Climate change is a global challenge and requires a global solution. Through analysis and dialogue, the Center for Climate and Energy Solutions is working with governments and stakeholders to identify practical and effective options for the post-2012 international climate framework. Read more


Turning Down the Heat: Finding Solutions for Global Warming

Turning Down the Heat: Finding Solutions for Global Warming

April 22, 1999

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

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

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

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

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

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

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

Where We Are

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

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

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

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

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

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

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

A Short Term Plan

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

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

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

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

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

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

Long Term Needs

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

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

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

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

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

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

Staying the Course

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

To stir your thinking, I would like to offer this quote from Alice in Wonderland, where Alice asks the Cheshire Cat: "Would you tell me, please, which way I ought to go from here?" "That depends a good deal on where you want to get to," said the Cat. "I don't much care where---" said Alice. "Then it doesn't matter which way you go," said the Cat. "---so long as I get somewhere," Alice added as an explanation. "Oh, you're sure to do that," said the Cat, "if only you walk long enough."

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

Op-Ed: Defining an Agenda for Global Action

"Defining an Agenda for Global Action"

By Eileen Claussen, Executive Director for the Pew Center on Global Climate Change

Appeared in the Washington Post

November 2, 1998

As the world focuses on this week's meeting in Buenos Aires, it is important to set a global agenda that will spur action and help us meet the aim of the United Nations Framework Convention on Climate Change (UNFCC): stabilizing atmospheric concentrations of greenhouse gases at levels that will prevent dangerous human interference with the climate system.

This global agenda should be based on concerted action on three fronts, in the view of the Pew Center on Global Climate Change. We need to:

  1. Take Action Now. One of the core beliefs of the Pew Center is that we accept the views of most scientists that enough is known about the science and the environmental impacts of climate change for us to take action to address its consequences. The challenge for our generation is to do this while sustaining a growing world economy. To meet this challenge, the nations of the world must take concrete steps to reduce greenhouse gas emissions. The sooner we begin, the more likely we will be to succeed in meeting the overall goal of stabilizing greenhouse gas concentrations in the atmosphere. What is needed is a framework that will encourage companies to act sooner rather than later.

    In the United States, we believe that the appropriate framework is an early action crediting program that will reward companies for actions they take to reduce emissions before the Kyoto Protocol starts providing international credit for emission reductions in 2008. This framework must be delineated by law, be clear and predictable, reward real and verifiable reductions, and be principally but not exclusively based on actions taken here at home.

  2. Develop Market Mechanisms. There is a growing body of evidence that market-based incentives can prompt individuals and companies to take action to protect the environment. These market mechanisms also have been proven successful in spurring technological innovation. As part of the Kyoto Protocol, countries have agreed to use several of these mechanisms in implementing greenhouse gas reductions - from emissions trading to the "clean development" framework that allows industrialized countries to get credit for financing emission-avoiding projects in developing nations.

    What is needed, however, is to go beyond the language of the Kyoto Protocol and to design the rules and operating procedures that will turn its words into reality. Our goal must be to insure that climate-friendly actions make economic sense for companies, and to make sure companies are confident that their actions will be accounted for.
  3. Create a Fair Global Framework. What constitutes a fair response to climate change is the major question underlying many unresolved issues in the global debate on this topic. The "fairness question" drives the levels of commitment of industrialized countries and is a deciding factor in the discussion of developing country participation, the structure of market-based mechanisms, and the nature and magnitude of different countries' financial commitments to the goals of the Protocol.

    We believe that three criteria should be considered in differentiating country obligations. They are: a country's responsibility for emissions that can cause climate change; a country's standard of living (or the ability to pay for efforts to reduce emissions); and a country's opportunity to reduce emissions. Based on these criteria, we can divide countries into three groups: those that must act now; those that should act now, but differently; and those that could act now if it were feasible.

Resolving these three issues is critical to the success of the Kyoto agreement, and it is our hope that they are the focus of the conversations in Buenos Aires and in the international negotiations to come.

Appeared in the Washington Post, Monday, November 2, 1998— by Eileen Claussen

Press Release: New Study Provides Framework To Determine Fair Commitments For All Countries In Global Climate Treaty

For Immediate Release:
October 29, 1998

Contact: Kelly Sullivan
             (202) 289-5900

New Study Provides Framework To Determine Fair Commitments For All Countries In Global Climate Treaty

Using Country-Specific Data, Report Addresses Major Obstacle Of Contributions By Industrialized and Developing Nations

WASHINGTON, D.C. - A new study released today by the Pew Center on Global Climate Change could help address one of the most significant and polarized issues in the debate over a global climate change treaty. The examination of global equity, released just days before the next major meeting of Framework Convention on Climate Change in Buenos Aires, for the first time differentiates the obligations of countries based on three criteria: responsibility for the emissions that cause climate change, standard of living or the ability to pay for mitigation, and the opportunity countries have to reduce greenhouse gas emissions.

Using these criteria, the report, "Equity and Global Climate Change," suggests that countries can be grouped into three tiers each with a different level of commitment to reduce emissions. The first tier is comprised of countries that must act now. The second tier includes countries that should act now but differently than the first tier. And, the third tier is made up of countries that could act now if feasible.

"We cannot begin to address the climate change issue until we are able to resolve what is fair to expect of each country," said Eileen Claussen, Pew Center Executive Director and a co-author of the report. "Until now, people have assumed that there would be one standard for the industrialized countries and another for developing countries. To tackle the climate change problem fairly and effectively, we must get beyond these simple divisions and agree upon a sound and constructive framework."

The Pew Center on Global Climate Change analysis confirms many assumptions about the responsibilities of certain countries but it also produces some surprises. For example, under the framework suggested by the study:

Tier one is comprised of 30 countries that have the greatest obligation to act because of their high emissions and standard of living. Many of these countries also have opportunities to improve their energy efficiency. This tier covers most industrialized countries including the U.S. and European nations, but also countries like Argentina and South Korea.

Tier two includes 52 countries that fall in the middle range using the three criteria. These countries should act in order for the international community to effectively reduce greenhouse gas emissions, but their obligations should be somewhat different than the first tier, typically because their standard of living is below the world average. Both developed and developing countries fall into this tier including China, India, Brazil, Russia, and Bulgaria.

Tier three countries, 74 in total, contribute less to the problem and have fewer resources to mitigate their emissions. This tier includes countries like Vietnam, Bolivia and Morocco.

Along with the release of its report, the Pew Center On Global Climate Change will begin running advertising in both US and international publications. Featuring a baseball scene, the ads say, "Its time to step up to the plate on climate change," and call on each country to take the field, work to the best of its abilities and do its fair share to beat the climate change problem.

"There should be no debate over the fact that the solution to global climate change requires the support of the entire international community," Claussen said. "The framework established by this report can help bridge the political divide that has stood in the way of international action and created uncertainty in markets across the globe."

A copy of the report, "Equity and Global Climate Change," is available on the Pew Center web site at

The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the nation's largest philanthropies and an influential voice in efforts to improve the quality of America's environment. The Pew Center is conducting studies, launching public education efforts, promoting climate change solutions globally and working with businesses to develop marketplace solutions to reduce greenhouse gases. The Pew Center is led by Eileen Claussen the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

The Pew Center's Business Environmental Leadership Council includes: Air Products and Chemicals, Inc.; American Electric Power Company; Baxter International Inc.; Boeing; BP America; CH2M HILL; DuPont; Enron Corp.; Holnam Inc.; Intercontinental Energy Corporation; International Paper; Lockheed Martin; Maytag Corporation; The Sun Company; 3M; Toyota; United Technologies; U.S. Generating Company; Weyerhaeuser and Whirlpool. DuPont and CH2M HILL are the two newest members of the council, announced earlier today.

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

Equity & Global Climate Change: The Complex Elements of Global Fairness

Equity & Global Climate Change: The Complex Elements of Global Fairness

October 29, 1998
(Reprinted June 2000)

Eileen Claussen and Lisa McNeilly, Pew Center on Global Climate Change

Press Release

Download Entire Report (pdf)


Eileen Claussen, President, Pew Center on Global Climate Change

What constitutes a fair response to climate change is the main question underlying many of the unresolved issues in the climate change debate. It is behind the questions of the level of commitment by industrialized countries, the type of participation to be undertaken by developing countries, the structure of the various trading mechanisms, and the nature and magnitude of financial obligations. What has been missing from the debate, however, are consensus principles that define equity in the context of this issue.

This report, which offers insight on global equity, is the second in a series by the Center. The Pew Center was established in 1998 by the Pew Charitable Trusts to bring a new cooperative approach and critical scientific, economic and technological expertise to the global climate change debate.

Using the language already in the Framework Convention and the Kyoto Protocol and the way equity has been invoked in other international treaties as a backdrop, the report lays out a new paradigm. We suggest that three criteria—responsibility for the emissions that can cause climate change, standard of living (or the ability to pay for climate change mitigation), and opportunity to reduce emissions—should be considered in differentiating country obligations. Based on these criteria, the report suggests that it is appropriate to divide countries into three groups rather than two: those that must act now; those that should act now, but differently; and those that could act now if feasible. We hope that these ideas will stimulate debate and draw us toward an objective and transparent approach to this critical cause.

The Pew Center and its Business Environmental Leadership Council believe that climate change is serious business. Fairness demands that countries step up to the plate.

Executive Summary

Of the many pending issues within the climate change debate, the question of what constitutes equitable international commitments may be the most difficult to address. Long-unresolved divisions about the distribution of resources and equitable access to them must be considered by climate change negotiators in order to agree on a fair and effective global response. Failing to do so may result in the most inequitable outcome of all, by leaving those who have to face the disproportionate burden of the impacts with few options to address the problem.

There are several philosophical approaches to equity, although the concept remains complex and difficult to define. It can be based on allocation of property rights or on the determination of who is most responsible. Some argue for achievement of the greatest good for the most people, while others are more concerned with minimizing the impact on the least fortunate or with plain common sense.1 There are also many aspects of equity—from maintaining a fair process to ensuring equity for a range of out-comes (baselines, limitations, compliance, monitoring, reporting, etc.). This paper does not review these philosophies in outlining general principles of equity for the climate change debate. Recognizing that pragmatic issues could dominate international discussions, the paper argues for focusing on these principles as early as possible and for using a transparent process.

We propose a new approach to equity, involving three criteria—responsibility, standard of living, and opportunity. Clearly, determining who is responsible for causing the problem is one factor in a fair response to climate change. In line with the "polluter pays" principle, this would include not only who emitted the most in the past, but also who will emit the most in the future. In addition, both national total and per capita contributions are relevant here. A second factor can be represented by national income per person. Looking at relative standards of living might affect who pays for climate change miti-gation, who takes action, and when they are required to take those actions. A third, pragmatic, factor would be opportunity. If one country can more cheaply reduce emissions than another, then it perhaps should be asked to do so.

The paper also outlines a set of principles that could guide negotiations:

  • All nations should be able to maintain or improve standards of living under a global climate change mitigation regime. Consequently, climate change mitigation should focus on alternative low-carbon development paths that don't reduce economic growth.
  • More broadly, the outcome of FCCC negotiations should not undermine or hinder progress toward the goal of sustainable development.
  • The countries most responsible for greenhouse gas concentrations in the atmosphere should be leaders in the effort to reduce emissions.
  • All nations should work to the best of their abilities — or with help from other countries — to reduce emissions either absolutely or relative to business-as-usual trajectories.
  • The world should take advantage of emission reduction opportunities where they exist.

These principles and these criteria lead to differential treatment for three—rather than the current two—groupings of countries. They also may lead to different actions being asked of countries within these groups. There is a group of "Must Act Now" countries who score high on both the responsibility and standard of living factors; these should be the leaders. There is a group at the opposite end of the spectrum—"Could Act Now"—who score low on at least two factors who should not be asked to take many actions now. The middle group would consist of those countries who score higher on some factors, but lower on others—"Should Act Now, But Differently." The principles above will drive what is asked of these countries.

We hope that these principles, factors and groupings lead to improved international discussions of equity, at the very least, and, even better, to a solution that all parties believe is fair.

Discussing equity in the context of climate change could require taking on a broad range of topics. By and large, this paper will only address consequential equity (outcome), on the assumption that procedural equity (process) will be addressed in other forums, and will largely confine the discussion to the outcomes of who takes on obligations and at what degree of stringency. Negotiations on other outcomes—compliance mechanisms, monitoring and verification systems, etc.—could easily be driven by the same conclusions presented here. For simplicity of presentation, the paper only refers to emission reductions, but efforts related to sinks of greenhouse gases are assumed to be covered by the same points. One other large aspect of equity—related to the distribution of costs and benefits of climate change mitigation within countries, especially the impact on labor and competitiveness—is important enough to warrant a separate analysis.


Eileen Claussen
Lisa McNeilly

Market Mechanisms & Global Climate Change

Market Mechanisms & Global Climate Change

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

Download Entire Report (pdf)


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

This report, which analyzes market-based environmental policy instruments, is the third in a series by the Center. The Pew Center was established in 1998 by the Pew Charitable Trusts, one of the nation's largest philanthropies and an influential voice in efforts to improve the quality of America's environment. The Center brings a new cooperative approach and critical scientific, economic and technological expertise to the global climate change debate. The report was prepared as an input for the participants of two international conferences designed to promote a trans-Atlantic dialogue on market-based instruments and their use in mitigating global climate change. Recognizing the critical role of business in both shaping and applying market-based mechanisms, the Pew Center is working to bring businesses from both the United States and Europe together to discuss ways to do so.

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

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

Executive Summary

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

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

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

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

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

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

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

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

Annie Petsonk
Daniel J. Dudek
Joseph Goffman

Beyond Kyoto: An Agenda for the Next Decade

Beyond Kyoto: An Agenda for the Next Decade

Speech given by Eileen Claussen, Executive Director
The Pew Center on Global Climate Change

American Enterprise Institute

September 14, 1998

I am sometimes reminded, when I talk about global climate change, of a painting by Pieter Brueghel titled "The Fall of Icarus". In Greek mythology, Icarus is the son of Daedulus, an architect and inventor who developed the concept of, and actually designed the labyrinth. When Daedulus and Icarus were later imprisoned in the labyrinth, Daedulus creates wings of wax for both himself and his son so they can escape. They manage to flee the labyrinth and fly away, but Icarus flies too close to the sun, his wings melt, and he falls into the sea and drowns. In the Brueghel painting, as Icarus falls into the sea, no one pays any attention. The ploughman continues ploughing his field, the ship does not come to the rescue. If there is a disaster, it is clearly someone elses disaster, and does not warrant a change in course.

There are two ways to apply this myth and painting to global climate change. First, we could view ourselves as Icarus approaching the sun with wings of wax. Clearly, then, we would want to change course, and fly at a different altitude. But we could also view ourselves as the ship or the ploughman, knowing, but not responding to what is about to happen. In this case, we should want to pay attention, and put in place a system so that when Icarus falls from the sky, we could move quickly to rescue him.

I would like to argue today, that we should look at the climate change issue in both ways. We, in the United States, should begin changing course, and taking steps to reduce our emissions of greenhouse gasses. We are, after all, the largest emitter of greenhouse gasses, with the largest gross domestic product (GDP), and the largest GDP per capita (expressed as purchasing power parity). At the same time, we know that this is a long term, global issue that demands a global response. So we should also be building the national and international systems to deal with this issue over time and with the active participation of all nations.

As we begin to discuss an agenda for the next decade we should take stock of where we are on the climate change issue, both domestically and internationally. Beginning with the science, or the basis for dealing with this issue, I believe we can simply say that sufficient scientific knowledge exists that supports taking steps to address mans emissions of greenhouse gasses. If we then look domestically, it is fair to say that:

  • First, we are still on a course of increasing emissions of greenhouse gasses. The Energy Information Agency suggests that without policy interventions, we are likely to increase our emissions annually over the next decade.
  • And second, the domestic climate change debate is highly polarized and politicized. It is centered on the Kyoto Protocol, and whether or not it should be ratified now or in some amended form at a later time. There is little focus on what should be done constructively to address the problem.

Internationally, the picture is quite different.

  • First, in Kyoto, all of the countries in the world agreed that binding reduction targets should be established for developed countries. But the developing countries were and are unwilling to accept emission targets at the present time. Still, more than 50 countries have already signed the Kyoto Protocol.
  • Second, there is some understanding globally that all major emitting countries must participate if we are to achieve long term success in avoiding growth in emissions of greenhouse gasses. This is particularly true given that developing country emission growth rates are expected to increase by 2.9 percent annually over the next decade.
  • And third, there is broad support for flexible mechanisms to deal with established emission targets, although this support is greatest in the United States.

Finally, I would like to make one point that brings us back to where we began. And that is that irrespective of what happens to the Kyoto Protocol, the issue of climate change will not disappear and global pressure to reduce emissions of greenhouse gasses will not abate. Icarus, we shouldnt be; the ploughman we cannot be.

So what agenda would be most practical and effective in moving actions to deal with the climate change issue forward? Perhaps a modest beginning would be most appropriate.

A National Agenda

The first item on the United States agenda should be to depoliticize and depolarize this issue in Washington. If we can move beyond political agendas and focus on economically sound, stable, and serious actions to reduce greenhouse gas emissions, we will provide a platform for business planners to look to the future. And looking to the future will allow them to develop cost effective investment strategies that will permit the needed replacement of capital equipment with greenhouse friendly technologies. If we fail to do this, we risk losing the opportunity to gain competitive advantage in clean technologies. And, additionally, if we wish to be efficient, we must begin now to plan for the longer term.

Our view that we need to put politics aside and begin to develop environmentally sound and economically justified programs to reduce greenhouse gas emissions is rooted in the current state of the science. This is not to say that major areas of scientific uncertainty do not exist. They obviously do, and part of our agenda must be to continue the necessary research to address those uncertainties and to increase our knowledge of the likely effects resulting from emissions of greenhouse gasses. However, the scientific basis is too deep-rooted to disappear, and it is the combination of scientific knowledge, the international agreement among 170 countries that developed nations need to act within the next decade, and the need for developing and implementing environmentally and economically justified programs, that led us to the conclusion that we need to depolarize this issue domestically now so that we can move forward.

To facilitate moving forward to address the climate change issue, our second agenda item should be to design a straight forward system that will recognize and give credit to those corporations that want to take early action to reduce greenhouse gas emissions. We as a nation should not force progressive companies to make a choice, on the one hand, of investing in emission reducing technology now and risk being punished for it later, or, on the other hand, to forego investment to develop or install climate friendly technology for a decade or more. Failure to adopt a program to give credit for early action will essentially compel industry to defer action for the next decade to avoid the uncertainty of how their actions will be treated by the government when more comprehensive programs are put in place. We believe that the Congress should step up to this issue and provide a legislative framework that will allow industry to undertake the emission reductions that will change our current course of emissions growth and result in a downward emissions trend. If we fail to take this step, we risk falling behind other countries in the contest for the development and marketing of clean technologies. We should take a lesson from history, and compare the U.S. auto industry of two decades ago with the information technology industry of today. In the climate change case, we can anticipate that both domestic consumers and international trading partners will pay ever more attention to climate friendly technologies, and we will need policies that will more strongly encourage our domestic industry to be there first Moreover, if we fail to encourage early action we will shorten the time horizon during which those who emit greenhouse gasses will need to take action to fulfill our national commitment should the international obligations agreed in Kyoto become binding on the United States. Such a compression of the time horizon for taking action will certainly lead to higher costs than would a more orderly program initiated earlier.

Our agenda for the next decade should also include exploring the type of system that we should install over the longer term. The domestic system should be market based and should allow the economy to grow as it protects the environment. Development of such a system will require participation by all levels of government, Federal, state and local as well as the private and nongovernmental sectors. This is a problem of enormous scope that will affect every individual and business in this country and around the world. We need to work together in partnership, to achieve our objectives - protection of the environment and continued economic growth.

And as we develop our national programs, we must also assure that our system will be not only efficient, but also fair. Should every sector be treated equally? We know that the opportunities for reducing emissions are not uniform across all sectors, since some have already taken steps to reduce their energy intensity and others have not, and some have significant further possible advances and others have not. Should we consider not only responsibility for the problem, but also opportunity for dealing with it? And how should we deal with the obvious labor issues, where some sectors will clearly be impacted, and where whole regions may suffer significant consequences? Surely, equity and transition issues must become a part of our national agenda, and a key component of our deliberations as we move to design a national system for dealing with this issue over the longer term.

Thus our third agenda item must be to begin the dialogue on how to move forward over the long term and then begin taking action in accordance with the results of that dialogue. We know there are policies and programs that can lower the costs, and we should analyze and discuss all alternatives. We know there are likely to be sectors of the economy that will be more impacted than others, and we should have discussions about how to achieve our environmental and economic goals in ways that minimize the costs and impacts, and treat those who will be adversely affected in ways that are fair and equitable.

Some will say that this is a pipe dream. However, we should also learn from history here. When we were faced with the oil embargo, we became more energy efficient and economic growth was, of necessity, decoupled from energy consumption in the decade following the embargo. Today, we are more energy productive than we were 25 years ago. Thus, when we have a national will and appropriate policy support, we can achieve goals that seemed beforehand to be unachievable. Dealing with climate change provides us with a similar challenge. We should take it, and use it to strengthen our national economy.

An International Agenda

As we move to implement a national agenda, we also need to address this issue internationally. We need to consult thoughtfully with other nations so that our expectations for international programs are grounded in reality, a consultation that will be facilitated and made more effective if we are taking steps at home to address this issue. Whatever view you hold of the Kyoto Protocol, it does provide for transboundary market based programs to encourage climate friendly development. Our first international agenda item should therefore be to carefully study and understand the potential of these mechanisms and develop programs to maximize their effectiveness. Emissions trading, joint implementation, and the Clean Development Mechanism are still in their formative stages. Working out international systems that are effective, efficient and equitable, and then developing the international institutions to deal with them are not simple tasks. It will require many years of effort from governments around the world, with their private sectors actively involved. Those who would argue that the next meeting of the Parties in Buenos Aires is a failure if it does not come to conclusion on rules to implement any of these mechanisms should have their motivations examined. Decades, with many high points and low points, were spent building the World Trade Organization. Our expectations for what can be achieved and over what time frame must be realistic; we will be lucky indeed if any of the market-based mechanisms are operational by the turn of the century.

A final agenda item, and one where both the domestic and international dialogue is emotional, rather than analytical, and where the polarization is strongest, involves how best to move all nations on to a change of course. It is clear from both an environmental and an economic point of view that all nations must take steps to reduce their emissions. But fashioning a system -- and a timetable -- that deals with this issue has, despite the rhetoric, hardly begun.

The views of the developing world on the subject of what has come in this country to be called meaningful participation have barely changed since the Kyoto Conference, where any effort to define participation was met with total and complete opposition. Yes, there are several countries, particularly in Latin America, that continue to be positive about both their future role and also the need for global solutions to the climate change issue. And South Korea has indicated that it is willing to voluntarily reduce its emissions beginning in 2018. But the vast majority of developing nations have not indicated any interest in going beyond their current commitments to take policies and measures to reduce their emissions consistent with their goals of poverty alleviation and economic development.

Why not? Two answers immediately come to mind. First, the developing countries are clearly waiting to see whether the developed countries take the lead in combating climate change and the adverse effects thereof (Article 3.1 of the Framework Convention on Climate Change). The record of the developed countries, particularly the United States, in achieving the aims of the Convention has not been a strong one. And it is clear that the developing countries are waiting to see whether the Kyoto Protocol elicits a more effective response from the developed world.

And second, and equally important, we have yet to address the issue of what a framework for equitable obligations might be. The United States, which argued the most strongly for developing country action prior to Kyoto did not, in fact, put down more than a marker that would indicate future commitments from developing countries. And the only proposals that have been put forward suggest that a fair and equitable regime would require the convergence of per capita emissions among all nations. But there has been a complete absence of debate on this very important issue, a debate that will be necessary before an agreement on what should be required (and what is fair) can be reached. Clearly, this is a very important agenda item for the next decade.

It is a hefty agenda. At home, it includes depoliticizing the issue, providing a legislative framework for early, voluntary action, and designing an emissions reduction system for the long term. Abroad, it includes building the systems and institutions to deal with the market based mechanisms that are in the Kyoto Protocol, and developing an effective and equitable framework to guide the participation of all nations. But if we are thoughtful, and work both domestically and internationally to achieve consensus rather than division, we can move forward economically and begin the long process of curtailing and reducing emission of greenhouse gasses. If we set an agenda for the next decade that addresses the five issues I have discussed, we should be able to avoid the mistake of Icarus and not fly too close to the sun. 

The Global and the Local: Blending Actions to Address Climate Change

The Global and the Local: Blending Actions to Address Climate Change

Speech by Eileen Claussen, Executive Director
The Pew Center on Global Climate Change

August 20, 1998

Responding to the challenge of climate change is, as we say at the Pew Center on Global Climate Change, serious business. Even talking about it in the current political environment raises sensitive and difficult issues. On the one hand, it is a global problem that demands a global solution. Emissions from Beijing can affect the climate in Boston, just as emissions from Chicago can affect the climate in Calcutta. On the other hand, global solutions cannot be found unless individual nations begin the search for their own solutions. These include working with the business community to make investments in more efficient products, practices and technologies, and taking steps to limit and reduce greenhouse gas emissions. Some argue that no single nation should embark on a directed course of action until there is a global framework with worldwide commitment. Others argue that a global response is, in effect, just a series of national responses, and that it is incumbent upon individual nations to begin taking steps to reduce their emissions now. The reality is that we will have to go down both paths simultaneously. We must take steps to control emissions at home at the same time as we design the systems that will be required for all nations to participate effectively in responding to this issue. If we fail to move forward on both paths -- the global and the local -- our response to climate change will almost certainly be a failure.

The International Situation

Let us look first at the international situation. Much has been said and written about what was accomplished, or not accomplished, at Kyoto. The treaty binds developed countries to emissions reductions that would have to be achieved between 2008 and 2012. The targets range from 8 percent below 1990 emission levels (the European Union) to 10 percent above 1990 levels (Iceland). The obligation agreed to by the United States was a reduction of 7 percent below 1990 levels. The parties also agreed to (1) a framework for emissions trading and joint implementation among developed countries; (2) language creating a Clean Development Mechanism, that would allow for joint sustainable development projects between industrialized and developing countries; and (3) a sprinkling of contradictory and incomplete language dealing with carbon sequestration. Binding commitments for developing countries; agreement on a compliance and enforcement regime; and specific definitions or guidelines for the operation of either the trading system or the Clean Development Mechanism were left for future meetings.

But to understand fully the global challenges that we face, we need to focus on the international politics leading up to the Kyoto agreement and how they manifested themselves during Kyoto, and again at the most recent international meeting in Bonn. Politics are also likely to be the drivers of the Conference of the Parties to the Framework Convention on Climate Change scheduled in Buenos Aires in November. If history is a guide, it will continue to play a significant role in subsequent negotiating sessions as well.

We should begin with the position of the United States. Beginning in 1996, the United States began designing a broad global framework for addressing the climate change issue. That framework, forwarded internationally in January of 1997, included a binding target for developed countries, emissions trading among developed countries, joint implementation possibilities between developed and developing countries, and three separate provisions related to the increased participation of developing countries. But the United States did not publicly propose a specific binding target until October 1997 (two months before Kyoto), when the President announced the U.S. position in a speech at the National Geographic Society. Because of the delay in defining a target, the U.S. proposal was coolly received, a reception that was exacerbated by both the European focus on ONLY the binding target, and the developing country view that the United States was not taking the issue seriously but was simply interested in limiting the energy use and development of other countries.

These views were reinforced by the Kyoto Conference itself. Most of the time in Kyoto was spent in prolonged and intense debate between the European Union, the United States and Japan. The subject? The magnitude of the binding reduction. Of course, it was obvious to all participants that the magnitude of the reduction would be directly related to agreement on trading and joint implementation. And that was, in fact, how the agreement was reached. The United States agreed to reductions that were greater than originally proposed by the President, and, in return, the language on what have been called the "flexibility mechanisms" was also included. Make no mistake as you think about how this bargain was struck: negotiations were held not only between Heads of Delegation in Kyoto, but also between Heads of State from their capitols. In fact, the discussions were so intense, that further development of language on the flexibility mechanisms could not be concluded by the time the Conference ended.

What about the role of the developing countries? A key part of the U.S. position was that developing countries be more active partners in reducing emissions. The provisions of the U.S. text related to developing countries were central to U.S. diplomatic efforts leading up to Kyoto. But, with the exception of Brazil, which turned the joint implementation concept into the Clean Development Mechanism, there was almost no exploration of ideas and language with key developing country greenhouse gas emitters like China and India. The result was that those countries, who were skeptical of U.S. intentions at the beginning of the Conference, and who had no interest in accepting obligations until it was clear that industrialized countries, particularly the United States, both show commitment to a reduction scheme and actually make significant emission reductions, became more adamantly opposed to increased involvement in the Kyoto Protocol. The public debates at Kyoto on the subject of developing country participation were therefore largely symbolic. And spokespersons for a number of developing countries even attempted to scuttle the emissions trading language at the end of the Conference, calling it immoral and unfair.

The reality is that the views of the developing world do not appear to have shifted since the Kyoto Conference. Yes, there are several countries, particularly in Latin America, that continue to be positive about both their future role and also about the need for global solutions to the climate change issue. And South Korea has indicated to Japan that is willing to voluntarily reduce its emissions beginning in 2018. But the vast majority have adopted a wait and see attitude with respect to their own obligations -- or perhaps we should phrase it "a wait and see if the developed countries begin taking steps to meet the obligations they agreed to in Kyoto." This posture is likely to dominate any discussions on particular commitments from the developing world, and is also likely to influence the negotiations on the Clean Development Mechanism, where key developing countries are interested in some degree of control over the projects that are accepted so that they can be assured that they are truly development projects, not just projects that can be used for credit by the developed world. Emissions trading and carbon sequestration, of course, still remain suspect, and it will take substantial discussion and negotiation to reach agreement on how to operationalize the Kyoto language.

At the core of the developing country view is the notion of fairness. Is it fair, many of them ask, for the developing countries to be asked to take on serious obligations while their total and per capita emissions are low compared to the developed world? Is it fair, some ask, for the developing countries with far lower GDP and per capita GDP to be asked to take on obligations to deal with a global problem caused thus far by the emissions from the developed world? Is it fair, others ask, for the United States, with the highest levels of both GDP AND emissions, to insist on developing country participation when the United States itself seems unwilling to make substantial emission reductions? Until these fundamental issues of fairness are addressed internationally, it is unlikely that we will see significant movement on the part of the developing countries.

The Domestic Situation

Unfortuantely, the complications here at home are equally daunting. While there is concern, interest and a willingness to act on the part of the general public, some in the business community, and some in government at the Federal, State and local levels, the issue is now enmeshed in difficult partisan politics. And while climate change itself remains controversial, it is Kyoto that has raised the tension levels dramatically. In fact, looking back at the last two years, it is clear that those in industry most opposed to dealing with the climate change issue (in other words, those who view themselves as losers under a climate change response regime) have thoroughly worked the political system to (1) cast doubt on the science; and (2) emphasize the possible negative economic impacts of the Kyoto Protocol, basing their analysis on unrealistic assumptions and unworkable policies. At the same time, many in the environmental community have unrealistically (1) advocated large reductions in more immediate time frames; and (2) concentrated on the availability of technologies that, they believe, could effect compliance with the Kyoto regime at virtually no cost. This clash of the polar positions between some of the industry and some of the environmental community has dominated the debate, catalyzing political grandstanding, and essentially removing the issue from the reasonable and pragmatic consensus-building center that we need if we are to move forward and successfully respond to climate change.

What has this meant for real emission reductions on the part of the United States? We need to begin with a look at our historic climate change obligations and how we have responded to them. First, the United States is a party to the Framework Convention on Climate Change, and, therefore, is obligated to take policies and measures to reduce emissions of greenhouse gases. It is also obligated to aim toward reducing emissions to 1990 levels by the year 2000. To meet these commitments, the United States has partnered with industry on a series of voluntary programs. Many of these programs were initiated during the Bush Administration, and were expanded upon by the Clinton Administration. These efforts, while significant, are not likely to result in the United States meeting 1990 levels by 2000. Indeed, the United States acknowledged in the 1998 Annual Energy Outlook that we would likely be 17 percent above 1990 levels by the year 2000.

Since Kyoto, most of the voluntary programs have continued, but they have neither been expanded nor intensified. Before the Kyoto Conference, the President outlined a program that the Administration would seek to implement post-Kyoto. This program included a $6.3 billion tax and budget package proposed in January of this year, that now appears dead on Capitol Hill; a modest effort that has as yet yielded no results to insure that electricity restructuring does not increase carbon dioxide emissions; and a somewhat more significant effort to consult with industry to develop voluntary early reduction objectives. This latter effort now also appears unlikely to come to fruition, in part because of the difficult political atmosphere, and in part because no one has come to grips with the complex but essential issue of how companies that make serious reductions will have those reductions credited toward future obligations.

Moving Forward

If we start with the premise that climate change is a serious issue that we must take seriously (and that is certainly the starting point for the Pew Center and the businesses that form its Environmental Leadership Council), we have an enormous task before us. Not only do we have to sort through the domestic and international politics that surround climate change, but we must also move forward to develop the technologies that will be necessary in the 21st century, see that those new technologies make their way through the global economy, and develop the governmental and non governmental systems that will provide the right combination of incentives to make these changes a reality. Obviously, this is no easy task.

Perhaps what we need is a modest beginning. First, we must do our best to de-politicize this issue in Washington, and work to agree on the basic agenda that will be necessary to achieve real results. There is no reason why we cannot work through a program to credit the voluntary early emission reductions of companies that want to get started now. Such an effort would be climate friendly and friendly to those forward looking companies that are committed to dealing positively with the climate change issue. It would be a way to energize U.S. industry, achieve and show progress, and reward those who make real contributions.

Second, there is no reason why we cannot sit down and design an incentive package so that individuals and individual companies begin to make investments that will result in reduced greenhouse gas emissions now and in the future. This is an issue that will be with us for a long time; the Kyoto targets alone will not allow us to stabilize greenhouse gas concentrations at less than dangerous levels. And what will count for the future is the technology that we develop over the coming decades. Quite simply, the earlier and faster we move, the greater our chances of being globally competitive with new, climate friendly technologies.

Third, there is no reason why we cannot sit down with the Federal government, State governments and local governments to begin assessing the roles for each in moving the United States to a lower emissions future. This is a problem of enormous scope, and it will take a concerted effort on the part of everyone to design a framework that is environmentally and economically responsive. We need to work together, in partnership, to achieve our objectives.

Fourth, there is no reason why we cannot begin to analyze and discuss how to design a domestic program that will achieve emission reductions over the longer term. We know there are policies and programs that can lower the costs; we know there are likely to be sectors of the economy that will be more impacted than others; and we know that there will be effects on American workers. Surely we can begin to have discussions about how to achieve our environmental goals in ways that minimize the costs and impacts, and treat those who will be affected in ways that are fair and equitable.

And fifth, there is no reason why we cannot agree on how to address this issue internationally, so that our expectations are grounded in reality, and our strategies are based not only on what is cost-effective, but also on what is fair. If we take steps at home, our ability to ask other nations to take steps will be more credible. If we are sensitive to the legitimate concerns of others, we are more likely to be able to lead in the design of an acceptable international system.

It may be hard, in August of 1998, to imagine a day when all sectors of society -- the public, the private and the nongovernmental -- are engaged in working on meaningful responses to the climate change issue. But I am not sure I could have imagined 6 months ago that the 17 corporate leaders represented in the Pew Center's Business Environment Leadership Council would step forward on this issue and agree to voluntarily begin responding to the challenges presented by global climate change. And I certainly didn't know 6 months ago of the efforts of so many of the States to inventory their emissions and develop action plans to reduce emissions. Maybe we can move beyond the rhetoric, take this issue seriously, and work together to develop solutions. Maybe we can face and address global climate change while sustaining a growing economy.

Syndicate content