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Forum on the State and Development of The Greenhouse Gas Market
Remarks of Eileen Claussen, President
Pew Center on Global Climate Change
International Emissions Trading Association's Annual Conference
December 5, 2002
Thank you for that kind introduction. I'm delighted to be here. I had the pleasure a year ago of welcoming IETA to Washington for its first annual conference. And I'm thrilled to have the opportunity to speak again, this year here in Brussels.
I'm reminded of a story about George Bernard Shaw. One of his plays was about to open in London and he sent two tickets to Winston Churchill with a note that read: "Enclosed are two tickets to the first-night performance of a play of mine. Bring a friend -- if you have one."
Churchill, never to be outdone, quickly wrote back: "Dear G.B.S. -- I thank you very much. Unfortunately, I am engaged that night, but could I have tickets for the second night… if there is one."
There was no doubt in my mind that IETA would be back for a second performance, and I very much appreciate the invitation. It has been our privilege at Pew to work with IETA on a number of fronts to encourage the development of an active, global greenhouse gas market. And I look forward to continuing that partnership as we move forward and promote real solutions to the critical challenge of global climate change.
Today I'd like to offer you some thoughts on where we stand in the effort to meet the challenge of climate change - in particular, where the United States stands in this effort - and what it is going to take to move us further along.
I'd like to start with some reflections on the most recent round of international negotiations, which concluded last month in Delhi. It's been said that blessed is the one who expects nothing, for he is never disappointed. That may well have been the case with COP 8. With the big issues on Kyoto implementation resolved in Bonn and Marrakech, but the Protocol not yet in force, expectations for Delhi were low. And they were met. The issues on the table in Delhi were largely technical and incremental in nature. And, even on these, the progress was modest.
But there were a couple of important outcomes. One was a greater emphasis on adaptation - a recognition that we cannot focus on mitigation alone. The second was the emergence of debate over next steps - the question of how we move forward beyond Kyoto's first commitment period. Long looming in the background, the issue was placed squarely on the table in Delhi, dominating both the dialogue and the political dynamics of the conference.
In the end, after much debate and negotiation, the Delhi Declaration itself was silent on the question of next steps. But the critical conversation about how we move toward a truly effective long-term framework has at least begun.
Delhi is also noteworthy because of the role played by the United States. Having played a more peripheral role in the negotiations immediately following its rejection of Kyoto, the United States began to reassert itself in Delhi, and in ways that were not necessarily helpful.
You'll recall that President Bush said he was rejecting Kyoto, in part, because it did not include commitments for developing countries. Yet in Delhi, the United States was suddenly arguing that it would be unfair to ask these same developing countries to take on emission targets.
On the surface, this might appear inconsistent if not hypocritical. But it is consistent in this sense: Although the administration is delivering one message at home and another abroad, both serve to impede progress. Whether the United States is harping on the lack of action by others, or deterring action by others, the goal remains the same: avoiding commitments of its own.
The U.S. stance in Delhi underscores an unsettling reality. On the one hand, we are in fact making significant headway against climate change. For all its flaws, Kyoto is a remarkable achievement and its entry into force will be a critical milestone. Even within the United States, there are encouraging signs. I'll elaborate on some of those in a few moments. But - and here's the unsettling part - the reality is that at the end of the day, we cannot meet the challenge of climate change without the full and willing participation of the United States. Until and unless the United States demonstrates a willingness to tackle its own emissions, it will be extraordinarily difficult for other developed countries to go beyond the commitments they made in Kyoto, and it will be next to impossible to persuade developing countries to take stronger action of their own.
So our prospects for success may hinge on two questions: Where is the United States today on the issue of global climate change? And what ultimately will it take to secure the full and willing participation of the United States in an effective long-term effort to meet this challenge?
First, I think it's important that we have absolutely no illusion about what we can and cannot expect from the present administration. It may be a sign of progress that the White House is no longer openly challenging the broad scientific consensus that global warming is real. We've moved past denial. The administration is busily recruiting companies for voluntary emission reduction programs. It is moving to improve the federal government's woefully inadequate emissions registry. It is engaging in bilateral efforts with a long list of countries.
These are all good things. But they fall far, far short of what is needed. And - forgive me if I seem a bit jaded - they seem meant to convey the appearance of progress, and thereby deter actions that would achieve genuine progress. I'm asked often whether I think the Bush administration can be persuaded to take stronger action on climate change. And I have to say that, barring a dramatic and unforeseen shift in U.S. politics, the answer is no. There is little to suggest that this administration is prepared to engage constructively on this issue either diplomatically or domestically.
That, however, is not to say that the United States is a lost cause. In fact, I would argue that, odd as it might seem, the United States is much further along in addressing this issue than it was the day President Bush took office. Climate change is getting more attention than ever - in the press, in corporate boardrooms, in state capitols, and even in Congress.
In the business sector, we've seen a steady shift from denial to acknowledgment; from acknowledgment to action; and, in some cases, from action to advocacy.
Many of you, I'm sure, are familiar with the voluntary actions being taken by leading companies to reduce their emissions. At last count, we'd identified more than 40 major companies that have publicly committed themselves to greenhouse gas reduction targets. Now the Business Roundtable, at the urging of the Administration, is trying to get all of its members to commit to voluntary action. Even Exxon-Mobil, a leading champion of the Administration's business-as-usual strategy, recently ran ads touting its efforts to get a handle on its emissions.
These voluntary steps of course are commendable, but they are hardly enough. The companies that are truly committed to tackling climate change know that we will never achieve the deep emission cuts we need unless everyone moves far enough, and fast enough, in the right direction. And that will happen only if the government requires it.
That is why the companies we work with at Pew recently called for the development of a comprehensive national climate strategy that is flexible and market-based but also has teeth - a strategy of mandatory, not voluntary, reductions. We need more companies that are prepared not just to acknowledge, and not just to act - but to advocate as well.
Even more dramatic are the efforts being launched by state governments. At least 42 of the 50 states have programs that, while not necessarily directed at climate change, have the potential to significantly reduce greenhouse gas emissions. And some of these states, it's worth noting, have higher annual emissions than many industrialized countries. For instance, Texas emits more than France.
Last month we released a report taking a closer look at several state efforts, and the results are impressive, to say the least. Some states are tackling climate change head-on with comprehensive strategies aimed at reducing emissions across sectors. For instance, New Jersey, moved in part by the threat to its coast from rising sea levels, has set a goal of reducing emissions 3.5 percent below 1990 levels by 2005 and, through a combination of regulatory and voluntary initiatives, is well on its way toward meeting its target.
Other states are reducing emissions by diversifying their energy supplies, in particular through greater use of renewable energy. Twelve states have adopted renewable portfolio standards requiring utilities to obtain a share of their power from renewable sources. In Texas, for instance, the "oil rush" is now giving way to a "wind rush." It's estimated that the substitution of wind and other renewables for fossil fuels will reduce the state's CO2 emissions by nearly 2 million tons a year.
Nebraska was the first state to directly link agricultural policy with greenhouse gas reduction. It is pursuing carbon sequestration as a dual strategy - one that promotes better soil conservation, while also positioning Nebraska farmers to reap rewards in a national or international carbon market. Others agree - four other states passed similar sequestration laws last year.
Other states are establishing greenhouse gas registries. Some are requiring large generators to report their emissions. Still others are going the next step and mandating that large generators reduce their emissions. Massachusetts has a multi-pollutant law requiring six older power plants to reduce their CO2 emissions 10 percent over the next several years. The law, which allows for emissions trading, is expected to reduce emissions by 2 to 4 million tons a year.
And of course California, always at the leading edge in environmental policy, is now trying to regulate carbon emissions from cars and trucks. The state's new law is being challenged in court by the automakers, and by the Bush administration. But if it survives, it will have a profound impact well beyond California. If other states follow California's lead, it could effectively set the new standard for cars sold across the United States.
While different states are taking different approaches, our report found some common characteristics. First, these efforts are typically supported by broad, bipartisan coalitions. Second, they often succeed because states view climate mitigation less as a burden than as an opportunity. Third, many of these efforts have multiple drivers, and multiple benefits - from increased energy security to lower tax bills and cleaner air.
These state initiatives are encouraging. They are achieving real reductions. Actions in one state are being replicated in others. And while state action alone will not be enough, it will help move us where we need to go. It is common in the United States for federal policy to reflect lessons learned from state initiatives. And to the extent that a fragmented, state-by-state approach to climate policy leads to a patchwork of conflicting rules and regulations. this will increase pressure on Washington for a comprehensive, consistent national approach.
So what are the odds that we will see one? As I said earlier, you should not expect any new initiative on this issue from the Bush administration. The prospects, however, may be significantly better in Congress, where both Democrats and Republicans have shown more interest than ever before in addressing climate change. Indeed, three times as many legislative proposals were introduced in the last two years as in the previous two years.
Climate change emerged as one of the major sticking points in the most recent effort to produce a comprehensive energy bill. The Senate version of the bill included two bipartisan climate provisions - one establishing a new office in the White House charged with developing a long-term climate strategy, the other establishing a system for tracking and reporting greenhouse gas emissions that would start out as voluntary but could become mandatory after five years.
The outcome of the recent midterm election, which gave Republicans control of both houses, might suggest that the recent surge in climate activity will be short-lived. Certainly, the odds of moving any major climate legislation in the foreseeable future are not especially good; frankly, they weren't much better before the election. But I think there's a good chance that the climate change debate in Congress will be very much alive.
Indeed, the debate could soon become far more serious. As many of you may know, Senators John McCain and Joe Lieberman have been working on legislation to establish a greenhouse cap-and-trade system in the United States. The Pew Center has been deeply involved in this effort from the start. We provided extensive input as the bill was being drafted and arranged for company representatives and independent experts to provide input as well. As you can imagine, crafting a sound, workable trading bill that has any political viability is no simple matter. I'm sure each of you could find something to quibble with in this bill. But on the whole, at least as it's presently drafted, the bill represents a very credible start. It is economy-wide. Its targets are aggressive but not unreasonable. And it allows for flexibility through sequestration and international trading.
The bill is likely to be introduced early in the new year. And while it's not about to come to a vote anytime soon, it's not likely to disappear either. With the Republicans taking control of the Senate, Senator McCain will again be chair of the Commerce Committee, and he said the day after the election that climate change will be one of this top priorities.
So while the Bush administration will continue to favor appearances over action, we have companies calling for mandatory carbon reductions, we have states stepping into the leadership vacuum, and we may soon have a genuine debate in Congress over national climate policy. What will it take to build on this momentum and produce real, sustained action? What will it take to make the United States and full and willing partner in the global effort against climate change?
For starters, it will require the continued resolve of the international community. Other nations must not allow the United States to deter them from acting. Having resolved their differences on Kyoto, they must now move forward with it and make it a success. They must fulfill their commitments and they must give the market the chance to achieve the necessary reductions as cost-effectively as possible.
Kyoto's success is the most effective form of diplomatic pressure that can be brought to bear on the United States. It is essential. But at the end of the day, the only pressures that can tip the scale - the only pressures that can persuade Washington that it is time to act - are those that come from within.
Ultimately, this requires the engagement of the American public. As I said earlier, we've seen a gradual evolution within the business community on this issue: first, a company accepts that the issue is real; next, it takes steps to address its own contribution to the problem; and then it engages in the policy debate, calling on government to do its part. We need to promote the same kind of evolution within the American public.
Most Americans already accept that climate change is real. But they need a much clearer understanding of its causes - of the ways in which their everyday activities contribute to climate change; and of its consequences - of the threats it poses to their communities, to their natural surroundings, and to future generations.
Next, people must better understand the choices they can make to reduce their own contribution to climate change - how as consumers they can choose more energy-efficient cars and appliances; and how as investors they can encourage more responsible corporate behavior.
Finally, the American public must demand action on the part of their elected leaders. Often it has taken a dramatic event or circumstance to mobilize public support on an environmental issue - the Cuyahoga River caught fire, our skylines literally disappeared behind the haze, families were forced from their homes at Love Canal. Climate change is different. We can't afford to wait for a climate disaster. We have to make the case for taking action now, before the crisis is upon us.
It may seem as if I've strayed quite far from the topic of this conference: the state and development of the greenhouse gas market. But actually I think I may be addressing the very heart of the matter. To have a functioning market, it is not enough to create institutions and accounting procedures. You must also have demand. Right now, it is not there. Our challenge, I would submit, is to create it.
Thank you for listening. I would be happy to take your questions.
Global Climate Change: The Complexities of Crafting a Workable Framework
Remarks of Eileen Claussen, President
Pew Center on Global Climate Change
The George Washington University's Elliott School Evening Lecture Series
November 6, 2002
Good evening, and thank you for that introduction.
While the Elliott School itself is just over ten years old, the truth is, students at George Washington have been instructed in international affairs for over 100 years. So it is a real pleasure to be here, to be a part of this lecture series, and be a part of this historic continuum in the analysis of international affairs.
I also want to thank you for choosing climate change at the Marvin Center over "Crossfire" at the Morton Auditorium.
In a way, I guess both events are about hot air. One difference, though, is that at "Crossfire" the goal seems to be generating as much hot air as possible. My goal, on the other hand, is just the opposite.
I believe that achieving that goal - in other words, protecting future generations from the worst consequences of global warming - is one of the most profound challenges of our time. What I'd like to do tonight is explore with you some of the complexities of that challenge - both the complexities of climate change itself, and the complexities of forging a workable international framework to address it. I'd like to offer a glimpse of how far we've come and how we got here. And perhaps most importantly, I'd like to lay out for you some of the core issues we must confront if we are to meet the goal of a safe, stable, and sustainable climate. Those of you tracking the climate talks that concluded last week in New Delhi know that negotiators began grappling with these very questions. And while there was little progress achieved, it is encouraging that at least the dialogue has begun.
So let's begin with the complex nature of the challenge. I think it is fair to say that climate change is different from any other global challenge we have faced before, and I believe that there are four specific reasons why. First, climate change is cloaked in uncertainty. Second, it is a long-term challenge. Third, it is a global challenge. And finally, it is inherently unfair.
Let's begin with the uncertainty.
I want to be clear. I think the science on climate change is both clear and compelling.
There is overwhelming scientific consensus on three basic points: the earth is warming; this warming trend is likely to worsen; and human activity is largely to blame. Yes, you can find scientists who will argue otherwise. But these are the findings of the Intergovernmental Panel on Climate Change, which draws on the expertise of hundreds of climate scientists around the world. They are also the findings of a special, well-balanced panel put together by the National Academy of Sciences at the request of President Bush.
True, the earth's temperature has always fluctuated. But ordinarily these shifts occur over the course of centuries or millennia, not decades. The 1990s were the hottest decade of the entire millennium. The last five years were among the seven hottest on record. Scientists project that over the next century, the average global temperature will rise two to ten degrees Fahrenheit. A ten-degree increase would be the largest swing in global temperature since the end of the last ice age 12,000 years ago.
But even knowing all of this, we still cannot accurately predict exactly how much the earth's temperature will rise or how quickly. Will it be just be the two degrees over the next century? Or will it be 10 degrees, the high end of the estimate? Similarly, we can not forecast precisely what impacts will be felt where. Is it safe to assume that if the temperature rise is gradual so, too, will be the impacts? Or, as some scientists believe, is there a significant risk of triggering sudden changes in the climate system that will lead to catastrophic consequences?
There are large economic uncertainties, as well. How quickly can our engineers perfect climate-friendly technologies? How quickly will companies and consumers adopt them? Might the economic benefits of addressing climate change be greater than we think because we will at the same time be solving other problems, like air pollution and our costly reliance on imported oil? And how much will this transformation of our economy to climate-friendly technologies actually cost?
We don't have good answers to these questions, and because we don't, some prefer a "wait and see" approach. They argue that the warming might not be as bad as predicted, so why act now?.
The problem with that line of thinking is that uncertainty cuts two ways. Maybe the warming will be much worse than the scientists say. And that is a risk I don't think we can afford to take. The strategies needed to address climate change must be implemented over many years, even decades, and the sooner we begin the less costly they will be.
And that brings me to second attribute that makes climate change unique. It is a long-term challenge.
The buildup of greenhouse gases in the atmosphere over the past century happened in a blink of the eye on the geological time scale. But measured on the scale of a human lifetime, climate change is very slow moving. The added carbon dioxide now burdening our atmosphere has accumulated over the course of generations.
We are beginning to feel and see some of the impacts now. In Alaska, for instance, roads are literally crumbling and homes are sagging as the permafrost begins to melt. And, less dramatic, spring is arriving earlier here and in Europe. But the significant sea level rise& the increased flooding and increased drought& the more powerful storms and extended heat waves& and other types of extreme weather-related events -- those are still decades down the road. Indeed, the full impact of today's emissions will not be felt until the next century.
Just as global warming is slow in coming, doing something about it is also a long-term proposition. Certainly, there are steps we can and should take right now - for instance, there are countless ways we could be using energy more efficiently and therby reducing greenhouse gas emissions. But ultimately what is needed is a fundamental transformation in the way we power our homes, our factories, our cars - in short, in the way we power our entire economy. Clearly, this can't happen overnight. It will take time - which, as I alluded to a moment ago, is all the more reason to get started now.
Admittedly, making the crucial investments now is a difficult proposition. How many candidates did you hear in the days leading up to yesterday's election talking specifically about climate change? Sure, a few talked about the environment in general& or related issues like decreasing our reliance on imported oil. But the fact is, our decision-making structures are not geared to taking the long-term view& and neither are most politicians.
The same holds true for businesses. Just as our political decisions are made with an eye toward the next election, our investment decisions are made with an eye to the quarterly earnings reports. Part of confronting climate change, then, is learning to think, and to act, for the long term.
Climate change is a long term challenge; it is also a global one. And that is the third attribute that really sets this issue apart.
The threat to the Earth's ozone layer was certainly a global one, but I don't know if we have ever before faced a challenge as all-encompassing as global climate change. That's because the buildup of greenhouse gases in our atmosphere influences the physical and chemical systems that shape climate literally everywhere on Earth. Yes, the impacts of global warming will vary widely from place to place. Floods in one part of the world might be droughts in another. But the fact is, whether the source of the carbon dioxide added to the atmosphere is gridlock on the Beltway or on a street in Beijing, it presents the very same risk.
No nation is immune. And thus, by the same token, every nation bears some responsibility for meeting this challenge. For that reason, while it may be noble for any one nation to limit its greenhouse gas emissions, it is an exercise in futility unless, ultimately, we all do.
That is not to say that every nation must act at the same time or in the same way. And that brings me to the fourth and final reason why I believe climate changes poses a challenge like none other. Climate change represents a common threat, and a common challenge. But we must also realize that climate change confronts us with extraordinary inequities. Put plainly, climate change is unfair.
Consider who is responsible for the emissions. If you look only to the past, the answer seems clear: the industrialized countries. Nearly two-thirds of the greenhouse gases added to the atmosphere over the past century as a result of human activity came from developed countries. Nearly a third was contributed by the United States alone.
But looking forward, the equation changes. As developing countries build their economies, they increase their emissions, too& particularly if they use the technologies now in widespread use in the developed world. And before long, probably in a few decades, their emissions will surpass those of the industrialized world.
Thus, in the long run, climate change cannot be effectively addressed without also limiting the emissions of the developing countries. And that poses a tough dilemma: developing countries are understandably reluctant to sacrifice their aspirations for the future, to solve a problem that is not of their making.
The equity issue, however, is not just one of economics or emissions& but effects also. In other words, when it comes to climate change, there is an unequal distribution of its impacts. Simply by virtue of their location on the planet and their natural endowments, different nations will be affected very differently. And it appears the worst impacts will fall disproportionately on the poorer nations.
In Bangladesh, the flooding of low-lying lands could displace millions. In Africa, increased drought and desertification could mean widespread famine.
At the end of the day, the consequences of climate change will fall most heavily on the countries that bear least responsibility for it, and are least able to cope with it.
I think the world community understood that when we met ten years ago in Rio. It was agreed that for all these reasons, the developed countries would act first. That is why the Kyoto Protocol sets emissions limits only for developed countries. But in time, all countries must be willing to bear their fair share of the responsibility.
So where are we today? After a decade of negotiations, we find ourselves on the verge of establishing the first international constraints on greenhouse gas emissions. The European Union and Japan have ratified the Kyoto Protocol and if, as expected, Russia follows suit, the treaty will enter into force within the next 12-18 months.
Kyoto forges both a vision, and a formula, for transcending national interests for the sake of a common, global, long-term good. It sets clear goals. And rather than fight the market, it tries to tap the market, and motivate the market, so those goals can be reached as affordably as possible. Thus, with or without the United States, Kyoto is a profound accomplishment and a crucial first step.
Of course, now we know, Kyoto will proceed without the United States, the largest emitter. President Bush has rejected Kyoto and offered up instead a domestic strategy that relies exclusively on voluntary action. The President's strategy sets a goal of reducing greenhouse gas intensity 18 percent by 2012. That might sound good, but in reality, it allows actual emissions to keep on growing. It is essentially business as usual and unquestionably inadequate.
Still, I think it is also important to realize two things about where we are and how we got here.
First, there had evolved a fundamental disconnect in U.S. climate policy.
Internationally, George Bush, Sr. begrudgingly attended the Rio Earth Summit in 1992 and signed the UN Framework Convention on Climate Change. The Clinton administration then supported a binding treaty and, in Kyoto, negotiated an ambitious target for reducing U.S. emissions. In fact, the United States was responsible for many, if not most, of the pro-market mechanisms that were negotiated into Kyoto - the emissions trading system is just one example.
But at home, the Senate - most notably with the "Byrd-Hagel Resolution"-- had laid down terms that made Kyoto's ratification a remote possibility at best, even with the pro-market mechanisms. In addition, the administration was barely contemplating let alone promoting the kinds of measures needed to meet the Kyoto target.
In other words, the United States has been both a driver and a drag on the process because it was in no way prepared to deliver at home what it had promised abroad. Of course, George W. Bush could have worked with other countries to address U.S. concerns within the Kyoto framework. But that's not the option he and his administration chose.
Regardless, there is a second thing we must realize about the current situation. And that is that despite President Bush's rejection of Kyoto, we are making progress - more than many people realize.
That's because President Bush's stance may have saved the Protocol abroad as other nations rallied behind it& and elevated the issue at home. Climate change has become a political story in the United States, and in Congress, members of both parties are more eager to demonstrate their interest in climate protection. As a matter of fact, nearly twice as many climate change bills were introduced in Congress over the past year as in the previous four years combined.
I mentioned that Kyoto was moving forward with or without the United States. Well, in the United States, concrete steps are being taken to meet the challenge of climate change& with or without Washington. At the state and local level governments aren't just debating. They're acting& and producing results. States and communities are delivering real emission reductions, along with other benefits, like cleaner air and lower tax bills.
Many companies are not waiting for federal government mandates either -- they're taking steps to reduce their emissions right now. At last count, we had identified more than 40 major companies that have publicly committed themselves to greenhouse gas reduction targets.
But it's not enough. These voluntary efforts are important, and they are to be commended. But the companies that are truly committed to tackling climate change know that we will never achieve the deep emission cuts we need unless everyone moves far enough, and fast enough, in the right direction. And that will happen only if the government requires it.
The same holds true on the international level.
Even if our current domestic efforts advance to the stage where they parallel those defined by Kyoto&
and even if these two structures for reducing emissions ultimately converge&.
they are still just initial steps in a much longer journey to stabilize greenhouse gas concentrations at levels that are safe.
A decade ago in Rio, it was acknowledged that to truly address climate change, we needed the "widest possible cooperation by all countries." Ten years later, that is still exactly where we need to go.
We must continue to work towards an international framework - one that includes the sustained participation of the world's largest emitters, developed and developing countries alike. That means reengaging the United States. It means building on Kyoto. Ultimately, it means looking beyond Kyoto. People have worked so hard over the last ten years to bring Kyoto to life that the understandable tendency is to look at Kyoto as the end in itself
But to paraphrase Winston Churchill, Kyoto is not the end. It is not even the beginning of the end. But rather, Kyoto is just the end of the beginning.
That is not a criticism, by any means. Kyoto is a critical tool that has brought us to a critical stage. Kyoto requires that negotiations toward a second round of targets start by 2005. That may present the first formal opportunity to begin shaping a post-Kyoto regime. But if we are to seize that opportunity, we must start thinking openly and critically right now about the best way forward.
So how do we move beyond Kyoto? How do we create a workable international framework? One place to start is by recalling the fundamental characteristics that make the climate change challenge so unique.
I talked earlier about climate change being a long-term challenge. Perhaps a new framework requires a specific long-term goal. After all, the only way to meet the objective set in Rio - stabilizing greenhouse gas concentrations at levels that are safe - is to reduce emissions. So wouldn't it make sense to define this objective more concretely - in other words, to set a specific concentration target - so we know just how much emissions must be cut?
The answer to that question is an unequivocal& maybe. There is no question that a quantified target would help determine the scale and timing of global emissions reductions. But there is also no question that negotiating such a target would prove to be extraordinarily difficult. What are the benefits and what are the obstacles? Are there alternative approaches? Perhaps we should aim for consensus on the overall direction and pace of our effort and ensure that near and medium-term efforts are adequately oriented to the long-term goal of climate stabilization.
A second critical issue is cost. Simply put, the viability and, ultimately, the success of any climate strategy rests in part on its ability to ensure that greenhouse gas reductions are achieved at the least possible cost.
That is why as we look beyond Kyoto, it is even more critical that we achieve the maximum environmental gain for dollar invested. Better market mechanisms may be part of the answer. But we must also ask if we can minimize cost by aiming for steeper reductions later rather than sooner? And if so, as I suspect, how do we send a strong, early signal to the marketplace so companies begin investing now in the technologies that will be needed to deliver deep reductions decades down the road?
Crafting a workable framework will also require us to rethink the structure of commitments.
Whereas the Kyoto Protocol employs absolute targets requiring fixed-percentage reductions& a post-Kyoto regime with broader participation will likely have to accommodate widely varying circumstances among nation. Should these targets be pegged to carbon intensity or GDP; should there be "growth" targets that allow developing countries to raise emissions? Could there be commitments that evolve from voluntary to mandatory?
Finally, to be effective, a long-term climate regime must be fair. Politically, the most difficult challenge in elaborating an effective post-Kyoto regime will be determining an equitable sharing of responsibility among nations both not just for reducing emissions& but for addressing the impacts of climate change.
Notions of fairness are not only elusive but shift over time. For instance, as I said earlier, there was consensus in Rio that developed countries should act first. Yet some, particularly here in the United States, did not agree. Indeed, in rejecting Kyoto, President Bush declared it unfair to the United States because it did not mandate action by developing countries like China and India. Interestingly, though, the Administration made a very different case at the recent talks in Delhi. There it argued that it would be unfair to ask commitments of developing countries because they must focus on reducing poverty and growing their economies. Delivering one message at home and another abroad is perhaps a way to impede progress on both fronts. It also underscores the potency of the equity argument and some of the difficulties we face in resolving it. But resolve it we must. Because in the end, nations will not commit to a serious, long-term global plan against climate change, let alone abide by it, unless each perceives it to be fair.
A long-term target. Cost-effectiveness. The structure of our commitments. And fairness. These are all tough issues, and right now, at least, they tend to lead to as many questions as they do answers. But these are the core issues in shaping a post-Kyoto regime. These are the issues we will have to analyze and understand if we are to meet the complicated challenge of global climate change.
I think that is a challenge we will meet. Not by yelling about it on "Crossfire"& but by committing to the challenge over the next decades&
By building on Kyoto and moving beyond it&
By having the ingenuity, savvy and fortitude needed to develop the technologies here at home& and participate in the treaties abroad.
And by crafting an international framework. One that is all-inclusive& one that is lasting&and one that works for everyone.
Statement of Eileen Claussen
President, Pew Center on Global Climate
COP-8 marked the beginning of an important shift in international climate negotiations from the specifics of implementing the Kyoto Protocol to the broader question of what happens next.
The issues formally before negotiators in Delhi were largely technical, and progress on them was modest. Nonetheless there were important advances, including decisions paving the way for the launch of Kyoto's Clean Development Mechanism.
Perhaps the most significant outcome, however, was the emergence of a vigorous debate over next steps in the development of an international framework for climate action. The question of future commitments, which has long loomed in the background, is now squarely on the table. It is no surprise that parties reached no consensus. An equitable sharing of responsibility for protecting our climate will emerge only after long and no doubt difficult dialogue. Now, at least, the dialogue has begun.
Regrettably, one of the major impediments to productive dialogue on next steps is the United States. Having rejected Kyoto in part because it did not include commitments for developing countries, the Administration argued forcefully in Delhi against any consideration of such commitments. Delivering one message at home and another abroad serves only to impede progress on both fronts.
The Delhi Declaration rightfully recognizes that meeting the objective of a safe and stable climate will require significant long-term reductions in greenhouse gas emissions. At this critical juncture, it is imperative that developed countries - including the United States - move forward with concrete measures to reduce their emissions, and that all countries seek common ground for an effective long-term climate strategy.
Climate Change Mitigation in Developing Countries: Brazil, China, India, Mexico, South Africa, and Turkey
Climate Change Mitigation in Developing Countries: Brazil, China, India, Mexico, South Africa, and Turkey
Prepared for the Pew Center on Global Climate Change
William Chandler,Battelle Memorial Institute
Roberto Schaeffer, Federal University of Rio de Janeiro
Zhou Dadi, China Energy Research Institute
P.R. Shukla, Indian Institute of Management
Fernando Tudela, El Colegio de Mexico
Ogunlade Davidson, University of Cape Town
Sema Alpan-Atamer, Med-Consult, Turkey
Eileen Claussen, President, Pew Center on Global Climate Change
One of the most contentious issues in the debate over global climate change is the perceived divide between the interests and obligations of developed and developing countries. Equity demands that developed countries-the source of most past and current emissions of greenhouse gases-act first to reduce emissions. That principle is embedded in the 1992 United Nations Framework Convention on Climate Change and in the 1997 Kyoto Protocol, which sets binding emission targets for developed countries only. With the Protocol now likely to enter into force, the focus will turn increasingly to the question of developing country emissions.
Addressing climate change in developing countries poses a fundamentally different challenge. For most, emission reduction is not a viable option in the near term. With income levels far below those of developed countries-and per capita emissions on average just one-sixth those of the industrialized world-developing countries will continue to increase their emissions as they strive for economic growth and a better quality of life. But their steadfast resistance to the idea of limiting their emissions has led to claims in some quarters that developing countries are not doing their fair share. Indeed, the Bush administration, in rejecting Kyoto, declared the Protocol unfair to the United States because it does not mandate action by large developing countries.
Accepting emission limits, however, is not the only measure of whether a country is contributing to climate change mitigation. Efforts that serve to reduce or avoid greenhouse gas emissions, whether or not undertaken in the name of climate protection, nonetheless contribute to climate mitigation. These efforts can occur across virtually every sector of an economy. This report seeks to document and quantify the climate mitigation resulting from such efforts in six developing countries-Brazil, China, India, Mexico, South Africa, and Turkey.
The report demonstrates that efforts undertaken by these six countries have reduced their emissions growth over the past three decades by approximately 300 million tons a year. Further, it finds that many of these efforts are motivated by common drivers: economic development and poverty alleviation, energy security, and local environmental protection. Put another way, there are multiple drivers for actions that reduce emissions, and they produce multiple benefits. The most promising policy approaches, then, will be those that capitalize on natural synergies between climate protection and development priorities to simultaneously advance both.
Just as equity demands that developed countries act first, the physical workings of our planet demand that in time developing countries limit and, ultimately, reduce their emissions as well. The search for consensus on an equitable sharing of responsibility must begin with a fair accounting of how nations already are contributing to this common effort. The authors and the Pew Center gratefully acknowledge Charles Feinstein, Alan Miller, Jiahua Pan, Cedric Philibert, and Leena Srivastava for their review of previous drafts of this report.
Greenhouse gas emissions from developing countries will likely surpass those from developed countries within the first half of this century, highlighting the need for developing country efforts to reduce the risk of climate change. While developing nations have been reluctant to accept binding emissions targets, asking that richer nations take action first, many are undertaking efforts that have significantly reduced the growth of their own greenhouse gas emissions. In most cases, climate mitigation is not the goal, but rather an outgrowth of efforts driven by economic, security, or local environmental concerns. This study attempts to document the climate mitigation resulting from such efforts in six key countriesBrazil, China, India, Mexico, South Africa, and Turkeyand to inform policy-making aimed at further mitigation in these and other developing nations.
The six countries examined here reflect significant regional, economic, demographic, and energy resource diversity. They include the worlds two most populous nations, a major oil exporter, Africas largest greenhouse gas emitter, and the country with the largest expanse of tropical forest. While their circumstances vary widely, these countries share common concerns that have motivated actions resulting in reduced greenhouse gas emissions growth. Primary among these concerns are economic growth, energy security, and improved air quality. The analysis presented here demonstrates that actions taken by these countries to achieve these and other goals have reduced the growth of their combined annual greenhouse gas emissions over the past three decades by nearly 300 million tons a year. If not for these actions, the annual emissions of these six countries would likely be about 18 percent higher than they are today. To put these figures in perspective, if all developed countries were to meet the emission targets set by the Kyoto Protocol, they would have to reduce their emissions by an estimated 392 million tons from where they are projected to be in 2010.1
The six case studies identify a broad range of mitigation activities and potentials:
Brazil's annual emissions are 91 million tons, or 10 percent lower than they would be if not for aggressive biofuels and energy efficiency programs aimed at reducing energy imports and diversifying energy supplies. A tax incentive for buyers of cars with low-powered engines, adopted to make transportation more affordable for the middle class, accounted for nearly 2 million tons of carbon abatement in the year 2000. If alcohol fuels, renewable electricity, cogeneration, and energy efficiency are encouraged in the future, carbon emissions growth could be further cut by an estimated 45 million tons a year by 2020. Deforestation, however, produces almost twice as much carbon dioxide as the energy sector. Government policy, with few exceptions, indirectly encourages emissions growth in the forestry sector.
China has dramatically reduced its emissions growth rate, now just half its economic growth rate, through slower population growth, energy efficiency improvements, fuel switching from coal to natural gas, and afforestation. Emissions growth has been reduced over the past three decades by an estimated 250 million tons of carbon per year, about one-third of China's current emissions. Continued policies for economic reform, efficiency, and environmental protection could reduce emissions growth by an additional 500 million tons a year in 2020.
India's growth in energy-related carbon dioxide emissions was reduced over the last decade through economic restructuring, enforcement of existing clean air laws by the nation's highest court, and renewable energy programs. In 2000, energy policy initiatives reduced carbon emissions by 18 million tons-over 5 percent of India's gross carbon emissions. About 120 million tons of additional carbon mitigation could be achieved over the next decade at a cost ranging from $0-15 per ton. Major opportunities include improved efficiency in both energy supply and demand, fuel switching from coal to gas, power transmission improvements, and afforestation.
Mexico was the first large oil-producing nation to ratify the Kyoto Protocol. Major factors affecting Mexican greenhouse gas emissions are population growth, economic development, energy supply growth, technological change, and land use change. Mexico has begun to reduce deforestation rates, switch to natural gas, and save energy, reducing annual emissions growth over the last decade by 5 percent, or 10 million tons of carbon per year. Mexican carbon dioxide emissions are projected to grow 69 percent by 2010, but alternative strategies could cut this growth by 45 percent.
South Africa's post-Apartheid government places its highest priority on development and meeting the needs of the poor. Over one-third of the nation's households are not even connected to a power grid. Yet, emissions growth could be reduced 3-4 percent a year by 2010 through efforts to reform the economy and improve energy efficiency. The government is already taking steps to phase out subsidies to its unusual, carbon-intensive coal liquefaction industry and to open the country to natural gas imports. As in many other developing countries, the absence of rigorous and publicly available studies of future energy use and greenhouse gas emissions remains an obstacle to future emissions mitigation.
Turkey's high rate of energy-related carbon emissions growth is expected to accelerate, with emissions climbing from 57 million tons in 2000 to almost 210 million tons in 2020. Carbon intensity in Turkey is higher than the western developed nation average. Energy-intensive, inefficient industries remain under government control with soft budget constraints, contributing to undisciplined energy use. Planned industrial privatizations may close the oldest and most inefficient operations and modernize surviving ones. Elimination of energy price subsidies could stimulate energy conservation, reducing energy and emissions growth below current projections.
Taken together, these six country studies support four broad conclusions:
- Many developing countries are already taking action that is significantly reducing their greenhouse gas emissions growth.
- These efforts are driven not by climate policy but by imperatives for development and poverty alleviation, local environmental protection, and energy security.
- Developing nations offer large opportunities for further emissions mitigation, but competing demands for resources may hamper progress.
- Developing countries can use policies to leverage human capacity, investment, and technology to capture large-scale mitigation opportunities, while simultaneously augmenting their development goals.
The six case studies also identified common barriers to climate mitigation. In many cases, the lack of good data impedes efforts to identify and realize mitigation potential. Insufficient human capacity-to analyze energy and emission futures, identify mitigation opportunities, execute economic reforms, and cultivate investment opportunities-represents another significant barrier. In most countries, public control of at least a portion of energy resources works against emissions mitigation by preventing the emergence of more efficient private actors.
Finally, a range of concerns-from the absence of transparency and rule of law to the extra risk associated with nontraditional energy investment-impedes investment and technology transfer that would contribute to emission mitigation.
The experiences of these six countries have implications for future policy at multiple levels-for national efforts within developing countries, for the evolving international climate framework, and for other bilateral or multilateral efforts aimed at encouraging emission reduction in developing countries.
One broad lesson, given the diversity of drivers and co-benefits, is the need at both the national and international levels for flexible policy approaches promoting and crediting a broad range of emission reduction and sequestration activities. Other policy priorities include: continuing to promote market reforms, such as more realistic energy pricing, that can accelerate economic growth while reducing emissions growth; working within developing countries and through bilateral and multilateral efforts to improve investment environments and create stronger incentives for climate-friendly investments; targeting capacity-building assistance to most effectively capitalize on natural synergies between climate mitigation and other development priorities; and supporting policies that address both climate and local environmental needs, such as improving air quality and reducing deforestation.
While this analysis has documented significant greenhouse gas mitigation in key developing countries, energy use and emissions will continue to climb as these countries attain higher levels of development. Far greater efforts to reduce emissions in both developed and developing countries will be required in the coming decades to avert the worst consequences of global climate change. These efforts must include stronger national policies as well as an evolving international regime that ensures adequate efforts by all major emitting countries. By highlighting the current and potential contribution of developing countries to emission mitigation, this report aims to enhance the prospects for stronger international cooperation toward the shared goal of climate protection.
Press Release: New Report Highlights Measures Reducing Greenhouse Gas Emissions Growth in Developing Countries
For Immediate Release:
October 24, 2002
Contact: Katie Mandes
New Report Highlights Measures Reducing Greenhouse Gas Emissions Growth in Developing Countries: Examines Efforts in Brazil, China, India, Mexico, South Africa, and Turkey
Washington, DC - Efforts undertaken by developing countries to strengthen their economies, enhance energy security, or protect local environments are at the same time significantly reducing the growth of their greenhouse gas emissions, according to a new report released today by the Pew Center on Global Climate Change.
The report, which examines measures contributing to climate mitigation in Brazil, China, India, Mexico, South Africa, and Turkey, found that such efforts reduced the growth of these countries' combined greenhouse gas emissions by nearly 300 million tons a year. If not for these efforts, the report concluded, emissions in the six countries could be about 19 percent higher than they are today.
Among the many efforts identified are market and energy reforms to promote economic growth; development of alternative fuels to reduce energy imports; aggressive energy efficiency programs; use of solar and other renewable energy to raise living standards in rural locations; reducing deforestation; slowing population growth; and switching from coal to natural gas to diversify energy sources and reduce air pollution.
Broader implementation of such efforts could reduce future emissions growth by an additional 300 million tons a year by 2010, the report estimates. It urges policymakers to pursue strategies at both the national and international levels that take advantage of synergies between climate protection and the overriding development priorities of developing countries to simultaneously advance both.
The report, Climate Change Mitigation in Developing Countries: Brazil, China, India, Mexico, South Africa, and Turkey, was researched and written by a team of in-country experts led by researchers at the Battelle Memorial Institute. The lead authors are William Chandler, Battelle Memorial Institute; Roberto Schaeffer, Federal University of Rio de Janeiro; Zhou Dadi, China Energy Research Institute; P.R. Shukla, Indian Institute of Management; Fernando Tudela, El Colegio de Mexico; Ogunlade Davidson, University of Cape Town; and Sema Alpan-Atamer, Med-Consult.
"While the United States and other developed countries must act first in the global effort against climate change, emissions from developing countries are growing rapidly, and in time they must be addressed as well," said Pew Center President Eileen Claussen.
"This report demonstrates that many efforts already under way in developing countries, whether or not motivated by climate concerns, are in fact contributing to the effort against climate change," Claussen said. "The key message is that climate protection can go hand in hand with economic growth and other overriding priorities of developing countries. With the right strategies, developing countries can achieve their goals even as they contribute more strongly to the effort against climate change."
For each of the six countries, the report profiles energy and emissions sources, identifies measures contributing to climate mitigation, and evaluates the potential for future mitigation. Key findings include:
- Brazil's emissions are 10 percent lower than they would be if not for aggressive biofuels and energy efficiency programs aimed at diversifying energy supplies. With stronger efforts, emissions growth could be cut by an additional 45 million tons a year by 2020. However, government policies continue to encourage deforestation, which produces almost twice as much carbon dioxide as the energy sector.
- China has dramatically reduced its emissions growth through slower population growth, energy efficiency, switching from coal to natural gas, and afforestation. Emissions growth has been reduced over the past three decades by an estimated 250 million tons of carbon per year, about one-third of current emissions, and could be reduced by an additional 500 million tons a year in 2020.
- India's growth in energy-related carbon dioxide emissions was reduced over the last decade through economic restructuring, enforcement of existing clean air laws by the nation's highest court, and renewable energy programs. About 120 million tons of additional carbon mitigation could be achieved over the next decade at a cost ranging from $0-15 per ton.
- Mexico, the first large oil-producing nation to ratify the Kyoto Protocol, has begun to reduce deforestation rates, switch to natural gas, and save energy, reducing annual emissions growth over the last decade by 5 percent, or 10 million tons of carbon per year. Mexican carbon dioxide emissions are projected to grow 69 percent by 2010, but alternative strategies could cut this growth by 45 percent.
- South Africa, as part of its post-Apartheid restructuring, is taking steps to phase out subsidies to its unusual, carbon-intensive coal liquefaction industry and open the country to natural gas imports. Emissions growth could be reduced 3-4 percent a year by 2010 through economic reforms and efficiency improvements.
- Turkey ranks among the fastest growing energy markets in the world; its emissions are projected to grow nearly four-fold by 2020. Planned privatization of government-run industries may close the most inefficient operations and modernize surviving ones. Elimination of energy subsidies could stimulate conservation, reducing energy and emissions growth below current projections.
The report estimates that efforts already undertaken by the six countries have reduced their combined emissions growth by 288 million tons of carbon a year. For perspective, the report notes, if all developed countries were to meet the emission targets set by the Kyoto Protocol, they would reduce their emissions by an estimated 392 million tons from where they are projected to be in 2010 (or by 285 million tons if the United States remains outside the Protocol and does not reduce its emissions from business as usual).
A complete copy of this report -- and previous Pew Center reports -- is available on the Pew Center's web site, www.c2es.org.
The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
The Center held a side event at COP 8 in New Delhi for the release of our new report on Climate Change Mitigation in Developing Countries.
Date: Tuesday, October 29
Venue: Vigyan Bhawan Conference Centre
The report examines measures contributing to climate mitigation in six developing countries - Brazil, China, India, Mexico, South Africa, and Turkey - and identifies future mitigation opportunities.
Lead authors are: William Chandler, Battelle Memorial Institute; Roberto Schaeffer, Federal University of Rio de Janeiro; Zhou Dadi, China Energy Research Institute; P.R. Shukla, Indian Institute of Management; Fernando Tudela, El Colegio de Mexico; Ogunlade Davidson, University of Cape Town; and Sema Alpan-Atamer, Med-Consult.
Climate Change Mitigation in Developing Countries
Transportation in Developing Countries: Greenhouse Gas Scenarios for Chile
Prepared for the Pew Center on Global Climate Change
Raúl O’Ryan, Universidad De Chile
Daniel Sperling, Mark Delucchi, and Tom Turrentine, University of California, Davis
Eileen Claussen, President, Pew Center on Global Climate Change
Worldwide, transportation sector greenhouse gas (GHG) emissions are the fastest growing and most difficult to control. In Chile, where the transportation sector is growing even faster than the rest of the economy and accounts for one-third of the nation's energy use, per capita GHG emissions are relatively high and car and truck ownership rates continue to increase.
Until recently, the environmental consequences of Chile's rapid development received little scrutiny. GHG emission levels continue to be a low priority for policymakers, but severe air pollution and traffic congestion are raising awareness of the need to address transportation-related environmental problems. As one of the world's most sophisticated countries at transferring transportation infrastructure and services provision to the private sector - most are now owned or managed by private companies, and market principles are being widely used in providing traditional public services - Chile could pioneer market-based approaches to transportation and environmental challenges.
This report creates two scenarios of GHG emissions from Chile's transportation sector in 2020. It finds:
- Greenhouse gas emissions increase 117 percent in the high, "business-as-usual" scenario but only 42 percent in the low scenario.
- Urban transportation strategies driven by concerns over air quality, traffic congestion, and the high cost of road infrastructure investments would also have climate change benefits. Examples of these strategies are:
- Introducing new and enhanced technology, such as converting urban buses from diesel to hydrogen fuel cell and using natural gas and small battery-powered electric cars.
- Improving public transportation, such as integrating bus routing and fare structures, establishing exclusive bus lanes and rights-of-way, offering more comfortable buses, and significantly expanding Metro and suburban rail services.
- Encouraging smaller cars and alternatives to car use, e.g., by implementing parking restrictions, charges, and road fees, and eliminating tax incentives for larger and inefficient cars and light trucks.
- For interurban transportation, the main problem is inadequate road, rail, port, and airport infrastructure. Supporting rail infrastructure will restrain GHG emissions.
Transportation in Developing Countries: Greenhouse Gas Scenarios for Chile is part of a five-report series on transportation sector GHG emissions in developing countries. The report's findings are based on a Lifecycle Energy Use and Emissions Model (LEM) developed by the Institute of Transportation Studies at the University of California at Davis. It estimates CO2-equivalent GHG emissions from the transportation sector. The Pew Center gratefully acknowledges Ralph Gakenheimer and Chris Zegras of MIT, Eduardo Sanhueza of Climate Change and Development (a Chilean consulting firm), and Michael Walsh, an independent transportation consultant, for their review of early drafts. The authors also express their gratitude to Barbara Cifuentes of the Universidad de Chile.
Chile is a lightly populated country of 15 million that has undergone major economic transformations. Over the past 25 years, the economy has evolved from a slow-growing, state-directed one into a fast-growing, market-oriented one. Chile's South American neighbors imitated this transformation during the nineties. In the transportation sector, as in other areas of the economy, the private sector took over many traditionally state-managed activities. Chile has undertaken more structural changes in this sector in the past two decades than perhaps any other developing country.
This report addresses changes in transportation, energy use, and greenhouse gas (GHG) emissions and other environmental impacts resulting from economic growth and transportation choices. It includes interurban transportation and the urban system in the capital city, Santiago. Chile is an especially interesting case study because of its enthusiastic embrace of market competition in all aspects of transportation. In particular, it has developed a franchising system by which the private sector has been encouraged to finance infrastructure development. However, during this period of economic transformation and growth, Chile has not addressed many environmental problems, including GHG emissions. The expected increase in emissions in the next twenty years is significant, and any reductions would result from indirect efforts intended to address other urban, environmental, and congestion problems.
Chile's transportation sector is growing even faster than the rest of the economy, especially in Santiago. Between 1985 and 1998, the Chilean economy increased by 2.5 times (7.4 percent per year on average) and the transportation sector by about 3.5 times (over 10 percent per year on average). Between 1977 and 1991, cars increased their share of passenger travel by more than 60 percent, while the bus share fell by 27 percent. These shifts are motivated by the strong urbanization process, with over 85 percent of the population now living in cities, and strong growth in car ownership, with one in ten persons now owning a car. Cars now account for 26 percent of travel within cities (measured as passenger-kilometers) and 41 percent between cities. Public transportation has been losing market share for decades.
The transportation sector is responsible for about 28 percent of GHG emissions in Chile. Of the total GHG emissions from transportation, 45 percent are from cars and taxis, 22 percent from trucks, 13 percent from ships, 9 percent from airplanes, 10 percent from buses, and less than 1 percent from trains. Passenger transportation accounts for about two-thirds of transportation sector GHG emissions, while about one-third is from freight. Interurban transportation accounts for over half of total emissions. Chile's policymakers at the national, sectoral, and local levels have largely ignored the environmental consequences of rapid development. A policy of "grow first, clean up later" was pursued until 1990, after which a few local environmental concerns did reach the policy agenda. Lack of interest in GHG emission reductions continues, stemming from growth-oriented thinking as well as the general understanding that Chile's impact on the global climate is small compared to major industrial nations. With only 15 million people, each using on average less than one-sixth as much energy as each U.S. resident, and with large carbon dioxide (CO2) sinks due to natural regeneration in abandoned lands and forest plantations, Chile's relative net contribution to global climate change is small. Concern for global climate change is not likely to motivate domestic policy action.
But other concerns, especially acute air pollution and worsening traffic congestion, are already motivating actions that will have a side effect of reducing growth in GHG emissions. Intensifying policy debates over motor vehicles will play a central role in determining Chile's impact on climate change. Prospective international incentives, for example from the sale of emission credits under the Kyoto Protocol's Clean Development Mechanism (CDM), would serve to support such domestic initiatives, with potentially large climate change benefits.
This report develops high ("business-as-usual") and low emission scenarios for GHGs for the next two decades. The scenarios are based upon interviews with experts and policymakers, and extensive analysis of transportation and energy data gathered from a wide range of Chilean sources. Both scenarios are premised on strong continued economic growth (5.8 percent annual GDP growth). Under the business-as-usual scenario, it is assumed that no strong actions are taken to curb GHG emissions or restrain motorization. The result, over the next twenty years, is a doubling of energy consumption and GHG emissions by the transportation sector.
In an alternative low emission scenario, changes include policies to improve public transportation and introduce cleaner and more efficient vehicles. The net effect is a 42 percent increase in GHG emissions, significantly less than in the high scenario.
It is clear, given Chile's strong economic growth, that overall national GHG emissions will increase. It is also clear that the potential exists to substantially restrain the growth in transportation emissions. This study illustrates the opportunities and benefits of laying a foundation now for a more fundamental strategy shift toward the low GHG emissions scenario. The national experience using market-based approaches to finance transportation sector infrastructure development could prove to be a useful model for implementing additional market-based initiatives that reduce GHG emissions, including international mechanisms. Indeed, policymakers and private sector partners in Chile may have the capacity to develop cost-sharing projects in which domestic goals - e.g., better transportation and local air quality - and international GHG goals can be attained.
Setting the Stage: Beyond Kyoto
Remarks of Elliot Diringer
Pew Center on Global Climate Change
The Fifth Mansfield Pacific Retreat, Melting Mountains: Climate Change in the Asia Pacific Region
June 27, 2002
Good morning. I'd like to thank our hosts at the Mansfield Center for the opportunity to be here today. I'm delighted, of course, to be able to spend a few days in such splendid surroundings. But even more, I appreciate the opportunity to meet and exchange ideas with such an esteemed group, people who bring with them not only extraordinary expertise, but also a willingness to grapple with what I believe is one of the most profound challenges of our time - the challenge of global climate change. I am very hopeful that over the next few days we can all arrive at a fuller understanding of this challenge and of the many perspectives that must be considered as we work toward meeting it.
One of the reasons I feel especially fortunate to be here is that I was able arrive a few days early. An old friend of mine met me here and we spent several days backpacking in Glacier Park. Before you go into the backcountry - really, before you go anywhere in the park - the rangers warn you in very serious tones to watch out for the grizzly bears. They tell you how to avoid the grizzlies, which is the preferred strategy. They tell you what to do if you do happen to see a grizzly, and they tell you what to do if it then happens to attack you. My friend and I fortunately did not need to avail ourselves of that last bit of advice. One thing the rangers don't warn you about, though, is the mosquitoes - and we saw lots and lots of those. Unlike the grizzlies, the mosquitoes are guaranteed to attack, and when they got really bad we found that the only real defense was to crawl inside our tent and hide. So allow me to be the first to warn you: When we head up into the park tomorrow, watch out for the mosquitoes.
One of the things I enjoy most about spending time in the backcountry is the way it reduces your realities to the very basics: feeding yourself, staying warm, staying dry, being prepared for whatever you might encounter. By stepping outside all the clutter and complications of everyday life, you can see much more starkly what it takes to meet your fundamental needs, and ultimately how dependent you are on the blessings and the whims of nature. I find it a very clarifying experience, and I think perhaps the same could be true of this retreat. By stepping outside our everyday routines, and coming to a place where our utter interdependence with our environment is so much easier to observe, perhaps we will be able see a little more clearly some of the challenges ahead. I hope so.
Gathering at this time in this place, I can't help but recall another meeting on climate change 10 years ago in another place of extraordinary natural beauty. The place was Rio de Janeiro. As I'm sure you all know, this month marks the 10th anniversary of the Earth Summit and the launch of the international effort against climate change. I was a reporter at the time, and when I look back now at some of the stories I filed from Rio, I detect a certain headiness - a sense that something truly profound was unfolding. That may simply have been a reflection of my own naiveté. Or history may show that Rio was indeed a turning point - a watershed moment when nations came together in the recognition that only by acting together can they ensure the well-being of this planet and its people. I think many more years must pass before such judgments can be made. But a decade after Rio seems a fitting time both to reflect back and to look ahead. So to help set the stage for our discussions, I'd like to pose some questions: Ten years after nations first committed themselves to the fight against climate change, how far have we come? And more importantly, how do we go the next step?
These questions of course lead to other, more complicated questions - sensitive questions, ones we might rather not confront because we know they have no easy answers. But I believe this is a group uniquely qualified to take these questions on. I say this because the four countries represented here - China, Japan, Korea and the United States - are a remarkable microcosm of the national interests and the global forces that will continue to shape, or might continue to undermine, the international effort against climate change. In fact, it is hard for me to imagine four other countries that could better reflect the challenges and opportunities before us. We have represented here the world's two largest economies, and its two largest emitters of greenhouse gases. We have key countries from both the developed world and the developing world, and one that straddles the two. Together, our countries account for nearly half of carbon dioxide emissions worldwide. But in their circumstances, their needs, their preoccupations - and in their preparedness to act - they are all quite different. In bringing us together here, the Mansfield Center has provided a very unusual opportunity to explore the ways in which these unique interests intersect, the ways in which they collide, and hopefully, the ways in which they might one day converge.
So, as I asked a moment ago, how far have we come? I think it's fair to say that we have spent the decade since Rio struggling to take the first step - struggling to create a common framework to start industrialized countries on the path to emissions reduction. In just the past 18 months, that effort has met both its greatest success - and its greatest setback. The success was the completion of negotiations over the rules for implementing the Kyoto Protocol, which has allowed countries to proceed with ratification and will soon, hopefully, lead to Kyoto's entry into force. The setback, of course, was President Bush's rejection of the Protocol. So we are now on the verge of making the framework real - of bringing into force a treaty establishing the first binding international limits on greenhouse gas emissions - but the largest emitter has made clear it will not join.
With or without the United States, Kyoto is a profound accomplishment. It forges both a vision, and a formula, for transcending national interests for the sake of a common, global, long-term good. It sets ambitious goals. And rather than fight the market, it tries to tap the market, and motivate the market, so those goals can be reached as affordably as possible. But I think it is important that we be honest about Kyoto - about what it is and what it is not, what it achieves and what it does not. In part by design and in part by default, Kyoto can at best capture less than 40 percent of global emissions. And for that subset of emissions, it is difficult to say just how much of a reduction Kyoto will actually deliver - perhaps not much at all. Whatever the real number, it is certain to be just a fraction of the long-term reduction needed to meet the objective set 10 years ago in Rio: stabilizing greenhouse gas concentrations at levels that are safe.
This is not a criticism of Kyoto. Rather, it is meant to underscore that Kyoto is only a first stage in a very long-term effort. Anyone struggling with this issue understands that, of course. But in the drive to bring Kyoto to life, that at times has come to appear an end in itself. Now that it is within reach, it might help to view Kyoto a little more critically. Kyoto is a tool - a critical tool to get us through a critical stage - but it may be a tool that can take us only so far. Other nations have now come to terms with the fact that President Bush is not returning to the Kyoto Protocol. I think there is the very real possibility that the United States is never returning to Kyoto. To get to the next stage, I believe - to reengage the United States in the international effort, and to draw in the other major emitters whose participation will be critical to its success - we must build on Kyoto. But we also must look beyond it. The Protocol requires that negotiations for a second round of commitments begin by 2005. It may be a mistake to limit those negotiations to the Kyoto framework. To actually secure a new set of commitments, and to create a durable international approach to climate change, we may need a new framework.
So 10 years after Rio, we stand at another critical juncture, one that requires that we be nimble. We must at the same time embrace Kyoto and look beyond it. We must start to think post-Kyoto.
In a moment, I'd like to share some thoughts on the challenges we face in moving beyond Kyoto to build an even stronger framework for international action. First, though, I'd like to focus a little more closely on the situation here in the United States - because until the United States is prepared to act, no international effort can succeed. And I'd like to suggest that while the United States clearly has a very long way to go, it may in fact be further along than many of you realize.
Even if most have accepted that President Bush is not returning to Kyoto, many, I am sure, still have trouble comprehending why he rejected it in the first place. Let me offer two explanations. In a narrow sense, it was a simple case of interest group politics. The new administration - without closely analyzing Kyoto and the history behind it, without putting any real thought to alternatives, and without anticipating the international furor it would invite - renounced Kyoto in part to reward certain of its favored constituencies. In a broader sense, though, the rejection of Kyoto might also be seen as a necessary readjustment. There had evolved a fundamental disconnect in U.S. climate policy. Internationally, the Clinton administration supported a binding treaty, and in Kyoto it agreed to an ambitious target. But at home, the Senate had laid down terms that made Kyoto's ratification a remote possibility at best, and the administration was barely contemplating let alone promoting the kinds of measures needed to meet the Kyoto target. In other words, the United States was in no way prepared to deliver at home what it had promised abroad. Some kind of readjustment was due. Working with other countries to address U.S. concerns within the Kyoto framework might have been an option. But it was not the one the new President chose.
The domestic climate strategy outlined by President Bush in February is not a credible answer to Kyoto. It may help spur some voluntary efforts by industry to reduce emissions, particularly if it can ensure that those taking action now will be credited in a future climate regime. But the President's strategy relies exclusively on voluntary actions. And its goal - an 18 percent reduction in greenhouse gas intensity by 2012 - translates into a 12 percent increase in actual emissions. It is more or less business as usual.
But when you look past this administration and its policies - to what is happening in the states, in the business community, and in Congress - the picture begins to look somewhat brighter. Recently, for instance, New Hampshire became the third state to enact some form of mandatory carbon controls on power plants. Other states, like Texas, are requiring electric utilities to generate a share of their power from renewable sources. Others are investing in energy efficiency, carbon sequestration, and transportation improvements. In many cases, these efforts are not driven exclusively nor even primarily by climate concerns. But they are delivering real emission reductions, along with other benefits, like cleaner air and lower tax bills.
A growing number of companies are also taking steps to address climate change. At last count, we'd identified more than 40 major companies, most with significant operations in the United States, that have taken on some kind of greenhouse gas reduction target. BP has cut its emissions 10 percent below 1990 levels - eight years ahead of target - and now has pledged to keep them there for at least the next 10 years. Alcoa is aiming to reduce its emissions 25 percent below 1990 levels by 2010. DuPont is aiming for a 65 percent reduction. We recently completed a report looking at several companies with voluntary greenhouse gas targets. The companies cited several motivations for taking on a target. They believe the science of climate change is compelling. They know in time the public will demand strong climate protections, and they can get ahead of the curve by reducing their emissions now. They want to encourage government policies that will work well for business. The companies cited one other important motivation: To improve their competitive position in the marketplace. And that, in fact, has been the result. The companies are finding that reducing emissions also helps to improve operational efficiencies, reduce energy and production costs, and increase market share - all things that contribute to a healthier bottom line.
Important political shifts are also beginning. Just as President Bush's rejection of Kyoto helped galvanize international support for the Protocol, it helped elevate the issue of climate change in the U.S. media and in Congress. The heightened media sensitivity was very clear three weeks ago when the United States submitted its latest national communication under the Rio treaty to the United Nations. The report contained no new information, it outlined no new policy initiative, and there was no announcement. Nevertheless it was page-one news. In Congress, meanwhile, members of both parties suddenly seem eager to demonstrate their interest in climate protection. Nearly twice as many climate change bills were introduced in Congress over the past year as in the previous four years combined. The energy bill passed in April by the Senate includes two bipartisan climate provisions - one establishing a new office in the White House charged with developing a long-term climate strategy, the other establishing a system for tracking and reporting greenhouse gas emissions that is voluntary at first but after five years could become mandatory.
These are only modest first steps, and they have not yet passed the House of Representatives or been signed into law. But some lawmakers are already looking much further down the road. Senators John McCain and Joe Lieberman, a Republican and a Democrat, plan to introduce legislation later this year to cap greenhouse gas emissions in the United States and establish an economy-wide emissions trading system. It is, frankly, hard to imagine such legislation being enacted for some time, probably years. But the fact that it is even being drafted suggests that in Congress at least the climate issue is taking on a new potency.
So let us assume for the moment that Kyoto enters into force, countries do their best to implement it, and on a parallel track, the United States begins building a credible climate strategy. That may be too hopeful or not hopeful enough, depending on one's point of view. But let's assume it. What, then, is the next step? Against a backdrop of increased globalization, soaring demand for energy, and the ever-present need for economic security, what are the core challenges nations must confront if they are to craft a truly effective international regime? And given the disparate interests of nations like those represented in this room, how likely is it that we can muster the collective will that it will require?
The core challenges, I would suggest, are not new ones. They are the same ones that have loomed before us from the start. First there is the question of a goal. The only way to meet the objective set in Rio - stabilizing greenhouse gas concentrations at levels that are safe - is to reduce emissions. So wouldn't it make sense to define this objective more concretely - in other words, to set a specific concentration target - so we know just how much emissions must be cut? Perhaps. But we also have to ask: Is it practical? The process of translating broad objective into concrete target would be one fraught with uncertainties, laden with value judgments, and subject to extraordinary political pressures. Even if our understanding of the climate system were far more precise, the level of risk we are willing to accept is in the end more a question of values than science. And precisely because such a determination would frame the entire climate effort, the political and economic stakes would be profound. It is critical that we understand the various emission pathways that could achieve stabilization at given concentrations, and the climate impacts that could result from each. But how much expertise and scarce political capital can we afford to invest in establishing a specific concentration target? Might we do better by aiming for consensus on the overall direction and pace of our effort, and periodically readjusting as we learn more?
A second challenge is fairness. Climate change confronts us with deep inequities of many different kinds. These are captured, at least in part, with the observation that those bearing the least historical responsibility for climate change - the developing countries - are also those facing the worst consequences, and those least able to do something about it.
Given these inequities, the understanding since Rio has been that developed countries should act first. There has been no clear understanding about what would happen next. Nor as yet have there been any real hints that developing countries are closer to contemplating commitments of their own. That is not to say that developing countries are not acting. Many, in fact, are making impressive gains in reducing or avoiding greenhouse gas emissions. As with the very substantial reductions achieved in China in recent years, climate protection usually is not the objective but rather an added benefit of efforts to reform markets or improve local environments. Still, these successes demonstrate the strong synergies between climate protection and the overriding development priorities of developing countries. They should be recognized, not least by those who have achieved them, and they should be nurtured.
But it may be time to start moving the equity debate beyond the developed-developing country divide. And interestingly enough, the U.S. withdrawal may present an opportunity to do that. On one hand, by undermining the basic bargain struck in Rio, the U.S. withdrawal could make it harder to deepen the engagement of developing countries. On the other hand, it might recast the terms of debate. The question is no longer: What kind of commitments will developing countries take on, and when? Rather, the question is: How do we ensure that all major emitters do their fair share? Because I believe one thing is certain: Nations will not commit to a serious, long-term global plan against climate change, let alone abide by it, unless each perceives it to be fair.
A third challenge is ensuring that our efforts are as cost-effective as possible. Quite obviously cost has been a central concern, particularly for the United States, from the very start. It is reflected in the very architecture of Kyoto, with its various forms of emissions trading. And the major sticking points in negotiating Kyoto's implementation rules - whether to allow unfettered access to trading, for instance, or how much sinks credit countries could claim - revolved largely around questions of cost.
As we look beyond Kyoto, it is even more critical that we achieve the maximum environmental gain for every won, yen, yuan or dollar invested. Better mechanisms may be part of the answer. Experience with the trading systems now emerging will lend insight into how market forces can be better harnessed for the cause of climate protection. But affordability may depend just as much or more on questions like timing. Can we minimize cost by aiming for steeper reductions later rather than sooner? If so, how do we send a strong, early signal to the marketplace so companies begin investing now in the technologies that will be needed to deliver deep reductions decades down the road?
A fourth challenge is, perhaps, a way of restating the first three. It has to do with the nature of commitments under a future climate regime. Kyoto takes one approach: targets and timetables. But there are many types of targets - greenhouse gas intensity, for instance. Beyond the type of commitment is the question of who must take it on. The precedent for differentiated commitments is well established. But what is the most effective grouping? Must it simply be developed or developing? If instead, for instance, we were to focus on the 20 largest emitters - a list that includes 12 developed and 8 developing countries - we would capture nearly 80 percent of global emissions. The top ten gets you nearly two-thirds.
I have described these challenges in very abstract terms. Whether we meet them, of course, will depend on very concrete calculations by individual nations of their own self-interests. And each nation's calculation will depend, in turn, on what others are willing to do. We can see that kind of interdependence among the countries represented here. Japan is moving ahead with Kyoto despite the U.S. withdrawal, but with its economy still struggling could it commit to steeper cuts in the future if the United States, its chief trading partner and competitor, is still out? How much further would Japan and the United States need to move, and how much assistance would they have to offer, before China would contemplate constraints on its own emissions? Might China's reluctance make it easier for Korea to capitalize on the emerging greenhouse gas market? In the long run, we all share a common interest in ensuring a safe and stable climate. The question is whether we can arrive at a set of reciprocal arrangements that aligns this common interest with the self-interests of nations that are so very different - and whether we can do it before it is too late.
I believe this is a fragile moment. It is clearer now than ever that we have put our climate at risk, and with it the well-being of future generations. I believe it is also clearer than ever that by addressing climate change we can help ensure a more sustainable future for all countries. Ten years after Rio, we can claim at least some measure of progress. We can justly celebrate Kyoto as a critical first step. But our efforts have begun to diverge, and we must find a way to draw them together, and to strengthen them. As we move forward, we should borrow all we can from Kyoto, because there is much of value there. But if we are to build a framework that is truly global in reach, and durable enough to guide our efforts in the decades to come, we must also look beyond Kyoto. It is best if we start now.
Again, I'd like to thank our hosts for the opportunity to contribute to this critical dialogue. And I'd like to thank you for listening.
By Eileen Claussen
The New York Times
June 7, 2002
In its business-as-usual approach to climate change, the Bush administration is increasingly out of step not only with other industrialized powers, but also with the growing support in this country for action to prevent global warming. The administration's oddly two-sided report last week to the United Nations brings the White House into the scientific mainstream on the subject - acknowledging that human activity is probably the cause of global warming and that America itself faces serious consequences - but at the same time lays out a strategy ensuring that American emissions of greenhouse gases will continue rising sharply for at least a decade.
Last week the European Union and its 15 member states completed en masse their ratification of the emissions-limiting treaty that President Bush has rejected, the Kyoto Protocol. This week Japan followed suit. Russia expects to ratify by the end of the year, meaning only one or two smaller countries would be needed to put the treaty into effect. (Ratifying countries must account for at least 55 percent of developed country emissions in 1990.)
The administration is also ignoring a growing domestic recognition of the need to act. Persuaded that the risks of climate change are real and that restraints on emissions are inevitable, many American companies are working on carbon reduction. To be sure, many others, especially in the energy and oil businesses, are strongly resistant. But dozens of major corporations like Alcoa, DuPont and Intel are among those setting their own targets for lower emissions. For many, there are financial payoffs, too - improved efficiencies, lower costs and increased sales of energy-saving products.
State governments are also moving ahead. New Hampshire recently became the third state to adopt mandatory controls on carbon emissions from power plants. New Jersey is aiming to reduce statewide emissions by 3.5 percent from 1990 levels in the years before 2005. All six New England states, in a compact with five Eastern Canadian provinces, have pledged to reduce their emissions to 10 percent below 1990 levels by 2020.
Even in Congress, the tide is beginning to turn. Twice as many climate change measures were introduced in the past year as in the previous four years combined, many with strong support from both Democrats and Republicans.
Scientists project that a century's worth of greenhouse gas releases, mostly from burning fossil fuels, have already bought us a few degrees of warming in the decades ahead. The challenge is heading off further warming by gradually weaning ourselves from fossil fuels. This transition to a low-carbon economy will require a new industrial revolution.
We must look to the marketplace to carry it out. Only the market can mobilize the ingenuity, investment and productive capacity needed to develop and disperse new technologies on such a large scale. But the marketplace will deliver only if it perceives a demand, and providing that demand is a role for government.
A modest but logical first step in the U.S. is a measure passed unanimously by the Senate in April encouraging companies to disclose their greenhouse gas emissions voluntarily. If after five years less than 60 percent of emissions are being reported to the public, the measure would change this voluntary reporting system to a mandatory one. A similar approach helped dramatically reduce toxic air and water pollution nationwide. This legislation should be accepted by the House and signed by the president.
Ultimately, though, the market must be driven by policies that set realistic, binding targets for reducing emissions and give companies the flexibility to achieve them as affordably as possible. The Bush administration's own report shows the danger in its remaining stubbornly out of step. The longer the United States waits, the graver the risks - and the cost of averting them.
Eileen Claussen is president of the Pew Center on Global Climate Change.
© 2002 The New York Times Company
Remarks of Elliot Diringer
Pew Center on Global Climate Change
"Climate Change: What Can Be Done?"
I would like to thank our hosts the opportunity to speak here today. This is my first trip to Wilton Park, and it's truly an honor to partake of your traditions. I will do my best to uphold them.
Next month marks an important anniversary: It will be 10 years since the Rio Earth Summit and the launch of the international effort against climate change. I attended Rio as a reporter. I recall long, exhausting days criss-crossing the conference center to dutifully witness official proceedings and pronouncements, all the while trolling for hallway chit-chat that often proved be the better story, then frantically typing up dispatches for my readers in San Francisco. Those of you who were also there will recall much talk of the spirit of Rio. Le me tell you the source of my Rio spirit. The Brazilian coffee industry had set up a booth, very strategically located, where all day long they handed out tiny cups of the strongest coffee I'd ever had. Every time I passed the booth, I'd grab another shot. To this day, I remain indebted to the coffee growers of Brazil.
Now back in my days in journalism, we had a real fondness for anniversaries. On the anniversary of a particularly notable event - an earthquake, let's say - we'd like to look back and assess. How had it changed people's lives? Were the authorities doing all they should to rebuild and help victims recover? Were we better prepared for the next big one? We'd call it the "one-year-later" story. Sometimes, for a really big event, we might do a "five-years-later" story. Today I'd like to offer you a "ten-years-later" story. Ten years after the nations of the world committed themselves to the fight against climate change, how far have we come? And more importantly, how do we go the next step? Of course, when I was a reporter, I got to think up the tough questions, then stick them to somebody else to answer. I can no longer get away with that. Having posed the questions, I must venture at least some semblance of a response. And worse yet, when I'm done, you get to ask questions. I just hope you're prepared to accept a "no comment."
So how far have we come? We have spent the decade since Rio struggling to take the first step - struggling to create a common framework that would start industrialized countries on the path to emissions reduction. In just the past 18 months, that effort has met both its greatest success - and its greatest setback. The success was the completion of negotiations over the rules for implementing the Kyoto Protocol. The setback, of course, was President Bush's flat-out rejection of the Protocol. So now that we are on the verge of making the framework real - of bringing into force a treaty establishing the first binding international limits on greenhouse gas emissions - the largest emitter refuses to go along. We begin the second decade of this effort with the United States and the rest of the industrialized world on two separate paths.
With or without the United States, Kyoto is a profound accomplishment. It forges both a vision, and a formula, for transcending national interests for the sake of a common, global, long-term good. It sets ambitious goals. And rather than fight the market, it tries to tap the market, and motivate the market, so those goals can be reached as affordably as possible. Much credit is due the European community for now embracing market approaches that just a few years ago were viewed with such deep suspicion. It is critical now that Kyoto enter into force, and I would say that at the moment the prospects appear good. It is critical as well that parties actually implement it - that they demonstrate it can be done.
At the same time I think it is important that we be honest about Kyoto - about what it is and what it is not, what it gets us and what it does not. And to do that, we must remind ourselves of the goal established in Rio: stabilizing greenhouse gas concentrations at a level that prevents dangerous anthropogenic interference with the climate system. No one can tell us with any certainty just what that level might be - a question I'll come back to later. But what is clear is that the emission reductions we need to achieve over the long term exceed by many magnitudes the reductions that might be achieved under Kyoto.
I say "might" because we really don't know how much of a reduction Kyoto will deliver. Without the United States, Kyoto addresses less than 40 percent of global emissions, and that assumes all other industrialized countries do ratify. And for that subset of emissions, it only begins to move countries down the path of emissions reduction. This is not meant as a criticism of Kyoto. Rather, it is meant to underscore that Kyoto is only a stage - a first stage - in a very long-term effort.
Of course, anyone struggling with this issue understands that. But in the drive to bring Kyoto to life, that at times has come to appear an end in itself. By necessity, Kyoto has become something of a holy grail. Now that it is within reach, I'd like to suggest it is time we start viewing it less as an icon and more as a tool - a critical tool to get us through a critical stage - but in the end, just a tool. Many in Europe have now come to terms with the fact that President Bush is not returning to the Kyoto Protocol. I think we all should contemplate the possibility - the very real possibility - that the United States is never returning to Kyoto. Clearly, the international effort against climate change can not succeed unless the United States in time becomes a full partner. But I suspect that when that time comes, the U.S. will be signing on to something that looks very different than the Kyoto Protocol.
So as we approach the tenth anniversary of Rio, we stand at another critical juncture, one that requires that we be nimble. We must at the same time embrace Kyoto and look beyond it. We must start to think post-Kyoto.
One way to begin is to ask: What will it take to get the United States back in? Certainly, that concern will and must play heavily in any effort to move the climate regime beyond Kyoto. And I'd like to offer some perspective on the prospects for stronger action in the United States. But in truth, I don't believe the best way to begin charting a path beyond Kyoto is by asking what will entice the U.S. back in. And that is because the challenges we face in constructing an effective global regime are really no different whether the U.S. is in Kyoto or it is not. They are the core challenges that have loomed before us from the start: How we define a safe level of greenhouse gas concentrations. How we launch the technological revolution it will take to achieve the reductions we need. How we ensure that all the major emitters shoulder their fair share of this effort. When we arrive at reasonable answers to those questions, I believe we will at the same time have answered the needs of the United States. So after focusing a bit on the situation in the U.S., I'd like to come back to those core questions, and at least sketch out some thoughts on how we might begin to approach them.
I know that to many on this side of the Atlantic, the U.S. attitude on climate change is not merely aggravating; it is inexplicable. I said earlier that Europeans had come to accept that President Bush is not returning to Kyoto. But many still have trouble comprehending, I am sure, why he rejected it in the first place. Let me offer two explanations. In a narrow sense, the U.S. rejection of Kyoto was a function of pure interest group politics. The new administration - without closely analyzing Kyoto and the history behind it, without putting any real thought to alternatives, and without anticipating the international furor it would invite - renounced Kyoto in part to reward certain of its favored constituencies.
In a broader sense, though, the rejection of Kyoto might also be seen as a necessary readjustment. There had evolved a fundamental disconnect in U.S. climate policy. Internationally, the Clinton administration supported a binding treaty, and in Kyoto it agreed to an ambitious target. But at home, the Senate had laid down terms that made Kyoto's ratification a remote possibility at best, and the administration was barely contemplating let alone promoting the kinds of measures needed to meet the Kyoto target. In other words, the United States was in no way prepared to deliver at home what it had promised abroad. Some kind of readjustment was due. A mid-course correction in U.S. policy might have sufficed. Instead, the new president chose an abrupt about-face.
It may not be readily apparent, but interestingly enough, the United States may well be further along now in addressing climate than ever before. To be sure, the new climate strategy outlined by the president earlier this year will not take us far. One encouraging element is a pledge that companies voluntarily reducing their emissions will receive some assurance that their efforts will be recognized in a future climate regime. But the President's strategy relies exclusively on voluntary approaches, and its goal - an 18 percent reduction in greenhouse gas intensity by 2012 - translates into a 12 percent increase in actual emissions. It is more or less business as usual.
But when you look past this administration and its policies - to what is happening in the states, in the business community, and in Congress - the picture looks somewhat brighter. Last month, for instance, New Hampshire became the third state to enact some form of mandatory carbon controls on power plants. Other states, like Texas, are requiring electric utilities to generate a share of their power from renewable sources. Others are investing in energy efficiency, carbon sequestration, and transportation improvements. In many cases, these efforts are not driven exclusively nor even primarily by climate concerns. But they are delivering real emission reductions, along with a host of other benefits, like cleaner air and lower tax bills.
A growing number of companies are also taking steps to address climate change. At last count, we'd identified more than 40 major companies, most with significant operations in the United States, that have taken on some kind of greenhouse gas reduction target. Many of you, I am sure, are aware that BP has already cut its emissions 10 percent below 1990 levels, eight years ahead of target, and now has pledged to keep them there for at least the next 10 years. Some other examples: Alcoa is aiming to reduce its emissions 25 percent below 1990 levels by 2010. DuPont is aiming for a 65 percent reduction. IBM has set targets for both emissions and energy efficiency, and has pledged that virtually every one of its new products will earn the government's highest energy efficiency rating.
We recently completed a report taking a closer look at several companies with voluntary greenhouse gas targets. The companies cited a variety of motivations for taking on a target. They believe the science of climate change is compelling, and in time the public will demand strong climate protections. They want to get ahead of the curve by reducing their emissions. They want to encourage government policies that will work well for business. And they all cited one other important motivation: to improve their competitive position in the marketplace. That, in fact, has been the result. The companies are finding that their efforts to reduce emissions are helping to improve operational efficiencies, reduce energy and production costs, and increase market share - all things that contribute to a healthier bottom line.
Important political shifts are underway as well. Just as President Bush's rejection of Kyoto helped galvanize international support for the Protocol, it helped elevate the issue of climate change in the U.S. media and in Congress. All of a sudden, it seems, members of both parties are eager to demonstrate their commitment to protecting the climate. Nearly twice as many climate change bills were introduced in Congress over the past year as in the previous four years combined. The energy bill passed last month by the Senate includes two bipartisan climate provisions. One would establish a new office in the White House charged with developing a strategy to achieve safe levels of greenhouse gas concentrations in the atmosphere. The other would establish a voluntary system for tracking and reporting greenhouse gas emissions. If after five years less than 60 percent of the nation's emissions are registered in this new inventory, reporting by major emitters would then become mandatory.
These are only first steps, and they have not yet passed the House or been signed into law. But some lawmakers are already looking much further down the road. Senators John McCain and Joe Lieberman, a Republican and a Democrat, plan to introduce a bill later this year to cap greenhouse gas emissions in the United States and establish an economy-wide emissions trading system. It is, frankly, hard to imagine such legislation being enacted for some time, probably years. But the fact that it is even being drafted is a sign that Congress at least is awakening to the need for the United States to meet its responsibilities on climate change.
So let's assume for the moment that Kyoto enters into force, countries do their best to implement it, and on a parallel track, the United States begins building a credible climate strategy. That may be too hopeful, or not hopeful enough, depending on your point of view. But let's assume it. What, then, are the challenges we face in going the next step? What are the core challenges nations must confront if they are to craft a truly effective international response to climate change?
I'd like to suggest four. There are many more, of course, and even with the four I'd like to suggest, it's sometimes hard to know where one stops and the next one begins. But I believe each represents a unique and important dimension, and each must be resolved if we are to move forward.
The first is the question of a goal. As I said earlier, the ultimate objective set in Rio is to stabilize of greenhouse gas concentrations at a level that prevents dangerous anthropogenic interference with the climate system. The only way to meet that objective is to reduce emissions. So, wouldn't it make sense to define it more concretely - in other words, to set a specific concentration target - so we will know just how much emissions must be cut? I for one think it does make sense. But we also have to ask: is it practical? The process of translating broad objective into concrete target would be one fraught with uncertainties, laden with value judgments, and subject to extraordinary political pressures. Even if our understanding of the climate system were far more precise, the level of risk we as a society are willing to accept is in the end more a question of values than of science. And precisely because such a determination would frame the entire climate effort, the political and economic stakes would be profound.
It is absolutely critical that we better understand the various emission pathways that could achieve stabilization at given concentrations, and the climate impacts that could result from each. But how much expertise and scarce political capital should we invest in establishing a specific concentration target? Might it not be better to aim for consensus on the overall direction and pace of our effort, and periodically readjust as we learn more?
A second challenge is fairness. Climate change confronts us with deep inequities of many different kinds. These are captured, at least in part, with the observation that those bearing the least historical responsibility for climate change - the developing countries - are also those facing the worst consequences, and those least able to do something about it.
Given these inequities, the understanding since Rio has been that developed countries should act first. There has been no clear understanding about what would happen next. Nor as yet have there been any real hints that developing countries are any closer to contemplating commitments of their own. That is not to say that developing countries are not acting. Many, in fact, are making impressive gains in reducing or avoiding greenhouse gas emissions. In most cases, climate protection is not the objective but rather an added benefit of efforts to reform markets or improve local environments. Still, these successes help demonstrate the strong synergies between climate protection and the overriding development priorities of developing countries. These efforts should be recognized and they should be nurtured.
But it may also be time to move the equity debate beyond the developed-developing country divide. And the U.S. withdrawal, curiously enough, may present an opportunity to do that. On the one hand, by undermining the basic [bargain] struck in Rio, the U.S. withdrawal could make it harder to deepen the engagement of developing countries. On the other hand, it recasts the terms of debate. The question is no longer: How do we get developing countries to take on commitments? Rather, it is: How do we ensure that all major emitters do their fair share? Because I believe one thing is certain: Nations will not commit to a serious, long-term global plan against climate change, let alone abide by it, unless each perceives it to be fair.
A third challenge is ensuring that we do whatever we do as cost-effectively as we can. Quite obviously cost has been a central concern, particularly for the United States, from the very start. It is reflected in the very architecture of Kyoto, with its various forms of emissions trading. And the major sticking points in negotiating Kyoto's implementation rules - whether to allow unfettered access to trading, for instance, or how much sinks credit countries could claim - revolved largely around questions of cost.
As we look beyond Kyoto, getting the maximum environmental gain for every dollar, pound, or euro invested becomes even more critical. To build political support for steeper cuts in emissions, it will be necessary to demonstrate that they can be achieved without wreaking economic havoc. Better mechanisms may be part of the answer. Experience with the trading systems now emerging will no doubt lend insight into how market forces can be better harnessed for the cause of climate protection. But affordability will depend just as much or more on questions like timing. For instance, how do you send a strong, early signal to the marketplace - so companies begin investing now in the technologies that will deliver deep reductions decades down the road - without setting overly ambitious targets that force the costly turnover of capital stock before it is really necessary? Is the answer to set an upper limit on cost, compromising on environmental integrity for the sake of economic certainty? Or is there a way we can ensure both?
The fourth challenge is, perhaps, a way of restating the first three. It has to do with the nature of commitments under a future climate regime. Kyoto takes one approach: targets and timetables. But there are many types of targets. President Bush chose a greenhouse gas intensity target, measuring emissions against GDP, an approach he suggested might work well for developing countries. How might other indicators work? Alternatively, must the commitment take the form of a constraint on emissions? Or might countries more readily agree to a positive set of requirements - not a fully harmonized list of specific measures that all countries must implement, but a broader set of policy mandates, for instance phasing out fossil fuel subsidies?
Beyond the type of commitment is the question of who must take it on. The precedent for differentiated commitments is well established. But what is the proper grouping? Must it simply be developed, developing, or both? If we instead start with the 20 largest emitters - a list that includes 12 developed and 8 developing countries - we would capture nearly 80 percent of global emissions. The top ten gets you nearly two-thirds.
As I hope you can tell, my intent is not to advocate any one approach, but rather to suggest that we must think openly and creatively about the possibilities. What set of reciprocal arrangements can create incentives strong enough to induce countries first to join an effective climate regime, and second to comply with it?
Under Kyoto, negotiations for a second round of commitments must begin by 2005. But it may be a mistake to limit those negotiations to the Kyoto framework. To actually secure a new set of commitments, and to create a durable international approach to climate change, we may need to construct a new framework. Certainly, we should borrow all we can from Kyoto, because there is much of value there. But we must also look beyond Kyoto, and it's best if we start now.
I've asked many questions. Now, I believe, it is your turn. Thank you for listening.