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

Op-Ed: Legislation Needed - Before It's Too Late

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.

Appeared in the Washington Post, Monday, October 25, 1999— by By Vicki Arroyo Cochran

Climate Change: A Challenge to the Conventional Wisdom

Climate Change: A Challenge to the Conventional Wisdom

Eileen Claussen
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.

Thank you.

Press Release: Study Finds Climate Change Will Impact U.S. Water Supply

For Immediate Release:
September 27, 1999

Contact: Kelly Sullivan/Heather Fass

Study Finds Climate Change Will Impact U.S. Water Supply: Both Quantity and Quality of Water Supply Could Be Affected

WASHINGTON, D.C. -- A new study released today by the Pew Center on Global Climate Change concludes that climate change is likely to impact both the availability and quality of the U.S. water supply.

The study, Water Resources and Global Climate Change, finds that as climate change alters precipitation, evapotranspiration and runoff in the United States, these changes are likely to affect the magnitude, frequency, and costs of extreme weather events, as well as our nation's water supply.

The report, one in a series by the Pew Center examining the impacts of climate change on the environment, was researched and written by Dr. Kenneth Frederick of Resources for the Future, and Dr. Peter Gleick of Pacific Institute for Studies in Development, Environment & Security.

"Recent floods and droughts have reminded everyone that the climate and our nation's water supply are inextricably linked," said Eileen Claussen, Executive Director, Pew Center on Global Climate Change. "This study shows that as the climate changes, so will its impact on our water supply."

While some specifics are difficult to predict, several consistent impacts can be identified. For example, in mountainous watersheds, higher temperatures will increase the ratio of rain to snow, accelerate the rate of spring snowmelt, and shorten the overall snowfall season, leading to more rapid, earlier, and greater spring runoff.

In already arid regions, there is likely to be greater flux in the water supply, while higher temperatures fuel an increased demand for water. In other areas, new instances of flooding and droughts also will impact the availability of water.

"An adequate - and safe - water supply is an essential component to our health, environment, communities and economy," said Claussen. "These new findings demonstrate that climate change will not only impact the quantity of our water supply, but the quality as well."

While higher water flows could improve water quality in some streams, the increased runoff of pollutants and saltwater intrusion could accompany climate change induced sea-level rise.

The study notes that there are steps that can be taken today to begin preparing for changes in our water supply. In addition to reviewing options for adapting and expanding the existing infrastructure, including reservoirs and dams, there are opportunities to develop water marketing and trading strategies and improve the management of water systems.

"The findings from this report show without question that there are steps we can - and should - be taking today to prepare our water supply for the consequences of climate change," said Claussen. "But the most important step of all is to reduce the greenhouse gas emissions that cause climate change."

In addition to being presented to Members of Congress and their staff at a briefing tomorrow on Capitol Hill, the findings from the study also are highlighted in a print advertisement sponsored by the Pew Center. The advertisement is scheduled to run on September 29th in The Washington Post, September 30th in Roll Call, and October 2nd in National Journal.

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 executive director 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.

Turning Down the Heat: Finding Solutions for Global Warming

Turning Down the Heat: Finding Solutions for Global Warming

April 22, 1999

Good morning. Thank you for inviting me to speak here in this idyllic setting, with the White River and the mountains, truly a perfect backdrop for Earth Day 1999. The subject of the program Turning Down the Heat: Finding Solutions for Global Warming is also ideal. Addressing global warming will be one of the great challenges of the 21st century, a challenge that must be met by both my generation and your generation. It is clearly a multi-year and multi-generation task - and a topic where even the best minds may have difficulty charting a sustained and effective course. But for us to begin on the path toward solutions, we should start with a modest list of needs:

First, we need to begin with a realistic assessment of where we are in addressing this issue, both nationally and internationally;

Second, we need to begin now to seriously reduce our greenhouse gas emissions;

Third, we need to chart a course for a long term response, and begin laying the groundwork for that response; and

Finally, we need to muster the will to stay the course until we are successful in meeting the challenges of global warming.

My less than optimistic view is that we are far from coming to grips with this issue, both as a nation and as a world. And we certainly have not yet shown that we have the will to stay the course. In fact, I think the best way to illustrate our situation would be to think briefly of a painting by Pieter Brueghel titled "The Fall of Icarus." As many of you know, in Greek mythology, Icarus is the son of Daedulus, an architect and inventor who developed the labyrinth. When Daedulus and Icarus were later imprisoned in the labyrinth, Daedulus created wings of wax for both himself and his son so they could escape. They managed to flee the labyrinth and flew away. But Icarus, failing to heed his father's advice, flew too close to the sun, his wings melted, and he fell into the sea and drowned. In the Brueghel painting, as Icarus falls into the sea, no one pays any attention. The ploughman continues ploughing his field, the ship does not come to the rescue. If there is a disaster, it is someone else's disaster, and does not warrant a change in course. Well, Icarus we shouldn't be; the ploughman we cannot be.

So let us begin with a realistic assessment of where we are, and then perhaps we can chart a course for change.

Where We Are

Beginning with the science, which is the basis for dealing with this issue, I believe we can simply say that sufficient scientific knowledge exists that supports taking action. The world's best scientists agree that the earth will warm somewhere between 1.5 and 6.3 degrees Fahrenheit over the next century. They also agree that that warming will have significant impacts on the world in which we live: sea level is projected to rise between 6 and 37 inches, because water expands when heated, and because some glacial ice will melt. In addition, we can expect to lose some ecosystems, stress our already depleted water supplies, see our crop production and agricultural practices change with regional consequences, and see increases in the spread of infectious disease. Extreme weather events may also increase in frequency. Most scientists also agree that rising temperatures can be attributed, at least in part, to human activity, and, absent any effort to alter that human activity, will only result in greater temperature increases over time.

But this emerging consensus of concern has not resulted in a similar consensus for action. While it is true that opinion polls in the United States and globally suggest, by a strong margin, that the public believes that global warming is a serious issue, it is still not high on either national or global agendas. And this view is confirmed and strengthened in a survey of opinion leaders done recently for the Pew Center. In this research, completed in January of 1999, we found that 68 percent of opinion leaders (based on a sample drawn from the 1998 edition of Who's Who) believe that global warming represents a serious threat, and 61 percent are of the view that it is happening now. Seventy-six percent of these opinion leaders also believed that the United States should reduce emissions even in the absence of action by other countries, a conclusion that is supported across party lines. The strongest reasons for taking action include the desire to leave a legacy for future generations, and avoiding human suffering, and ecosystem loss.

In partial response to green public opinion, discussions of global climate change in Europe have been more constant and more politically charged than in the U.S.. And European governments have taken a more aggressive stand in the international negotiating process. But even in Europe, actions have not equaled words. Most EU governments continue to struggle with making significant reductions (beyond those garnered from loss of the industrial base in the former East Germany, or the phasing down of coal use in the United Kingdom), and some expect their emissions to grow substantially. In the United States, the debate is highly polarized, and the Administration and the Congress have been unable to agree on either a program to slow the growth in greenhouse gases, or on the funding needed for climate technology development.

But on neither continent (and certainly not in other parts of the world) has the public's concern been translated into public action. Consumer automobile purchases reflect low gasoline prices, and not the need to reduce carbon emissions. Green energy markets (where non-fossil energy is supplied) are beginning to grow, but consumer purchasing of green power still remains a choice of the few and not the many.

This lack of public will translates easily into a lack of political leadership. For while the Kyoto Protocol was agreed in December 1997, with an overall 5 percent reduction below 1990 levels to be achieved by 2012, government consultations on implementation of the agreement have been slow and contentious. The European Union, for example, has chosen to use these ongoing negotiations to redefine some of the basic parameters that were agreed in Kyoto, while the United States has indicated that it will not make any attempt to ratify the agreement until other agreements (that further define the Kyoto market mechanisms and that more deeply involve developing countries) are completed. The work plan agreed to in Buenos Aires in November 1998 contains over 152 separate items - an indication that not that much - or at least not enough -- was actually agreed the year before in Kyoto.

But if this picture looks bleak - with a concerned, but unmotivated public and a lack of leadership from governments - it is important to note that some shifts in behavior have actually occurred over the past year. In the United States, this shift can be seen in two ways. Most importantly, some in the private sector have begun to take significant actions to deal with their own emissions. BP Amoco, for example, has set a target to reduce its own emissions by 10% below 1990 levels by the year 2010. Shell International has a target of 10% below 1990 levels by 2002. United Technologies has committed to reduce its energy and water consumption per dollar of sales by 25% below 1997 levels by 2007. DuPont will reduce it global greenhouse gas emissions by 45% below 1991 levels by 2000. And Baxter International has reduced the global warming impact of its emissions by 81% since 1990. All 21 companies affiliated with the Pew Center on Global Climate Change are beginning to inventory their emissions and assess their opportunities for emission reductions. And while these companies are the exception rather than the norm, they do reflect a change - and a beginning.

I believe that we are also seeing a change up on Capitol Hill. At the beginning of this year, 12 Senators from across the political spectrum, including Senators Chaffee, Lieberman, Mack, Voinovich, Jeffords, Baucus, and Warner, introduced a climate change bill that would provide credit to companies that reduce their emissions when a regulatory program to control greenhouse gas emissions is enacted. Senators Murkowski, and Hagel are considering legislation that would provide incentives for technology research and development. It is also likely that we will see bills dealing with climate change introduced in the House over the next several months. So while these bills represent a wide range of views, they do indicate a change of tone and substance - the Congress recognizes that climate change is an issue that cannot be avoided and it is at the table thinking about possible solutions. And as I mentioned earlier, support for reducing greenhouse gas emissions even outside of an international agreement, is supported by opinion leaders without regard to political party.

A Short Term Plan

Addressing the climate change issue will require actions both in the short term and the long term - in the short term because without early and constant action we will not be able to address all of our long-term concerns. I would like to suggest that there are at least four items we can tackle now.

First and foremost, we should try to put in place a straightforward system to give credit to those corporations and entities that want to take early action to reduce their greenhouse gas emissions. We should not force progressive companies to make a choice, on the one hand, of investing in emission reducing technology now and risk being punished for it later, or, on the other hand, to forego investment to develop or install climate friendly technology for a decade or more. Failure to adopt a program to give credit for early action will essentially compel industry to defer action to avoid the uncertainty of how their actions will be treated by the government when more comprehensive programs are put in place.

Congress should step up to this issue and provide a legislative framework that will allow industry to undertake the emission reductions that will change our current course of emissions growth and result in a downward emissions trend. Of course I do not want to paper over some of the difficult questions that must be answered if we are to have an effective credit for early action program. How do we assure that the reductions that are credited are real and verified? How do we provide enough of an incentive for action, and yet do not over-mortgage the budget allocation for the United States in the Kyoto Protocol should it be ratified and enter into force? And how should we handle high-growth sectors, where emissions per unit of output may be significantly decreased, but where overall company-wide emissions may rise with vastly increased output? I would simply argue that these questions are all relevant for future carbon control activities, and we would do well to begin to work on the answers now.

It is also critical in the short term that we put in place programs and incentives for the development and diffusion of clean, green technologies. While it is important to take account of sectoral capital cycles, it is also important that we do not readily accept future investments in equipment that is not climate-friendly where alternatives are available. Such an effort should start now, but should not be geared to short term investments. Consider the 50 plus year lifetimes of power generation equipment, heating and cooling systems, and aircraft. Or consider the lifetime of simple refrigerators and freezers, where efficiencies have improved approximately 70 percent over the past 10 years, but where the old appliances still predominate in U.S. households.

As we move forward on a lower emissions path, and as we begin to invest in cleaner technologies, we must also focus our analytical efforts on developing sound methodologies and experimenting with new policy approaches. We should not fool ourselves into thinking that the requirements for addressing global climate change are simple, or even that we have a full understanding of those requirements. If we are to support carbon sequestration in trees and soils, obviously a sensible thing to do, we must develop accurate baselines and accounting systems. If we wish to control all greenhouse gases, we will need to significantly improve our ability to count those emissions in ways that can easily be monitored and verified. As we move toward establishing corporate baselines and conducting inventories, we need to deal with issues ranging from how to account for baseline changes as a result of mergers and acquisitions to whether to include employee travel as part of company-wide emissions reduction plans.

And the learning required does not stop with methodological issues. While we may have successfully implemented a sulfur dioxide emissions trading program in the United States, this does not mean that we have fully assessed what might be required for a greenhouse gas system with inter-gas, intra-company, inter-company and inter-country trading. In fact, one of the most interesting experiments now being conducted is the BP Amoco intra-company trading program, a multi-country, multi-facility effort that has already seen five trades completed at an average price of less than $20/ton. But more experimentation and learning is necessary if we are to launch a system for the global control of all greenhouse gases that will not only reduce emissions, but will do so in a manner that supports a growing global economy.

Long Term Needs

Of course no amount of short-term activity will be sufficient for dealing with what is clearly a long-term issue. We are, after all, dealing with greenhouse gases that accumulate over decades and stay in the atmosphere for thousands of years. So I would suggest that we also begin to focus on three longer term needs: the need to build stronger international capacity to deal with climate change; the need to build global institutions capable of handling topics ranging from Clean Development Mechanism projects to monitoring, verification and compliance activities; and the need to resolve global participation concerns in ways that balance effectiveness and equity.

Negotiating a regime for the control of greenhouse gas emissions and then implementing that regime on both international and national levels are highly complex tasks. Yet the capacity of most countries, particularly in the developing world, is limited. An international system is only as good as the national systems that support it. If enough nations do not implement policies to achieve their negotiated emission reductions, then globally we will not meet our targets. If there are doubts whether some nations' reductions and calculations are real, then trading markets will suffer and compliance on the part of other countries is at risk. Help with building this kind of national capacity is necessary if we are to lay the groundwork for international implementation, and we should begin now to engage this task.

And international implementation requires strong, credible and lean institutions. While some believe that most countries comply most of the time with most international treaties, reality requires that there are institutions that build trust among countries, that minimize free riders, and that maximize the incentives to comply. These institutions do so by developing methodologies, and providing assistance with implementation. They do so by developing clear, transparent processes rather than black boxes. And they do so by being both effective and efficient, a must in a climate control regime where we will likely see the creation of a competitive market for trade in emissions reductions.

But these national and international systems will only be useful if equitable participation in the international agreement is established. Global carbon dioxide emissions totaled about 28 billion metric tons in 1995. The United States is the largest emitter of these gases, both historically and currently. We are also very high on the scale of emissions per person. If we go back to 1950, our cumulative carbon emissions total 180 billion tons. Russia, the number 2 emitter, is 2/3 less, followed by China, Germany and Japan. To get more personal about it, our emissions amount to about 19 tons per person per year. But per capita emissions are 12 tons in Russia, 10 tons in Germany, 9 tons in Japan, 2 ½ tons in China, and less than ½ ton in Kenya.

For now, only 39 countries - albeit 39 of the higher emitting countries - are required to reduce their emissions of greenhouse gases. But just as there are wide disparities among countries in terms of responsibility for carbon emissions, so also are there wide disparities in the ability to pay for reductions, and the opportunities countries have for making reductions without reducing economic growth. Annual GDP per capita calculations using purchasing power parity vary from $460 to $26,000, the latter being more than $460 per week. In fact, the world's three richest individuals hold assets that are greater than the combined wealth of the 48 poorest countries. Developed countries are ½ as energy intense (measured in terms of energy used per unit of GDP) as developing countries, which are, in turn, ½ as energy intense as the Eastern European/Former Soviet Union countries.

Yet to find solutions to global warming, most countries will have to participate in a global regime. Finding an appropriate metric for the equitable distribution of the burden will be a most difficult task, one that has not been joined in the international negotiating process in a thoughtful and thorough manner. In fact, the United States has insisted on developing country participation - not an unreasonable position if solutions to the problem are to be found, and the developing world has insisted on the lead being taken by the developed world, also not an unreasonable position, and one that is consistent with the Framework Convention on Climate Change. What remains, and what is essential, is to come to some accommodation on what can be achieved both politically and practically to satisfy both equity and effectiveness concerns. It is not too early to begin this dialogue now.

Staying the Course

Of course, finding solutions to the climate change issue will require sustained effort over decades - on the part of governments, who must establish the rules and modify them as we learn more of the science, and as technological solutions begin to manifest themselves; on the part of industry, who must innovate, manufacture, and operate under a new paradigm where climate change will drive many decisions; and on the part of the public, who must also switch to a more climate-friendly path in their purchases and in their lifestyles. Can we muster the will to meet this challenge, and can we stay the course, knowing that it will be difficult and convoluted at times?

To stir your thinking, I would like to offer this quote from Alice in Wonderland, 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."

Well, we can't afford to walk long enough. We must know where we are going, and we must begin on the path to solutions. Today. 

Voluntary Efforts to Reduce Greenhouse Gas Emissions



Before the Senate Committee on the
Environment and Public works

Washington, DC
March 24, 1999

Mr. Chairman, Senator Baucus, and members of the Committee, thank you for your invitation to testify this morning on voluntary efforts to reduce greenhouse gas emissions. The Pew Center on Global Climate Change was founded in the belief that our generation's challenge will be to address global climate change while sustaining a growing global economy. To ensure that future generations enjoy a healthy environment and sound economy, it is imperative that we address the issue of climate change. And there is no better place for us to begin than with early action to reduce greenhouse gas emissions.

Mr. Chairman, throughout your career, you have been at the forefront of the movement to protect and enhance our nation's environment and natural resources. Your recent decision to retire from the Senate at the end of your current term represents a profound loss to the Senate and to our country. It will also be a profound loss in the field of climate change where leadership will be vitally needed, and where your vision and pragmatism will be sorely missed.

I am the Executive Director of the Pew Center on Global Climate Change, an organization founded by the Pew Charitable Trusts to work constructively on the climate change issue and to put forward meaningful and credible information and analyses to help us forge a consensus for action. The Pew Center and its Business Environmental Leadership Council were established in May 1998. While Council members serve as active participants and advisors to the Pew Center, we do not accept financial contributions from these or any other corporations. We formed the Business Environmental Leadership Council because we believe that the business community is ready and willing to provide the impetus to move forward on the issue of climate change. The Council consists of over twenty of the nation's and world's largest corporations. Together, the annual revenues of these companies total more than $550 billion dollars. Total employment for the companies is well over 1 1/2 million people.

The Pew Center and its Business Council accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to begin to take actions to address the problem. We recognize that the concentration of greenhouse gases is steadily increasing, and that these gases will remain in our atmosphere for many years -- in some cases, for thousands of years. The current scientific consensus indicates that greenhouse gases generated by human activities could increase the temperature of the earth's atmosphere by 1.8 to 6 degrees Fahrenheit over the next 100 years with potentially serious impacts on the global environment.

Concern over changes occurring to the earth's climate led to United States' ratification of the Rio Framework Convention on Climate Change in 1992. This Convention calls upon our nation to voluntarily reduce our emissions of greenhouse gases to 1990 levels by the year 2000. We will not come close to meeting our obligations under the Rio Convention, nor will many of the other industrialized nations who accepted the same voluntary target. And while we debate the reasons for our failure to meet our Rio obligations, our emissions continue to increase, and the global concentrations of greenhouse gases continue on their inexorable upward path.

For this reason, we do not believe that action on climate change should be delayed until we are satisfied with the progress that has been made on this issue internationally. Instead, we believe that companies can and should take concrete steps now in the U.S. and abroad to assess their opportunities for emission reductions and establish and meet emission reduction objectives.

The companies of the Pew Business Environmental Leadership Council support the view that they should act now, not later. Perhaps some examples of current company efforts would be instructive. BP Amoco, for example, has established a target to reduce its greenhouse gas emissions by 10 percent from a 1990 baseline by 2010. These reductions will be measured using established protocols and will be verified by external observers. BP Amoco has also created a pilot project for internal emissions trading. This allows individual business units to find the lowest cost way of meeting the company-wide target. At this stage, twelve business units are involved in this internal trading program, and five trades have occurred. The program will expand to include all the activities of BP Amoco over the next eighteen months.

Another of our companies, American Electric Power (AEP), has implemented Climate Challenge programs that fall into four main categories: improvements in the efficiency of generating and delivering electricity; increasing the use and output of its non-fossil fuel plants; establishing energy conservation programs at AEP facilities and for its customers; and sequestering carbon in forests. The total cumulative effect of these actions will be the avoidance of approximately 10 million tons of carbon dioxide that would otherwise have been emitted into the atmosphere. In one of the more innovative programs designed to reduce carbon emissions, AEP joined with BP Amoco, The Nature Conservancy, PacifiCorp and the Bolivian Friends of Nature Foundation to establish the Noel Kempff Mercado Climate Action Project in December 1996. The primary goal of this project is to preserve threatened tropical forests in the Province of Santa Cruz, Bolivia, thereby protecting its rich biological diversity and reducing releases of carbon dioxide into the atmosphere. The Noel Kempff Mercado Climate Action Project was approved by the US Initiative on Joint Implementation in December 1996.

Other ambitious examples from Business Council companies include the program of United Technologies which will, by 2007, reduce its energy and water consumption per dollar of sales by 25 percent below 1997 levels, with approximately the same reduction in emissions that cause climate change. This program is global in scope, covering 229 facilities in 36 countries, including 96 in the U.S. DuPont will, by 2000, cut its annual global greenhouse gas emissions by about 45 percent below 1991 levels. Shell International aims to reduce greenhouse gas emissions by 10 percent below 1990 levels by 2002. Since 1990 Baxter International has reduced the global warming impact of its emissions by 81 percent. Baxter also has a goal to improve their energy efficiency 10 percent per unit of production by the year 2005, based on 1996 levels of production. In 1995, Entergy committed to eliminating over four million tons of carbon dioxide emissions per year through 2000.

Regardless of the outcome of negotiations on an international climate change agreement, the members of the Business Council will continue to move forward, because they believe that this is a serious issue that demands a serious response. These programs will include internal audits of their emissions, the establishment of baselines, and the implementation of programs to reduce their greenhouse gas emissions.

The Pew Center recognizes that the nations of the world unanimously adopted the Kyoto Protocol and that this Protocol has already been signed by 84 countries. We believe that this Protocol represents a first step. But we also believe that more must be done to fully design and implement the market-based mechanisms that were adopted in principle in the Protocol. Further, the present Protocol does not ensure the participation of many important countries, and this omission must be remedied if we are to meet our environmental and economic objectives. However, we do not know when this will occur.

But we do expect that at some point in the future, the United States will ratify a climate change treaty that includes a binding commitment to reduce emissions of greenhouse gases. And while our companies are already taking voluntary actions to reduce their emissions, they also want to ensure that they will receive credit for these actions under any future climate change treaty, particularly when since many of these actions are and were undertaken at the request of the U.S. government to fulfill the goal of the Framework Convention on Climate Change.

But the issue is not primarily one of getting credit or providing incentives to act early. The key issue is one of eliminating disincentives: voluntary action, in the absence of credit, can work to the disadvantage of companies who act early to reduce their emissions. It is clearly not in our interest for companies that do the right thing by voluntarily attempting to slow the rate of greenhouse gases entering our atmosphere to be penalized and economically harmed for their efforts.

How could this happen? It is because companies typically delay the most expensive steps until the most cost effective options have been undertaken. Consider the following scenario. One company acts early, and begins by first making the most cost effective reductions. Its competitor does nothing, and continues to emit greenhouse gases. After a number of years, a binding treaty is ratified by the United States. Both companies are now asked to make the same level of reductions. However, if the company who acted early has not received credit for its reductions, its emissions baseline will be set at its new lower level, and it will be required to make additional and more costly expenditures. The competitor, who did nothing, can now meet its emissions target with lower cost reductions, resulting in a competitive advantage. The company who acted early is penalized. And for that reason, many companies may choose not to act early and voluntarily. Without credit for early action, there is a disincentive to act before rules are in place. Thus credit for early action is not just an issue of providing incentives for early emission reductions. It also removes the disincentives that penalize companies that recognize and work to ameliorate the threat that greenhouse gases pose to our atmosphere. Solving this problem requires leadership from Congress. An analysis undertaken by the Pew Center and published in October 1998 finds that federal agencies do not have sufficient legal authority to provide the certainty that firms need to make significant early investments. Congress must provide the legislative framework to remove the disincentives to early action. Such a legislative framework would also demonstrate that the United States takes its commitments under the Framework Convention seriously, and that we, as the nation with the world's highest emissions, are committed to addressing the problem of climate change.

While the Center does not take a position on the merits of any particular bill, we believe there are a number of issues that must be addressed in such a legislative framework. We would like to stress the following:

  • Credits should only be provided for actions that are real and verifiable. Verifiability means that reductions must be measured and monitored using standardized measurement techniques. Any system that is adopted should reward virtuous actors -- not those who engage in sham or paper reductions, or who "game" and manipulate the system. Paper reductions could occur if companies are allowed to count the same reduction twice, or to report a reduction at one facility, while transferring the production -- and the emissions -- to another facility. There can be no effective credit for early action program if we are not committed to establishing a robust and rigorous monitoring and verification effort.
  • The program should be simple and flexible. Participation in a system of credit for early action would be voluntary, but it is in our collective interest to be inclusive, so that many businesses are encouraged to mitigate and reduce their emissions. Companies in sectors that are experiencing high growth must be accommodated as must those who produce products, be they autos or appliances, that use significant quantities of energy. We must also keep transaction costs to a minimum, so that the costs of participation do not exceed the benefits to the participants.
  • The legislative framework should not prejudge the future national implementation scheme. We are not at a point now where we can predict the design of the program that will be implemented in the United States to meet a future international obligation. Any system for credit for early voluntary action should therefore be designed to operate within the framework of any likely domestic regulatory or tax program that might be fashioned to control domestic greenhouse gas emissions. It should also be accompanied by, and integrated into, a set of policies that stimulate early action, including fiscal policies and funding for research and development.
  • Domestic action should be the primary emphasis, but verifiable international projects should be included. The framework should focus primarily on domestic early action, but should also consider provisions related to international actions that comply with accepted international standards. International projects may earn credits for reductions achieved after the year 2000 under the Clean Development Mechanism. These should clearly be incorporated into any early action crediting framework. The small number of projects already accepted into the U.S. Initiative on Joint Implementation that achieved reductions prior to 2000, and meet rigorous standards for verification and monitoring, should also be recognized.
  • The legislative framework should not over-mortgage the U.S. greenhouse gas allocation. The Kyoto Protocol, in its current form, does not contain any incentives to act early. As long as this remains a feature of a future international control regime, credits allocated for early domestic reductions will have to come out of any U.S. allocation granted under a treaty. Therefore, careful consideration needs to be given to the impact of an early credit program on the availability of credits to those who choose not to participate in the early action initiative. Allocating too many credits too early could significantly increase the difficulty of complying with a regulatory regime. On the other hand, removing the disincentives for early action is the objective of an early action program. The design of the program should balance these two objectives, perhaps through the establishment of reasonable baselines.

The Pew Center and its Business Environmental Leadership Council believe climate change is serious business, and that early action is smart business. Our effort is founded on the belief that enough is known about the science and environmental impacts of climate change for us to take action now to address its consequences. Awarding credit for early action is an important first step in what we believe will be a long and intense effort.

Sen. Lugar Statement on Pew Study

Agriculture & Global Climate Change February 10, 1999

Senate Agriculture, Nutrition and Forestry Committee
Chairman Dick Lugar, U.S. Senator for Indiana

Statement by Senator Dick Lugar on Pew Global Climate Change Study

"There is still much uncertainty about global climate change and what impact it might have on agriculture. I welcome the Pew Center on Global Climate Change study, "Agriculture and Global Climate Change: A Review of Impacts to U.S. Agricultural Resources." This report will assist policy makers in the agricultural sector in the ongoing debate over the science and economics of climate change.

"Efforts to mitigate greenhouse gas concentrations can provide unique opportunities to agriculture. The sequestration of carbon, existing now with the increase in conservation tillage practices, the restoration of our wetlands and the Conservation Reserve Program provides our farmers and ranchers with practical mechanisms which can reduce greenhouse gas concentrations. The Pew Report mentions the need for additional research and evaluation of measurement techniques to allow these opportunities for enhanced carbon storage to be implemented.

"Another opportunity for the economy of agriculture would be the development of transportation fuels from cellulosic biomass. Ambassador James Woolsey and I have recently published an article on "The New Petroleum" in the January-February issue of Foreign Affairs. Our article points out that biofuels may have no impact or even a negative impact on emission of greenhouse gases. Because more carbon is stored in the soil when biofuels are produced than is emitted when they are burned.

"Biofuels not only provide economic opportunities for agriculture, they improve the long term productivity of our soils. And they address the world's growing dependence upon oil exports from unstable nations, which is a threat to our national security as well as to our environment. Sound energy and environmental policies go hand in hand."

Back to the Agriculture & Global Climate Change Report.

Press Release: New Study Details Effects of Climate Change On U.S. Agriculture

For Immediate Release:
February 10, 1999

Contact: Shannon Hunt / Kelly Sullivan
             (202) 289-5900

New Study Details Effects of Climate Change On U.S. Agriculture

Projected Regional Impacts on Agriculture Outlined: New Report is First in Series Examining Environmental Impacts of Climate Change

WASHINGTON, D.C. — Climate change has the potential to affect livestock and crops, local agricultural economies and crop production trends according to a new report by the Pew Center on Global Climate Change, which examines the effects of climate change on agriculture. The report finds that while climate change is not expected to threaten the ability of the U.S. to produce enough food to feed itself through the next century, some U.S. agricultural regions, particularly in the north, are expected to benefit, while others, primarily in the south, could face adverse impacts.

The report, released today at a press conference on Capitol Hill, notes that the resiliency and adaptability of the U.S. agricultural sector has made it one of the country's most productive industries and gives the sector the ability to adapt to the changes associated with climate change. However, the report also finds that there remains a potential for negative effects, and particular regions, especially those in the south, will face greater obstacles in adapting to the challenges posed by climate change.

"Anyone with a stake in agriculture should be interested in the findings of this report, which shows that the farming industry we know today will not be the same in the future under the effects of climate change," said Eileen Claussen, Pew Center Executive Director.

At Wednesday's press conference, Agriculture Committee Chairman Richard Lugar (R-IN) and Senator Bob Kerrey (D-NE) both issued statements supporting the Pew Center's efforts to inform American agricultural producers about the potential impacts of climate change.

According to the report, climate change could cause grain yields to fall significantly in southern states, while in the north, longer growing seasons could increase yields of grains such as wheat. Changes in grain production and foraging regions could also cause shifts in the locations of livestock production. Uncertainty in the models does not allow precision in identifying localized effects.

The study finds that in order to develop the most accurate and credible assessment of the possible impacts of climate change, it is important to consider adaptation and human response, as well as to continue to develop improved climate change forecasts. But, given the potential impacts, farmers and the agricultural community must consider new strategies in the face of uncertainty.

The report states that the emerging consensus from modeling studies is that the net effects on U.S. agriculture, with a doubling of carbon dioxide in the atmosphere, may be small. But, these models may understate long-range impacts if the rate or magnitude of greenhouse gas emissions exceed projected levels. For example, extreme events - such as storms, droughts and early and late frosts caused by climate change - also could play a role in determining the ultimate impact of climate change on agriculture.

Additionally, secondary impacts of climate change, such as the potential for higher ozone levels, impacts on water resources and pest populations, contribute to the uncertainty and pose additional challenges not only to individual producers, but also larger agricultural economies.

The value of U.S. agricultural commodities exceeds $165 billion at the farm level and over $500 billion after processing and marketing. "The role of the U.S. agricultural sector is too important for us to ignore these findings," said Claussen. "The agricultural community can adapt to climate change, but adaptation takes time and resources, and with uncertainties related to the timing and magnitude of temperature changes, not all opportunities for adaptation are likely to be realized."

This report is the first in a series of environmental impact reports slated to be released by the Pew Center this year. Other reports in this series will assess what is known about the impact of climate change on weather and includes analyses of its impact on water resources, coastal areas, human health, ecosystems, and forests.

A copy of the report, "A Review of Impacts to U.S. Agricultural Resources," is available on the Pew Center web site at 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 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.

Early Action & Global Climate Change: An Analysis of Early Action Crediting Proposals


Early Action and Global Climate Change: An Analysis of Early Action Crediting Proposals

Robert R. Nordhaus and Stephen C. Fotis

Press Release

Download Entire Report (pdf)


Eileen Claussen, Executive Director, Pew Center on Global Climate Change

The challenge of our generation will be addressing climate change while sustaining a growing economy. We need to take concrete actions to reduce emissions, both here and abroad. The sooner we begin, the more likely we are to succeed in stabilizing atmospheric concentrations at a level that will prevent dangerous anthropogenic interference with the climate.

This report, which analyzes proposals to credit early, voluntary actions to mitigate greenhouse gas emissions, is the first in a series to be published by the Center. The Pew Center was established in 1998 by the Pew Charitable Trusts to bring a new cooperative approach and critical scientific, economic, and technological expertise to the global climate change debate. Some U.S. companies have indicated support for early action programs in keeping with their desire to take immediate action to reduce greenhouse gases and their need for assurance that such actions will be rewarded and not punished.

This report addresses the issues that policy makers will face in designing a domestic early action program, analyzes current proposals, and suggests a set of principles to guide an effective program. It suggests that, regardless of any eventual international framework, the U.S. can take steps to credit reductions in gases now, and therefore encourage and reward companies that act to minimize their emissions. The longer we wait to address climate change, the more it is likely to cost—both environmentally and economically. The Pew Center concludes:

  • The cost of delay is significant. Steps taken now represent an investment that will pay environmental and economic dividends into the future. Conversely, continued inaction will result in greater environmental challenges and increased costs down the line.
  • U.S. Leadership is imperative. Since the U.S. has both the highest greenhouse gas emissions and per capita income, implementing a voluntary early action program demonstrates to the world our commitment to address the problem of climate change.
  • Leadership must start with Congress. Congress must provide the legislative framework to encourage early action.

The Pew Center and its Business Environmental Leadership Council believe climate change is serious business. Our effort is founded on the belief that enough is known about the science and environmental impacts of climate change for us to take action now to address its consequences. Awarding credit for early action is an important first step.

Executive Summary

The ultimate objective of the Rio Convention, which the United States ratified in 1992, is to stabilize atmospheric concentrations of greenhouse gases (ghg) at levels that will prevent dangerous anthropogenic interference with the climate system. Such stabilization will require significant reductions in ghg emissions by the United States and other countries. One mechanism proposed for encouraging U.S. companies to begin reducing ghg emissions now is an early action crediting program. Such a program would provide U.S. companies with credits for ghg reductions achieved prior to the year 2008 (i.e., before the first budget period under the proposed Kyoto Protocol) that would be usable by those companies for compliance with any future domestic ghg regulatory program.

This paper analyzes the legal, policy, and technical issues that policy makers may wish to consider in designing an early action crediting program. Although many of these issues are quite complex and cannot be fully addressed with simple and uniform crediting rules for all industry sectors, the paper attempts to formulate a set of general principles to guide policy makers in fashioning an administratively workable and effective program. The paper begins with a review of current U.S. efforts to mitigate ghg emissions through voluntary actions and programs and provides an analysis of five early action crediting proposals publicly available as of July 1998.

Voluntary GHG Mitigation Efforts in the United States. The Rio Convention's non-binding goal for developed countries was to return ghg emissions to 1990 levels by 2000. To meet this goal, the Clinton Administration developed the Climate Change Action Plan (CCAP), which outlined a portfolio of about 50 ghg mitigation actions. The plan applied to all sectors of the economy that emit ghg emissions and was intended to foster voluntary partnerships with the private sector and local governments. Generally speaking, the CCAP initiatives were designed to provide information and tools to encourage participants to voluntarily undertake physical or operational changes that will reduce ghg emissions. Although they demonstrate that industry and government can work together to achieve cost-effective ghg reductions, the CCAP initiatives have not achieved the level of reductions necessary to return U.S. emissions to 1990 levels, as contemplated by the Rio Convention.

Review of Design Issues and of Current Extant Early Action Crediting Proposals. The paper provides an analysis of the legal, policy, and technical issues raised in the early action crediting proposals developed by the Environmental Defense Fund, the Coalition to Advance Sustainable Technology, the Center for Clean Air Policy, Resources for the Future, and Niagara Mohawk Power Corporation. Key issues include the legal framework for the program, source of credits, flexibility, actions eligible for credit, and technical design of the program.

Principles for Designing An Early Action Program. Based on the review of these issues, the paper identifies the following general principles that may be useful as a guide to policy makers in fashioning a workable and effective program:

1. Provide a predictable credit mechanism and clear legal framework for the program. The principal purpose of an early action crediting program is to encourage voluntary ghg reductions in the near term. The program should provide a substantial and reliable incentive that will stimulate immediate efforts to slow down the increase of, and, ultimately, to decrease, ghg emissions levels in the United States. For such an incentive to be effective, participants must know in advance the credits they will earn for particular ghg reductions or sequestration activities and be given clear assurances that they possess a legally enforceable right to receive earned credits. Existing law does not provide the legal framework to give participants that right. For that reason, the crediting mechanism should be clearly delineated by statute or in agreements authorized by statute.

2. Keep the program simple and flexible. Any early action crediting program will be voluntary. The extent of participation in the program will depend, among other things, on whether potential participants perceive benefits of participation to exceed the costs of complying with the requirements of the program. Simplicity and flexibility are key components of minimizing transaction and compliance costs. Because of the range of potential participants, the agency administering the program will need flexibility to tailor the program to the needs and circumstances of particular industries and companies. The program will also need the flexibility to encourage innovation and reward efficiency. The best mechanism for doing this is through agreements between the participants and the government that spell out the specifics of the crediting mechanism for that participant, or industry. Model agreements for particular industries may be useful tools in this regard.

3. Reward real reductions, not gaming. An early action crediting program takes ghg credits otherwise available to U.S. companies during the initial period of domestic ghg regulation and gives them to participants in the early action program as a spur to reducing ghg emissions before that initial period. It is important that credits be used to reward real net reductions in ghg emissions, rather than paper reductions. The program needs to incorporate safeguards that give the public and other emitters confidence that the system will not be gamed.

4. Provide some form of recognition of past voluntary ghg reductions. Voluntary ghg reductions achieved between 1990 and 1998 and reported to the federal government should be recognized either in the form of a baseline adjustment or as a direct credit. It is important to maintain the principle that companies will not be disadvantaged because of prior voluntary reductions. However, the reward for past mitigation efforts should be provided only to the extent that the ghg reductions are real, quantifiable, verified, and not double-counted.

5. Don't predetermine the eventual domestic regulatory program. An early action crediting program should be designed to operate within the framework of any likely domestic regulatory or tax program that might be fashioned to control domestic ghg emissions. This includes a range of regulatory options such as carbon taxes, direct regulatory programs, and marketable permit schemes (implemented through, for example, an auction or administrative allocation of allowances).

6. Don't make the early action crediting program contingent upon ratification of the kyoto protocol. The early action program should not depend upon Senate ratification of the Kyoto Protocol in its present form. Rather, it should be designed to operate in the context of whatever international control regime may eventually be adopted and ratified by the U.S.

7. Focus principally on domestic early action. The allocation of credits to the U.S. under Kyoto or any other international agreement is an asset that should be carefully husbanded for use by the U.S. economy. For that reason, the principal but not exclusive focus of the program should be on rewarding early domestic actions to mitigate ghg emissions. There are, however, a number of circumstances where credit for actions outside the U.S. should be considered.

8. Don't over-mortgage the U.S. ghg allocation. The Kyoto Protocol, if ratified, will not provide international credit for reductions attained prior to 2008 in developed countries. Early action credits for ghg reductions within the United States thus would have to come out of the U.S. first budget allocation under the Protocol. Careful consideration needs to be given to the impact of an early action credit program on the availability of credits to non-participants once domestic regulation commences, and the extent to which credit should be given for action outside the U.S.




Robert R. Nordhaus
Stephen C. Fotis

Market Mechanisms & Global Climate Change

Market Mechanisms & Global Climate Change

Annie Petsonk, Daniel J. Dudek and Joseph Goffman, Environmental Defense Fund,
in cooperation with the Pew Center on Global Climate Change.

Download Entire Report (pdf)


Eileen Claussen, Executive Director, Pew Center on Global Climate Change
There is growing evidence that providing businesses and consumers with market-based mechanisms for addressing environmental problems can achieve equal or better compliance while reducing costs and spurring technological innovation. In the context of climate change, countries have agreed to use several market-based mechanisms in implementing greenhouse gas emissions reductions-from emissions trading similar to that used in the United States to reduce sulfur dioxide emissions to more experimental measures such as joint implementation and the Clean Development Mechanism.

This report, which analyzes market-based environmental policy instruments, is the third in a series by the Center. The Pew Center was established in 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 Center brings a new cooperative approach and critical scientific, economic and technological expertise to the global climate change debate. The report was prepared as an input for the participants of two international conferences designed to promote a trans-Atlantic dialogue on market-based instruments and their use in mitigating global climate change. Recognizing the critical role of business in both shaping and applying market-based mechanisms, the Pew Center is working to bring businesses from both the United States and Europe together to discuss ways to do so.

The report reviews U.S. and European experience with market-based mechanisms and the ways the Kyoto Protocol on Climate Change utilizes these mechanisms. The report finds that properly designed rules for the operation of these mechanisms can provide economic and environmental integrity and signal to business and governments that any trades undertaken in accordance with the system will be valid and of value. Key elements to the success of such a system will be measurement, transparency, accountability, fungibility and consistency.

The Pew Center and its Business Environmental Leadership Council believe that climate change is serious business. Implementing emissions trading and other market-based mechanisms will be part of a serious response to the climate change problem.

Executive Summary

This paper has been developed with a view toward promoting trans-Atlantic dialogues on market mechanisms for environmental protection. While the overarching topic for dialogue is the full panoply of environmental problems for which market mechanisms may be considered, this paper is prepared in the context of increasing global attention to the problem of climate change. The November 1998 Buenos Aires Conference of the Parties to the United Nations Framework Convention on Climate Change provides an example of the international focus on market mechanisms among governments, the private sector, and non-governmental organizations around the world.

This paper reviews market mechanisms for environmental protection, with special focus on emissions trading. Emissions trading programs place an overall limit on the amount of emissions that sources may emit, and then allow sources a degree of flexibility to determine where, when, and how to meet their total limits. Emissions trading programs provide this flexibility by allocating to sources a fixed amount of emissions allowances; any source that reduces emissions below allowable levels may save the resulting allowance increment to offset future emissions, or sell the increment to another source who may add the increment to its allowances. Compliance is determined solely by comparing actual emissions to allowable amounts.

The paper notes that five elements are essential for providing environmental and economic integrity in such programs: measurement, transparency, accountability, fungibility, and consistency. In reviewing the experiences of the U.S., New Zealand, and Europe, the paper finds that harnessing the competitive forces of the market-place in favor of pollution reduction can enable governments, industries, and non-governmental organizations (NGOs) to reach political consensus about pollution limits. Experience also indicates that when these elements are firmly in place, emissions trading programs can deliver powerful incentives to sources to innovate to develop more environmentally effective and more cost-effective ways of reducing emissions. Trading programs premised on these elements can achieve faster, deeper cuts in pollution, at far less cost than other regulatory instruments.

The 1997 Kyoto Protocol on Climate Change seeks to use market mechanisms to limit the emissions of greenhouse gases (GHGs) that are contributing to changes in the global climate. The paper examines the Kyoto Protocol framework for an innovative international market in GHG emissions reductions. The Protocol places a legally binding limit on the allowable amount of GHG emissions from most industrialized countries for the period 2008-2012. It then affords these nations the opportunity to trade allowable amounts of emissions, either directly or in conjunction with joint emissions reduction projects. It further allows these nations to implement their obligations collectively, through shared arrangements known as "bubbles" or "umbrellas."And the Protocol invites the participation of nations that have not adopted a legally binding GHG limit: it allows a limited form of trading between nations with limits and those without, where the trading involves emissions reductions obtained through cooperative projects in the latter group of nations.

The paper notes that the Kyoto Protocol respects the sovereignty of each participating nation to determine how best to implement its international obligations at the domestic level, and whether, in so doing, it should allow its private sector to participate in the international emissions trading market. The Protocol leaves open the development of internationally agreed rules to provide the transparency, the accountability, and-particularly in the case of trading with nations lacking limits on GHG emissions-the measurability that may be key to the Protocol's success. Further, the Protocol allows each nation that adopts emissions limits to decide whether to initiate programs prior to 2008 that will provide recognition and incentives for early actions to reduce emissions. The Protocol does not address the question of whether nations will, individually or collectively, place quantitative or qualitative restrictions on emissions trading.

After exploring the theory of market mechanisms, examining their implementation in selected cases, and analyzing the market elements of the Kyoto Protocol, the paper draws on lessons learned from practical experience in order to identify and evaluate options on the questions left open by the Protocol. The paper indicates that for environmental and economic effectiveness, experience weighs in favor of a limited set of rules-carefully drawn to foster measurement, transparency, accountability, fungibility, and consistency-and weighs against imposing further restrictions on the market mechanisms.

This paper includes a compilation and synthesis drawn from the sources and materials listed in Appendix I. The authors, Annie Petsonk, Daniel J. Dudek, and Joseph Goffman, are, respectively, International Counsel, Senior Economist, and Senior Attorney with the Environmental Defense Fund. The authors wish to acknowledge the insights gleaned from conversations with Christoph Bals, Marianne Ginsburg, Anke Herold, Jos Cozijnsen, Jennifer Morgan, Sascha Müller-Kraenner, Hermann Ott, John Schmitz, and Jonathan Wiener. Any errors or omissions are solely the responsibility of the authors.

This report was one input into two conferences on market-based mechanisms, which were held on 23 and 27 October, 1998, in Bonn and Paris. The conferences provided an important forum in which participants, including representatives of businesses, non-governmental organizations, and governments, shared practical experience about the use of market mechanisms, and provided valuable insights about the trans-Atlantic context for consideration of the report's findings.

Annie Petsonk
Daniel J. Dudek
Joseph Goffman

Press Release: New Study Demonstrates Consequences of Delay and the Need for a Congressional Response

For Immediate Release:
October 1, 1998

Contact: Kelly Sullivan or Shannon Hunt
             (202) 289-5900

Pew Center on Global Climate Change and Major Corporations Highlight Urgency of Early Action : New Study Demonstrates Consequences of Delay and the Need for a Congressional Response

WASHINGTON, D.C. - The Pew Center on Global Climate Change, with its Business Environmental Leadership Council, today released a new study on climate change and the need for Congressional legislation to ensure credit for companies acting in response to the problem of climate change.

"The cost of delay is significant - both in terms of the economic and environmental consequences," said Eileen Claussen, executive director of the Pew Center on Global Climate Change. "The problem is getting worse and the longer we wait, the more difficult and expensive our response will be."

The report, "Early Action and Global Climate Change," addresses the issues that policymakers will face in designing a domestic early action program, analyzes current proposals, and suggests a set of principles to guide an effective program.

"From this study, we can conclude that, regardless of any eventual international framework, the U.S. can take steps to credit reductions in gases now, and therefore encourage and reward companies that act to minimize their emissions," said Claussen. Robert R. Nordhaus and Stephen C. Fotis prepared the report for the Pew Center on Global Climate Change.

Beginning October 3rd, print advertising will run in targeted national publications, highlighting three key conclusions the Pew Center found from the report:

  • The cost of delay is significant. Steps taken now represent an investment that will pay environmental and economic dividends into the future. Conversely, continued inaction will result in greater environmental impacts and increased costs down the line.
  • U.S. leadership is imperative. Since the U.S. has both the highest greenhouse gas emissions and per capita income, implementing a voluntary early action program demonstrates to the world our commitment to address the problem of climate change.
  • Leadership must start with Congress. Congress must provide the legislative framework to encourage early action.

The advertising also includes a list of the companies which comprise the Pew Center on Global Climate Change's Business Environmental Leadership Council. With the addition of Weyerhaeuser, which was announced today, the Business Environmental Leadership Council totals eighteen companies, including:

Air Products and Chemicals, Inc.; American Electric Power Company; Baxter International Inc.; Boeing; BP America; Enron Corp.; Holnam Inc.; Intercontinental Energy Corporation; International Paper; Lockheed Martin; Maytag Corporation; The Sun Company; 3M; Toyota; United Technologies; U.S. Generating Company; Weyerhaeuser and Whirlpool.

Several of the company representatives joined Claussen at the news conference in Washington, D.C. to release and review the study.

"Many U.S. companies - including the members of the Business Environmental Leadership Council - have indicated support for early action programs in keeping with their desire to take immediate action to reduce greenhouse gases and their need for assurance that such actions will be rewarded and not punished," said Claussen.

In providing an objective assessment of the current proposals on early action, the report identified eight key principles necessary for a workable, effective early action policy. The report found that an early action policy should:

  1. Provide a predictable credit mechanism and a clear legal framework for the program;
  2. Keep the program simple and flexible;
  3. Reward real reductions, not gaming;
  4. Provide some form of recognition of past voluntary greenhouse gas reductions;
  5. Not over-mortgage the U.S. greenhouse gas allocation;
  6. Not predetermine the eventual domestic regulatory program;
  7. Not make the early action crediting program contingent on ratification of the Kyoto Protocol; and
  8. Focus principally on domestic early action.

"From this report and extensive consultation with our member companies, it is clear that we should no longer put off until tomorrow what we should begin today," said Claussen. "Climate change is serious business and early action is smart business."

Click here to read a copy of the report, "Early Action and Global Climate Change."

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