductions. And yet, in spite of increasing confidence in the science, those who identify opportunities to reduce their greenhouse gas emissions through changes in their production processes, energy consumption, or products (e.g., refrigerators, cars, or air conditioners) are currently unsure whether future government actions will recognize these reductions. Should their responsibility be triggered in the future - i.e., when a protocol is eventually ratified or a domestic program implemented - entities that act early could be left with fewer (and more costly) options to reduce. This creates the wrong incentive from an environmental standpoint. It also inhibits our ability to phase in potentially costly carbon reduction policy and to develop technologies needed to address the problem.
Early action legislation addresses this disincentive for action. The concept is simple: provide credit towards a future domestic regime to those entities acting now to reduce their emissions. Such legislation would stimulate action by rewarding those who act first and create incentives to curb emissions at the earliest opportunity.
Yet while the principle is sound, crafting sound and viable legislation has proven to be a challenge. Issues that need to be addressed in the design of such a program include: What should be the "baseline" year against which emission reductions are compared? Should reductions be measured by efficiency improvements (rate per unit of output) to allow flexibility for increases in production or market share or should only actual tons reduced be credited (because this is what the environment sees and is consistent with our Kyoto targets)? How to spur the greatest - and most permanent -- reductions rather than reward those most easily accessible? Given the long-lived nature of greenhouse gases, does it even matter which tons are reduced so long as we curb emissions now?
While some of these questions are addressed in the bipartisan early action bills pending in the Senate and House, others are not resolved. Congressional action on the issue appears stalled and crafting a sound compromise remains difficult.
While it would be preferable to create true incentives for early action, in its simplest form such legislation could state that actions taken after a certain baseline year - the date of legislative enactment, for example -- will not be penalized. Such a statute could help protect firms acting now from being punished for taking responsible action.
The more time passes, the less likely it will be for us to achieve the goal of climate stabilization. Some companies are announcing aggressive commitments to reduce their contributions to climate change. Some state and local governments are taking steps to register and promote these actions. But without U.S. government action, we will not have the broad participation and commitment -- either in this country or abroad -- needed to truly address this problem.
Climate Change: A Challenge to the Conventional Wisdom
Executive Director, Pew Center on Global Climate Change
World Aviation Conference
San Francisco, California
October 20, 1999
Good morning. I had a lovely flight to San Francisco yesterday. So let me begin by thanking you for making that possible. And we can wait until my presentation is over to see whether you think I deserve a smooth flight back. I must tell you that I accepted your very kind invitation to speak at the World Aviation Congress because I thought it would be a perfect place to challenge two pieces of what could be called "the conventional wisdom:" the first is that industry always opposes responding to environmental problems by initially doubting the scientific basis of the problem, then arguing that responding to the problem is too costly, and finally, arguing for a delayed timetable for the response; the second is that leadership on public policy issues must always come from government.
But before I challenge these views, it may be useful for me to provide a little background on the global climate change issue. I believe this issue represents one of the most significant challenges of the next century: it's a science issue and an environmental issue; a global issue and a national issue; a technology issue and a fairness issue; a business issue and an economics issue. It is not likely to go away in the short term no matter what we do. And, if we don't do anything, it won't go away in the long term either. So let me give you a brief sketch of what we know and where we stand, and then spend a little time talking about practical solutions, the Pew Center on Global Climate Change, and the aviation industry. In so doing, I hope that I can convince you that the best response to the conventional wisdom is real information, analysis, assessment, and action, and that some in industry, and in the aviation industry in particular, are clearly up to the task. My job, I think, is to inspire all of you to take on this challenge and help provide the leadership that we need and that is so sorely lacking.
But to begin at the beginning, let's look at the science. The earth's atmosphere is made up mainly of oxygen and nitrogen, but it also contains other naturally occurring gases, including water vapor, carbon dioxide, methane and nitrous oxide, that are responsible for a natural greenhouse effect. Without this natural greenhouse effect, the earth would be about 34 degrees colder than it now is. But atmospheric concentrations of these gases have been rising, particularly since the late 1800's, as has the average surface temperature of the globe, which has warmed by 0.6 degrees centigrade. In their analyses of these and other data, most of the world's best scientists are agreed on two things: that the earth will continue to warm (we estimate 1.3 to 4.0 degrees centigrade by 2100), and that human-induced greenhouse gases will be at least partly responsible for that warming. I don't want to over simplify the consensus that exists here. There remain significant uncertainties (like how the formation and dissipation of clouds affect the climate), and there remain skeptical scientists. But the greatest uncertainties surround not whether there is, or will be, a change in the climate, but rather what the impacts of that change will be, where they will be felt, and when.
What do we know about the impacts of climate change? If the amount of warming over the next century is as currently predicted, it is quite clear that there will be a rise in sea level, estimated to be between 17 and 99 centimeters. For the United States, the rate of warming is expected to be noticeably faster than the global mean rate, particularly across the northern Great Plains and the northeastern states. These temperature changes are expected to increase winter precipitation in northern latitudes, increase the frequency of extremely hot days, and decrease the frequency of frosts. Changes in the incidence of daily precipitation extremes are highly uncertain, although there is some evidence suggesting an increase in the frequency of wet extremes. The effects of these temperature and precipitation change on agriculture, water resources, coastal resources, health and ecosystems are expected to be regionally significant. For example, while climate change is not expected to threaten the ability of the United States as a whole to feed itself, regional patterns of agricultural production are likely to change, and many crops will have to be grown in more northerly latitudes. Similarly, we can expect climate change to have impacts on our nation's water supply because of increased flooding in northern latitudes and snow-melt driven basins. At the same time, the frequency and severity of dry spells and droughts is also predicted to increase, although at different times and in different regions. Sea-level rise, with concurrent increases in storm frequency and/or intensity, is likely to affect some of our coastal areas, particularly the Atlantic coast, the Louisiana delta and the San Francisco basin. But my objective here is not to give you a laundry list of possible or probable environmental effects, but simply to suggest that we know enough about the science and the environmental impacts of climate change to begin taking steps to address its consequences. We all live in worlds where we analyze risks, make decisions, and take appropriate actions based on our risk assessments. This issue is clearly at a stage where we must move beyond denial and debate, and focus ourselves on rational action.
Rational action. It is probably a concept that we can all find appealing. But it seems to me that it is easier to say it than to take it, particularly when we are dealing with an issue like this where polarization of views is the norm, and coherent discourse and problem solving are rare. As some of you may imagine, and others of you may know first hand, this is a highly political issue, and I mean "big P" political: Republicans v. Democrats; Europe v. the United States; developed countries v. developing countries. It is also a "small p" political issue: scientists associated with the Intergovernmental Panel on Climate Change v. skeptical scientists; industry winners v. industry losers; the Kyoto Protocol as the solution to the climate change issue v. Kyoto as an agreement that will never enter into force. So perhaps I can be most helpful by giving you a little context, and then moving into a discussion of some practical paths forward.
In thinking about the climate change issue, it is both obvious and easy to suggest that climate change is a global problem that demands a global solution. And, of course, it is true. Greenhouse gases emitted in Delhi can affect the climate in Dallas, just as emissions in Chicago can affect the climate in Calcutta. On the other hand, global solutions cannot be found unless individual nations, businesses, and even individuals search for, and implement their own solutions. We have a broad global framework negotiated in 1992 and now ratified by 179 countries, including the United States, that establishes an overall goal of preventing dangerous anthropogenic interference with the climate system, and requires all countries to take policies and measures to reduce their greenhouse gas emissions, consistent with their circumstances and abilities. We also have the Kyoto Protocol, negotiated in December of 1997, and now signed by 84 countries, including the United States, and ratified by 15. This protocol establishes legally binding emission reduction targets for developed countries (7% below 1990 emission levels for the United States by 2012). It also allows for emissions trading and joint implementation among countries with targets, as well as use of a Clean Development Mechanism for project-based emission reductions between developed and developing countries. But perhaps the best way to look at the Kyoto Protocol is to look at what it does not contain, and what remains to be done.
It does not, for example, include any emission reductions or limitations beyond a first step for developed countries only. This is an obvious problem, since successfully addressing the matter requires more than one-step as well as participation from countries beyond those in the developed world. Yet the Protocol does not come to grips with what future steps might look like, for either developed or developing countries, or even what the framework for making decisions on these steps might be. What are the factors that should be considered in determining appropriate obligations for different countries or groups of countries to reduce or limit their emissions? To what extent should responsibility for the problem, past, present and future be a factor? Should it be tempered by a country's ability to pay for mitigation activities? Should emission rights be granted to countries based on historic emission levels, or should they be distributed on a per capita emissions basis? And what kind of system is effective, practical and fair?
The protocol does contain a framework for achieving emission reductions where they will be most cost-effective by including provisions on emissions trading, joint implementation, and the establishment of a Clean Development Mechanism, but it provides no specifics on how these mechanisms might work. It includes the possibility of sequestering carbon in forests and soils, but contains no specifics on how carbon that is sequestered should be included in a nation's total emissions budget. And it does not contain any provisions related to compliance, another issue that requires a serious and thoughtful response.
But as a practical matter, it seems to me that a framework for international action to deal with the climate change issue will evolve over the next decade no matter what current national and global politics suggest about the Kyoto protocol. And if you take this view of the inevitability of global action, and couple it with the view that the science is compelling enough to begin taking serious steps to address it, then the emphasis shifts to action frameworks and actions closer to home: national actions, company actions, and individual actions.
So where do we stand domestically? Unfortunately, the complications at home are as daunting as the complications abroad. While there is concern, interest, and a willingness to act on the part of the general public, some in the business community, and some in government, particularly at the State and local levels, the issue is now enmeshed in difficult and frustrating partisan politics. While the science remains somewhat controversial (although far less than even one year ago), it is the Kyoto Protocol that has raised the tensions dramatically. It is rare, in Washington, to be able to get past the question of whether to support Kyoto or declare it dead. As a practical matter, this has translated into arguments on the size and scope of the climate change budget, debates over whether Federal employees should be allowed to talk about the Kyoto Protocol, and attempts to use economic analysis to prove either that Kyoto implementation would ruin the economy or that it would be virtually free. What it has not translated into is the further development and implementation of programs that would change the expected trajectory of greenhouse gas emissions, or the passage of legislation that would either protect the 1990 baseline for companies that have voluntarily reduced their emissions over the past decade or provide incentives for more companies to move forward with emission reduction efforts.
I feel compelled to add here that the situation in the United States is unique among the countries of the world. The United Kingdom is now in the process of planning a domestic emissions trading experiment. The Danish government has already secured legislative authority to implement a trading program, and other emissions trading programs are under development in Norway and Sweden. The Germans are implementing a modest tax program. The Netherlands has a more traditional program full of different policies and measures that has been approved by their parliament. Whether these programs will work, or how well they will work, remains uncertain. But they do reflect serious attempts to experiment and move forward, to take the risk necessary to determine what approaches will ultimately be successful. There is even movement in the less developed world: privatization of the electricity sector is moving forward in India, where competition is expected to increase the use of natural gas and lower greenhouse gas emissions; Korea is beginning to plan for opening up their power sector to competition, again with a projected increase in the use of natural gas; and China, which has dramatically lowered its energy consumption per unit of output over the past decade, is on a path to continue making significant energy intensity improvements over the next decade.
Can more be done to deal with this problem than is apparent from the current level of activity? Of course. But if the U.S. government, or global governments more broadly, are either not able to come to grips with the more challenging issues that must be addressed, or unwilling to exercise real leadership, who will? I believe the answer is obvious and already in evidence, and I hope you will forgive me for the following advertisement. When the Pew Center on Global Climate Change was formed in May of 1998, there was little that was pushing 13 companies (the Washington Post, in an editorial, called them "a few brave firms") to publicly declare that
1 - they accept the views of most scientists that enough is known about climate change for them to take actions to address its consequences;
2 - that businesses can and should take concrete steps now in the U.S. and abroad to assess their opportunities for emission reductions; establish and meet emission reduction objectives; and invest in new, more efficient products, practices and technologies;
3 - that the Kyoto agreement represents a first step in the international process but that more must be done to implement the market-based mechanisms that were adopted in principle in Kyoto, and to more fully involve the rest of the world in the solution;
4 - and that we can make significant progress in addressing climate change and sustaining economic growth in the United States by adopting reasonable policies, programs and transition strategies.
Three of these companies are leaders in your industry as well: Boeing, Lockheed Martin and United Technologies. And there was little pushing the additional 8 companies that have since affiliated with the Pew Center. And there was little pushing those companies that have already set reduction targets and established programs to implement those targets, including DuPont, BP Amoco, Shell and United Technologies. And if this isn't leadership and a serious challenge to the conventional wisdom, I'd like to know what is.
But the job is not over yet. In fact, it is barely beginning. This is not a problem that can be solved in one day or one decade. It is a long-term issue that will require a sustained and serious effort over a long period of time. And there is room for virtually everyone to play a role in developing solutions. In fact, without participation from everyone -- countries, industry sectors, companies, and individuals -- it is not clear that we can mount a serious response to the problem. And this brings me to the aviation community.
I recognize up front that you have a problem that inspires jealousy in most other industries: you have had, and are projected to continue to have, a strong annual growth rate. And with this growth rate comes a problem, for while you have been successful in reducing emissions per unit of output, continued growth will increase your total greenhouse gas contributions. Even at current levels, the aviation industry accounts for roughly 2 percent of total global carbon dioxide emissions. I also realize that this sounds like a relatively small contribution. But unfortunately most sectors make small contributions, and aviation outpaces chemicals, iron and steel, cement and aluminum. You could even compare yourselves to many countries. The global aviation sector emitted more carbon dioxide than China, Germany, France or the United Kingdom.
But I didn't come here to depress you. It seems to me that all of the players on this issue are different from one another. Their contributions to the problem differ; their opportunities for emission reductions differ; and the costs that these reductions would entail differ. There is no "one size fits all" solution, and while special pleadings have never appealed to me as ways to do business, there is much to be said for flexible systems that allow for these key differences to be addressed and resolved. So let me be specific in suggesting that you focus on three topics: governance, technology and flexibility.
The aviation industry is already in a unique position with respect to governance. Article 2.2 of the Kyoto Protocol grants the industry special recognition, and establishes ICAO, the International Civil Aviation Organization, as the body responsible for regulating international aircraft emissions. As someone who has worked for many years with various Convention Secretariats and their Conferences of the Parties, I can only assure you that you are very lucky to be dealing with an organization that knows your possibilities and your constraints. But what is important is that you not squander your good fortune; your credibility on environmental issues is at stake here. It should be possible to develop timely and effective solutions that allow you to grow your business in sustainable ways. Find them, before others find paths that are less in your interest.
The second topic that demands some attention is that of innovation and technological change. Your industry has been a leader in the development and diffusion of new, more advanced technologies for decades. As you make investments in research and development, and as you consider priority areas upon which to focus your efforts, I would urge you not to forget that growth in the 21st century will almost certainly have to be environmentally sustainable growth. It is no accident that several of the largest global oil companies (and I am referring here to Shell and BP Amoco) have begun to think of themselves as energy companies, and have begun to significantly expand their investments in less traditional, more environmentally friendly energy sources. I didn't come here to tell you how to spend your R&D dollars. But I would like to suggest that you think carefully about what may be required over the next several decades to deal with the issue of global climate change, and that you factor this picture of the future into your longer term planning. You should be the industry that is first at the starting gate, and first at the finish line.
And finally, I urge you to think constructively about the market mechanisms that are contained in the Kyoto Protocol. These mechanisms essentially allow firms and nations to achieve the lowest cost emission reductions regardless of where they occur. And by doing this, the mechanisms provide economic incentives for innovation and lowered compliance costs. The best known example we have of how emissions trading works can be found in the acid rain trading program under Title IV of the Clean Air Act, a program which coincidentally I managed while at the Environmental Protection Agency. That program was designed to be scrupulous in its accounting system, and highly flexible and open in its trading system, a balance that has worked well to ensure that emissions are lowered and costs are as low as possible. It seems to me that the "Kyoto mechanisms," emissions trading, joint implementation and the Clean Development Mechanism have a significant potential for use by the aviation sector, and I know that ICAO is exploring their use along with other policy choices. You should carefully consider whether they would work for you, and, if you become convinced (as I am) that they could be of value, work with governments to ensure that the rules that are used to implement these provisions are simple, straightforward and result in real emission reductions.
In closing, I would like to briefly come back to the conventional wisdom. Yesterday's Wall Street Journal contained several articles on climate change. The lead story was titled "Inside the Race to Profit from Global Warming: Big Business Produces some Unexpected Converts." I call your attention to these articles not because I am quoted in them (alas, I am, and my quotes are not always diplomatic), but because I think they do point directly to the issue of leadership. If the marketplace has triumphed, at least temporarily, over government, as Daniel Yergin contends in his book "The Commanding Heights," then the marketplace will also have to stand ready to be judged by its commitment and contribution to environmentally sound solutions. The aviation industry is viewed as clean and green: technological giants in a world where technology is king. I urge you to live up to your reputation, exercise leadership, make a constructive contribution to the solution, and turn the conventional wisdom on its head.