U.S. States & Regions

States and regions across the country are adopting climate policies, including the development of regional greenhouse gas reduction markets, the creation of state and local climate action and adaptation plans, and increasing renewable energy generation. Read More
 

Community Adjustment to Climate Change Policy

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Community Adjustment to Climate Change Policy

Prepared for the Pew Center on Global Climate Change
December 2001

By:
Judith M. Greenwald, Pew Center on Global Climate Change
Brandon Roberts, Brandon Roberts & Associates
Andrew D. Reamer, Andrew Reamer & Associates

Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

A Pew Center report series on the economics of climate change has identified many ways in which economic modeling can be improved to more reliably project the costs of greenhouse gas reduction policies. These studies show that better model design – for instance, more realistically portraying technological progress and flexibility in the economy – can yield substantially lower projections for the costs of addressing climate change. They provide strong evidence that a rational climate policy that sets realistic short-, medium-, and long-term goals can achieve significant environmental gains while minimizing economic costs.

At the same time, it is important to recognize that the costs of addressing climate change are likely to fall disproportionately on certain industries, communities, and workers, and to explore ways to minimize these adverse impacts. This report is one of three focusing of these critical transition issues. It draws from past community assistance efforts to recommend ways the government can best assist communities that may suffer economic disruption as a result of climate change policies. A report released simultaneously looks at potential impacts on American workers and a future Pew Center report will evaluate competitiveness issues.

In the case of community assistance, the government has considerable experience assisting communities adversely affected by policies such as trade agreements, defense downsizing, and forest protection. For this report, authors Judith Greenwald, Brandon Roberts, and Andrew Reamer apply lessons learned from previous adjustment programs to the challenges posed by addressing climate change. Specifically, the report examines the risks faced by communities whose economies rely heavily on energy production and energy-intensive industries. The authors conclude that a new federal adjustment program for at-risk communities should be part of U.S. climate change policy. The report recommends that the U.S. government take the following actions:

  • Designate and fund the Economic Development Administration (E.D.A.) of the U.S. Department of Commerce to design and implement an economic adjustment program for communities;
  • Identify and assist communities that are particularly dependent on energy-producing and energy-intensive sectors before dislocations occur;
  • Leverage and integrate additional resources by involving multiple federal agencies and state and local governments through federal and regional task forces; and
  • Be flexible in addressing community needs by supporting locally determined, comprehensive strategies for five to seven years after the implementation of new climate policies.

C learly, some steps recommended in these reports will require funding. As policies to address climate change are developed, revenue streams from related fees (e.g., from permit fees or auction revenues) could be used to assist with these programs. Addressing climate change through sound policy will make it possible to achieve our environmental objectives while shielding workers and communities from potential economic harm. The authors and the Pew Center are indebted to Robert Atkinson, Ev Ehrlich, and Phil Singerman for their comments on previous drafts of this report.

Executive Summary

The world is becoming increasingly concerned about the risks of global warming from the buildup of greenhouse gases in the atmosphere, but many American decision-makers are worried about the economic impacts of policies that may be needed to reduce U.S. greenhouse gas emissions. The overall size and distribution of the impacts of such policies are uncertain, and depend greatly upon how governments, businesses, consumers, and workers respond to the challenge. Efforts to avert global warming would put some American businesses, workers, and communities at risk of economic dislocation. This paper focuses on how the federal government can best assist at-risk communities. Since the burning of fossil fuels such as coal, oil, and natural gas to produce energy is a major source of greenhouse gas emissions, such communities include those with high reliance on jobs in energy production — say, coal mining in Wyoming, or oil and gas production in Louisiana — and in energy-intensive industries such as steel manufacturing in Pennsylvania.

This is not the first time that important national policies have forced economic change on particular communities. The same story has been told for trade agreements, defense downsizing, and forest protection, for example. In each case, the U.S. government helped affected communities through various forms of economic adjustment assistance. In addition, in the last 20 years, numerous U.S. communities have sought to adapt to wrenching economic change brought about by global competition and recession, both with and without federal assistance.

The United States has substantial infrastructure and experience at the federal, state, and local levels in community economic adjustment. Thus, a foundation is in place for creating a new government program to help communities adversely affected by global climate change policy. Experience in the United States and elsewhere suggests that, although economic adjustment programs do not usually remove the pain of economic disruption, appropriately designed programs can lessen that pain considerably. At the same time, there is substantial room for improvement in existing adjustment efforts.

This paper recommends a new federal adjustment program for communities as part of global climate change policy. Specifically, the United States should do the following: (1) commit to address the problem by designating a single agency, the Economic Development Administration (EDA) of the U.S. Department of Commerce, and authorizing about $550 million dedicated dollars, to design and implement an economic adjustment program; (2) be proactive by identifying communities that are particularly dependent on energy-producing and energy-intensive sectors, and by helping communities to take action before dislocations occur; (3) leverage and integrate additional resources by involving multiple federal agencies and state and local governments through federal and regional task forces; and (4) be flexible in addressing community needs by supporting locally determined, comprehensive strategies for five to seven years.

Such a program would take advantage of available experience and expertise at all levels of government, and would take into account the wide variability in local circumstances and opportunities. By doing so, it would minimize economic dislocation and maximize opportunities to create jobs and protect the environment.

About the Authors

Judith M. Greenwald
Pew Center on Global Climate Change

Brandon Roberts
Brandon Roberts & Associates

Brandon Roberts, president of Brandon Roberts & Associates since 1990, is a public policy consultant specializing in economic and workforce development matters. He works primarily with state- and local-level organizations to develop and implement effective policies and program activities, and to evaluate the benefits of past efforts. He has worked in California, Delaware, Florida, Massachusetts, Michigan, Minnesota, Iowa, Ohio, Oregon, and Washington; in large cities such as Baltimore, Cincinnati, Cleveland, Miami, and Portland; and on a number of projects involving community-based organizations.

Before starting his own consulting firm, Mr. Roberts served as Deputy Director of the Council of State Community Development Agencies in Washington, D.C., where he worked extensively with state economic and community development agencies and helped develop policies and strategies to address the employment needs of low-income individuals. He also has held positions in the U.S. Economic Development Administration and the Executive Office of the President. Mr. Roberts has a BS in government (1975) and a MSP in urban and regional planning (1977) from Florida State University.

Andrew D. Reamer
Andrew Reamer & Associates

Andrew Reamer, Ph.D., is Principal of Andrew Reamer & Associates, a Boston-based consulting firm specializing in economic development and public policy. Dr. Reamer received a Ph.D. in Economic Development and Public Policy (1987) and a Masters in City Planning (1981) from the Department of Urban Studies and Planning, Massachusetts Institute of Technology.

Andrew D. Reamer
Brandon Roberts
Judith Greenwald
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Remarks of Eileen Claussen at City Club of Portland

Remarks of Eileen Claussen
President, Pew Center On Global Climate Change

City Club of Portland
Portland, Oregon

December 14, 2001

Greetings and thank you very much. It is wonderful to be here in Portland, and I want to thank the people at the City Club for inviting me to be a part of your Friday Forum. I noticed on the club's schedule that next week's Friday Forum presenters will be the Oregon Repertory singers. I sincerely hope that none of you got the dates mixed up. I always try to be somewhat entertaining in my speeches, but singing a few holiday favorites definitely crosses the line.

Seriously, I'm glad to have the chance to be here today to talk to you about one of the most profound challenges of the 21st century. That, of course, is the challenge of global climate change. I'd like to tell you where we stand right now in the effort to deal with climate change, both here in the United States and internationally. And I'd like to tell you where we are headed - the kind of world we will leave our children and grandchildren if we stick to business as usual. But most importantly, I'd like to tell you where we need to be headed - the path that instead will allow us to pass to future generations a safer, healthier, more prosperous planet. It is not a simple path. For what is needed, I believe, is a second industrial revolution - one that takes us beyond oil and beyond coal to cleaner, more secure ways to power our global economy. Government must have a hand, a strong hand, in launching this revolution. But it can succeed only if our corporate leaders rise to the challenge as well. For while government can set the goals, only the marketplace can spur the innovation and mobilize the resources needed to achieve them. Fortunately, a growing number of forward-thinking companies already are leading the way.

First, though, I'd like to tell you why the state of Oregon holds such a special place in my heart. Some of you, I'm sure, remember back in the 70' s when Oregon became the first state in the nation to require a deposit on bottles and cans. At the time, I was a young staffer in EPA's office of solid waste. And I thought: Hey, they've got a great idea out there in Oregon. We should let other people know about it. So I put together a nifty little pamphlet describing Oregon's groundbreaking program and EPA started distributing it. Well, not everyone agreed that bottle bills were such a grand idea. The beverage industry was, shall I say, unhappy. And they let my bosses know it. I'm told, in fact, that the chairman of Pepsi raised the matter directly with the president. Soon thereafter EPA decided to "loan" me to an obscure office in Congress where I couldn't cause any more trouble. And when I was finally allowed to return, I was assigned a new area of responsibility: sewage sludge.

I'm pleased to say I was eventually able to rise above sewage sludge. I'm also pleased to note that, all these years later, Oregon is still leading the way on the environment. In fact, I know of no state that is doing more to meet the challenge of global warming. Oregon was the first state to enact mandatory controls on carbon dioxide - requiring that all new power plants meet a tough new emissions standard. The city of Portland and Multnomah County were the first local governments in the United States to adopt a plan for reducing greenhouse gas emissions. And through your commitment to light rail and other smart growth strategies, you are demonstrating that protecting the climate goes hand in hand with preserving Oregon's enviable quality of life. These efforts really do reflect the spirit behind the Oregon state motto, "She flies with her own wings." May you soar higher and higher.

But are others joining you in flight? Climate change is by definition a global challenge. And the best efforts of any one city, state or nation will come to naught unless, ultimately, we all act together. We're by no means there yet - not even close. But it might surprise you to learn that we are in fact making headway. The reason this might surprise you is that the one thing most people heard about climate change over the past year was that President Bush rejected the Kyoto Protocol. His decision indeed was a setback. But let's look at what's happened since.

First, let's look at the international picture. For those of you new to this topic, the Kyoto Protocol is an agreement negotiated in 1997 that does two things: it sets targets for reducing greenhouse gas emissions from industrialized countries; and it allows them to meet those targets through market-based strategies like emissions trading. Don't worry. I'm not going to get too far into this. But it's worth taking a minute to understand why these market-based strategies are so important. Basically, they put the market to work to cut emissions as cost-effectively as possible. In other words, they deliver the greatest environmental benefit at the lowest possible cost. And they create market incentives that drive companies to keep coming up with better and cheaper ways to cut emissions. This is how we've tackled acid rain faster and cheaper than anyone ever imagined. Emissions trading is a concept born here in America, and it was the United States that insisted it be part of the Kyoto Protocol.

While Kyoto established a broad framework, the nitty-gritty rules still had to be negotiated before countries could ratify it. A year ago, those negotiations were at a standstill. Then President Bush rejected the Protocol. Suddenly, the rest of the world was rallying to its defense. In negotiations last July in Bonn, and then last month in Marrakech, nations made the tough compromises and worked out the rules. They're not perfect, but they do establish a workable international system for beginning to tackle this problem. The agreements in Bonn and Marrakech have been rightly declared a triumph of multilateralism. They represent a triumph as well for the principle of harnessing the global market to protect our global environment. It's true, Kyoto's targets take us only a decade into the future, and provide only a small fraction of the emissions reductions we must ultimately achieve. But the bottom line is that we have to start somewhere, and much of the world has now established that starting point. The priority now is to ensure the Protocol's swift ratification and entry into force so we can, at long last, begin to deliver on Kyoto's promise and achieve real progress.

What, then, of the United States? With just 4 percent of the world's population, we generate 25 percent of the world's greenhouse gas emissions. Each year, our emissions grow higher. We've rejected Kyoto, yet we have no real strategy of our own. I'm afraid I have little expectation that the Bush administration is prepared to put forward the kind of proposals needed to launch a serious effort, at least not at the moment. Nor, for that matter, was the previous administration. But just as President Bush's rejection of Kyoto helped rally international support for the Protocol, it has stimulated a very interesting and encouraging bipartisan response on Capitol Hill. Suddenly, both Democrats and Republicans seem eager to demonstrate their commitment to tackling climate change.

For instance, Senator Robert Byrd, a leading Democrat from coal-producing West Virginia, and Senator Ted Stevens, a leading Republican from oil-producing Alaska, are teaming up on a bill that would devote billions to researching and developing climate-friendly technology. It also would establish a climate change office in the White House and give the President one year to develop a comprehensive strategy aimed at stabilizing greenhouse gas concentrations in the atmosphere. A first step, but an important one.

Other bills would require companies to track and disclose their emissions of greenhouse gases, an essential step toward building a comprehensive emissions reduction strategy. This is an idea that the White House seems at least open to considering. In the Senate, there's a serious debate brewing over new pollution standards for power plants - in fact, the first real debate at the federal level over the kind of mandatory controls on carbon dioxide that Oregon already has in place. Finally, another bipartisan duo, Senators John McCain and Joe Lieberman, have said they plan to introduce legislation establishing an emissions trading system covering major sources of greenhouse gases throughout the economy. It's hard to imagine a bill like that moving through Congress anytime soon. But the very idea that two such prominent lawmakers would be advocating such a far-reaching strategy was virtually unthinkable just a year ago.

To be certain, there are many in Congress and elsewhere who remain adamantly opposed to concrete action against climate change. Perhaps they assume, in the greatest tradition of laissez-faire economics, that a rising sea level lifts all boats. There are even those who continue to question whether global warming is real. President Bush expressed his own doubts about the science when he first took office. He asked the National Academy of Sciences to undertake a special review. The NAS came back and said, yes, there are some uncertainties in the science. There always will be, I'm sure. But the NAS went on to say that, despite those uncertainties, the evidence for global warming is strong and growing stronger.

Here's what the science tells us. First, the earth is indeed getting warmer. The 1990s were the hottest decade of the entire millennium, and 1997, '98, and '99 were three of the hottest years ever. Second, this warming trend is almost certain to continue. Projections of future warming suggest an average global increase of two to ten degrees Fahrenheit over the next century. Third, and perhaps most importantly, the evidence strongly suggests that human activities, in particular the burning of fossil fuels, are largely to blame.

What will the impacts of this warming be? How will all this affect our children and grandchildren? Some people like to see the bright side of global warming. Lower heating bills in winter, for instance, and longer growing seasons in the Midwest. But there's good reason to believe that any potential benefits will be far outweighed by the costs.

Rising sea levels will flood coastal areas - a very real worry along portions of the U.S. coastline but a much greater worry for low-lying countries like the Netherlands and Bangladesh. Higher temperatures mean an increase in extreme weather-more flooding, more drought, and more severe storms. Historic patterns of rain and snowfall will be disrupted, putting water supplies at risk. Here in the Pacific Northwest, for instance, warmer winters will mean less snow pack in the mountains and an earlier springtime melt. Water shortages are likely to grow worse. Many of our most threatened species and ecosystems will face even greater risk. Declines in river flow, for instance, could destroy any chance of saving this region's precious salmon runs. And hotter, drier summers will stress the forests and pose an ever greater threat of wildfire.

One of the tremendous inequities of climate change is that the people facing the greatest risks are those least able to bear them. Wealthy nations like the United States can find ways to lessen the impact. We can build sea walls to protect our coasts. Our farmers can switch to other crops better suited to a warmer climate. We can strengthen our public health system to guard against diseases like malaria and dengue fever. But poorer nations struggling to feed and house their people cannot so easily adapt. And, scientists predict, they will be the ones hardest hit. For them, prolonged drought doesn't mean parched lawns and water rationing. It means starvation. Rising sea levels won't just be an inconvenience for those with beachfront property. They'll mean mass migrations and increased competition for scarce land. Lest you think this is all conjecture, it's worth noting that the people of Tuvalu, a small island nation in the Pacific, recently decided to abandon their homeland before it's swallowed by rising seas. All 11,000 residents will be relocating to New Zealand beginning next year.

So this is the kind of world that awaits us if we continue on our present course. What is the alternative? What will it take to keep our planet from overheating? Well, quite obviously, it requires dramatically reducing emissions of carbon dioxide and other greenhouse gases that trap heat in our atmosphere. What is the primary source of these gases? The combustion of fossil fuels. So our goal, over time, must be to end our reliance on coal and oil and to develop new sources of energy that can power our growing economy without endangering our climate. Yes, it is a tall order. As I said earlier, it will take nothing short of a second industrial revolution.

Let me be clear: This revolution cannot take place overnight. It will, in fact, take decades. But there are important steps we should take right now to begin the transition. First, we need to be more energy efficient, so we use less energy to achieve the same results. The United States has made significant improvements in energy efficiency over the last decade. But countries such as the United Kingdom, Germany, Japan and Brazil are all far less energy intensive than we are, and we have clearly have much further to go. Some of this could be as simple as turning off the lights, buying a compact fluorescent next time you need a new light bulb, or carefully checking the energy efficiency ratings the next time you buy a new washer or dryer. We also should be insisting on more energy-efficient cars. The technology exists. The new Toyota Prius, a hybrid car that uses both an electric motor and an internal combustion engine, can go more than 50 miles on a gallon of gas. It's proven so popular you have to wait months to get one. If everyone in America drove a hybrid, we would save about 1.6 billion gallons of oil a year - far more than we import from the Middle East.

Improving efficiency is not enough, though. To address climate change, we will also have to emit much less carbon, and this means switching to less carbon intensive fuels. Some fuel switching can be done now, but we need a serious effort to begin laying the groundwork for the fuels of the future. We've been through energy transitions before. In the 18th century, we still relied largely on wood. In the 19th century, the steam engine took over. In the 20th century, we turned to oil. Now we must develop new fuels to meet the needs of the 21st century.

I can't tell you what the fuel of choice should be a hundred years from now. That will depend on the ingenuity of our scientists and engineers; investment decisions made in boardrooms; the unpredictable course of technological development; and the whims of the marketplace. Solar, wind and geothermal power all hold tremendous promise. But one technology that is generating real interest right now is the hydrogen fuel cell.

Fuel cells are what NASA puts on board rockets to generate power in space. They can run on different kinds of fuels. But whatever the fuel source, the only byproduct is heat and water - pure water. In other words, no smog-forming pollutants and no carbon dioxide. Fuel cells could be used to power cars, and many automakers are now engaged in efforts to make fuel cell cars a reality. They could be used to power businesses or homes. Instead of buying electricity from a coal-burning utility, a fuel cell in your basement no bigger than a central air conditioner could generate all the clean power you need. The use of hydrogen to power fuel cells is appealing because there are so many different ways to produce it. Hydrogen can be extracted from coal, oil or natural gas - or, preferably, produced from renewable energy sources. And it can take different forms. Some energy experts envision the day when, instead of filling your car at the gas pump, you'll pick up "fuel in a box" from the convenience store or a vending machine. You could go about 250 miles on a six-pack.

That's just one possibility, and there are many, many more. The point is that if we are to realize them - if we are to discover and pursue the most promising options - we must get started. This second industrial revolution requires technological and economic transformation on an unprecedented scale. And we must begin making investments now to ensure its success.

There are those who say we can't afford to address climate change, particularly when our economy is slowing. I believe they are wrong, for a host of reasons. I could tell you how the economic models they rely on exaggerate the costs of cutting emissions and fail to take into account the full range of benefits. But instead, let me tell you about the concrete experiences of the companies we work with at the Pew Center on Global Climate Change. Thirty-seven major companies are now members of our Business Environmental Leadership Council. These are primarily Fortune 500 companies - names you'd recognize, like Weyerhauser, Intel, Boeing, DuPont, Shell and Alcoa. Together these companies employ more than 2 million people and generate revenues of nearly $900 billion. And through their investments in emissions-cutting and climate-friendly technologies, they are demonstrating that what is good for the climate can be good, too, for the bottom line.

Many of these companies have adopted voluntary targets for reducing their greenhouse gas emissions. We recently released a report that took a close look at six of them. It looked at the reasons why they took on targets, and what the results have been. The companies said one of the motivations for taking on a target was to improve their competitive positioning in the marketplace. And that, in fact, has been the result. Each of the companies is on track to meeting or exceeding its greenhouse gas goal. Together, they've delivered reductions equal to the annual emissions of three million cars. And all the companies are finding that their efforts are helping to reduce production costs and enhance product sales today.

So, yes, I am confident that with smart strategies that tap the power of the marketplace instead of squelching it, that do not expect more than can be delivered, and that take into account capital stock turnover cycles, we can afford to address climate change. In fact, we can strengthen the long-term health of our economy. Whatever the economic indicators for the latest quarter, over the long haul, increased efficiencies can only improve the bottom line. There are real economic opportunities that come with taking action on climate change. It would be a mistake not to seize them.

Before closing, I'd like to say a word about the new concerns now dominating our national agenda. I refer, of course, to the horrible, haunting events of September 11. The security of our nation is now, and will for some time remain, the overriding concern in Washington, and with good reason. As a result, a host of other vital issues - climate change among them - will for now take a lower profile. But I believe those of us working on climate change can still make an important contribution. We can help show how, with the right strategies, we can both protect our nation and advance the fight against global warming. This is most obvious in the case of "energy security." We all know that continuing to rely so heavily on imported oil is a costly mistake. To some the answer is drilling in the Arctic refuge. But whatever your views on the Arctic, it is clear that no amount of domestic drilling will significantly reduce our reliance on foreign oil. If we are serious about energy security - whether or not we're serious about addressing climate change - we must move beyond oil.

So, where are we in the effort against climate change? Internationally, after a decade of difficult negotiations, we are for the first time on the verge of enacting binding emissions limits for all industrialized countries but one. In the United States, despite our refusal to join the rest of the world in the Kyoto Protocol, there is a growing bipartisan recognition that we cannot continue to blithely ignore our responsibilities as the world's largest greenhouse gas polluter. In a growing number of boardrooms, corporate leaders are seeing climate change not only as a challenge but as an opportunity. And in communities like Portland, ordinary citizens are acting locally to meet what is truly a global challenge. We have a long, long way to go. But we have begun. And that is good. Thank you very much.

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U.S. Domestic Response to Climate Change

July 2001 | Download the PDF

Index

 

Introduction

The United States is the world’s largest emitter of greenhouse gases (GHGs), accounting for roughly 25 percent of global emissions. No strategy to address global climate change can ultimately succeed without substantial and permanent reductions in U.S. emissions. Voluntary efforts in a number of sectors over the past several years have failed to curb the overall growth in U.S. GHG emissions. A number of policy options are available to secure additional emissions reductions. However, to be effective and affordable, a long-term emissions reduction program must couple mandatory GHG reductions with technology development and market mechanisms.

To date, efforts to reduce U.S. GHG emissions have been limited almost exclusively to voluntary activities at the federal, state, local, and corporate level. Many of these efforts were spurred by the United Nations Framework Convention on Climate Change, which set a non-binding target of reducing emissions from industrialized countries to 1990 levels by 2000. Though some voluntary efforts have resulted in significant emissions reductions – some companies, for instance, have cut emissions 10 percent or more – in the aggregate, they have not succeeded in curbing the overall growth in U.S. emissions.1 While technology has improved the energy intensity of products and processes over the last 50 years, this greater efficiency has been outpaced by increased demand driven by economic expansion, population growth, and changing consumer preferences. U.S. emissions rose roughly 12 percent over the past decade, and are projected to continue rising for the foreseeable future.2

U.S. GHG Emissions
Source: U.S. EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-1999. 2010 projections for CO2 are from: U.S. DOE. Annual Energy Outlook 2000. 2010 projections for non-COs gases are from: U.S. EPA. Annual Energy Review (2000).


(See Figure 1.) Voluntary programs can make an important contribution to a domestic climate change program, and can provide valuable experience for designing future efforts, but they cannot stimulate the broad engagement that will be necessary to achieve the level of emissions reductions that will ultimately be required.

Climate change is a long-term challenge that will require sustained global action and investment over many decades. Ideally, a national strategy would be guided by a specific long-term emissions goal. It would also couple short- and long-term measures – and both supply and demand elements – to signal markets to begin the transition toward that ultimate objective. More specifically, short-term measures are needed to improve energy efficiency and encourage the use of lower-carbon fuels; long-term measures are needed to encourage sustained investment in development of the technology and infrastructure needed to facilitate the transition to a low-carbon economy. Further, because energy consumption is an important component of GHG emissions, any domestic energy policy program must be geared toward long-term GHG emissions reductions. (See Figure 2 for chart of emissions by sector in carbon dioxide equivalents [CO2E].)

A domestic strategy ultimately must reflect any international commitments by the United States. However, its design and implementation should proceed now even if the United States is not yet prepared to enter into an international agreement. As domestic and international programs evolve, close coordination between them is critical. This is especially important for companies that operate and compete both domestically and abroad, and for U.S.-based companies that sell products abroad, as they will be subject to rules dealing with climate change in other countries. In addition, coordination is necessary to maximize the effectiveness of emissions trading and other flexibility mechanisms now being developed at the international level.

The cost of meeting a given emissions target can vary by orders of magnitude depending on the approach taken. In general, the most cost-effective approaches allow emitters flexibility in deciding how to meet a target or performance level; provide early direction so targets can be anticipated and factored into major capital and investment decisions; and employ market-based mechanisms such as emissions trading to achieve reductions where they cost the least. To ease the transition and enlist the broadest possible participation, early targets should be realistic and achievable without stranding major capital investments or imposing undue economic hardships. These could be followed over time by more stringent constraints that allow for the turnover of existing capital stock and the development of new breakthrough technologies and innovative measures for reducing GHG emissions. This paper outlines possible elements of a comprehensive domestic strategy that couples short- and long-term measures. The proposed elements – some voluntary, others mandatory – aim to:

  • improve the tracking and reporting of greenhouse gas emissions;
  • promote new technologies and practices; and,
  • provide a foundation upon which to secure long-term emissions reductions.

 

Sources of Total GHG Emissions
Source: U.S. EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-1999.
Note: Emissions from electricity produced by industries but sold to the grid is included in the "Industrial" category. Emissions due to other industrial activities as well as residential and commercial use of electricity are included under "Electric Utilities." Excludes emissions from U.S. territories.

While each of these objectives can be pursued in a number of different ways (several options for securing emissions reductions are proposed), an effective strategy must address all three.

Tracking and Reporting Greenhouse Gas Emissions

No effort to reduce greenhouse gas emissions can succeed without the accurate measuring and tracking of emissions. Improved tracking and reporting of emissions reductions could provide the basis for government assurances that companies will not be penalized for their early reductions under a future climate policy. Public disclosure of emissions data can also serve as a powerful incentive for reductions.

A first step is establishment of a registration program to more accurately and reliably measure, report, and track GHG emissions. This could be done through legislation that builds on current efforts such as the Department of Energy’s 1605(b) program. The current program has limited value because its reporting standards lack rigor, there are no verification requirements, and many companies choose not to report. In an improved registry program, a company would establish a baseline consisting of current aggregate emissions from all major GHG sources under its control in the United States. Gross emissions on an annual basis could be compared to this established baseline. In addition to accounting for emissions from a company’s core operations, an improved registry should over time develop the means to measure, report, and track GHG emissions resulting from: the use of products manufactured by that company; offsets achieved through sequestration projects designed to store carbon in forests, soils, oceans, or underground; and offsets achieved through increased energy efficiency.

A reliable registry would make it possible to provide “baseline protection” for companies taking action now to reduce their emissions. These entities could be assured that – in the event of future controls involving the allocation of emissions allowances or requiring emissions reductions – they would not be penalized for reductions already achieved voluntarily. The improved registry program could also provide a mechanism to recognize the emissions reductions resulting from companies manufacturing more efficient or carbon-saving products. Finally, it could ensure that GHG reductions and sequestration offsets are of sufficient integrity that they can be traded and sustain their value in future years. This registry would include reductions and offsets achieved outside of the United States, in both developed and developing countries. In this manner, both gross and net (reductions and offsets) emissions would be recorded.

An additional step would be to require public disclosure of GHG emissions data for all facilities or companies whose emissions exceed a given threshold. At present, only electric generating sources must report their CO2 emissions and, although publicly available, emissions data are not tabulated and disclosed in a manner that encourages companies to reduce their emissions voluntarily. To address these shortcomings, a mandatory GHG reporting program should apply to all major source categories of GHG emissions and require public disclosure as is now required under the federal Toxics Release Inventory (TRI) program. Disclosure reports would be subject to verification and reporting entities would face enforcement action if emissions were misrepresented. As with the TRI program, reported data would be aggregated and made available on facility-specific, company-wide, and source-category bases. Under the TRI program, such disclosures have encouraged companies to assess potential mitigation opportunities and reduce emissions voluntarily, and the same is likely with a GHG reporting program. Gross emissions from an entity’s U.S. sources as well as net emissions (after considering sequestration activities and trading) would be reported to encourage comprehensive mitigation strategies.

A mandatory GHG reporting obligation (and an improved registry) could be linked to a voluntary program for mitigating GHG emissions. Such linkage would likely increase the effectiveness of each initiative, judging by the success of the voluntary pollution prevention programs that were coordinated with mandatory TRI reporting.3 Following the model used in EPA’s 33/50 (Industrial Toxics) Project, the voluntary program could establish clear performance targets to be achieved by each sector within specified time frames. Although voluntary, participation in the program could be limited to only those companies willing to make corporate-wide commitments to achieve minimum reduction levels from their core business operations or prescribed performance levels for products sold in the United States. Setting minimum standards would likely increase the pressure for companies to step forward with voluntary commitments achieving substantial emissions reductions. The minimum standard approach could also be combined with a graduated scale of incentives for those who make voluntary commitments, rewarding those who exceed their emissions goals with greater financial or other incentives like tax credits.

Finally, improved registries coupled with reporting requirements would also serve as an important foundation for mandatory approaches to reducing GHGs.

Promoting Clean Technologies and Practices

The ultimate success of a climate change strategy will hinge on the timely development and deployment of technologies that over time can substantially reduce the carbon intensity of the overall U.S. economy – including industry, the transportation sector, and residential/commercial activity. (See Figure 3 for historic energy use of these sectors.) In the short term, improved technologies can significantly enhance energy efficiency, provide opportunities to store – or sequester – carbon, and expand use of lower-carbon fuels (such as natural gas). In the long term, new technologies will be needed to develop non-fossil energy sources such as biofuels, wind, hydrogen, and solar, and provide opportunities for more permanent forms of sequestration.

Energy Consumption by End-Use Sector
Source: U.S. DOE. Energy in the United States: A Brief History and Current Trends (1999).


A successful technology strategy demands sustained, coordinated investments at a very high level from all stakeholders. A variety of incentives and direct investment tools can be used to promote technological innovation, from basic research to deployment:

  • Targeted tax credits or low-interest loans can encourage the development and adoption of energy-efficient technologies (such as combined heat and power, and state-of-the-art lighting); clean fuel technologies (including advanced fossil fuel technology, hydrogen, fuel cells, and biofuels); and carbon storage in forests and agricultural soils, using innovative management techniques.
  • Investment in basic research may be especially critical in inventing breakthrough technologies that will facilitate the transition to a low-carbon economy.
  • Public-private partnerships, such as Industries for the Future and the Partnership for a New Generation of Vehicles, can team government and corporate researchers to accelerate technology gains.
  • Basic research and tax credits could accelerate the development and diffusion of climate-friendly alternatives to non-CO2 greenhouse gases or technologies and practices that reduce their emissions.
  • Investment in training to improve agricultural practices can decrease the release of methane (CH4) and nitrous oxide (N2O).
  • Public education through the use of required labeling and other means can help consumers reduce their contribution to climate change.
  • Incentives to builders and landlords can encourage the use of energy-efficient materials and appliances in new construction and rental units.


Finally, improved product efficiency standards – coupled with incentives to exceed minimum requirements – can achieve significant emissions reductions. Under the traditional command-and-control approach, the incentive is to meet, but not exceed, a government-set standard. A combined hybrid standard/incentive approach (e.g., one that combines a minimum efficiency standard with a sliding tax or emissions credit for those who go beyond the standard) would provide incentive to exceed minimum regulatory requirements. This approach should be added to existing product standards as they come up for review and employed for new products for which standards have not yet been set.

Securing Emissions Reductions

An especially critical element of a domestic climate change program will be the design of a market-based GHG emissions management framework to ensure significant long-term reductions in emissions. Also, an effective program ultimately will entail some form of mandatory requirements. The approaches that follow include voluntary activities that could be implemented in advance of, or alongside, mandatory emissions reductions:

Enter into agreements with companies willing to make significant, enforceable commitments to achieve net GHG emissions reductions in lieu of future GHG control requirements.

Securing regulatory certainty may be a powerful incentive for those willing to undertake substantial GHG reduction commitments. By committing to take action yielding specified reductions over an established period of time, a firm could receive a commitment from the government that (as long as its contractual obligations are met) it would not be bound by subsequently developed GHG controls over the same time period. For example, if a company were to commit to significant reductions over a 20-year period (e.g., a 20 percent reduction achieved either through steady declines of 1 percent per year or through a major capital investment at some point during this timeframe), the company could avoid additional mandatory GHG control obligations during the same 20-year period.4 This approach would allow companies to move forward with substantial capital investments that will secure significant emissions reductions.

Under this approach, reductions below company baseline levels (e.g., 1990 GHG emissions) could be achieved through meeting either rate-based or specified net targets. These commitments would provide baseline protection, and shelter firms from additional requirements developed during the term, in exchange for legally binding agreements containing measurement, verification, and reporting requirements. Such an approach would require enabling legislation authorizing the Executive Branch to enter into these agreements. This legislation should include provisions for public notice and comment. Companies also could be allowed to enter into similar agreements with respect to their services or products manufactured and sold in the United States.5

Ultimately, the ability of the United States to achieve significant long-term GHG reductions depends on our success in the design and implementation of a mandatory program to reduce emissions.

Additional features could include allowing program participants to trade emissions credits and allowing credit for reductions achieved through sequestration and offsets. In other words, companies that reduce their emissions beyond the levels specified in the agreement would be able to trade these additional emissions reductions with firms that were unable to meet their reduction targets under a future regulatory program. Similarly, credit for real, quantifiable, and verifiable sequestration activities could be granted towards the obligations and, when in excess of specified targets, could be sold in an emissions trading market.

Set voluntary emissions reduction targets for major industry sectors with a trigger mechanism for imposing mandatory requirements if a sector falls short of its targets.

A second approach would establish initial rate-based or specified reduction targets for major industry sectors, but impose stricter controls for sectors that do not meet their initial targets. The program, for example, could call for a sector to stabilize its emissions at year 2000 levels over the 2005-to-2010 period, while providing federal authority to impose stricter mandatory control requirements by a later date if the sector as a whole fails to achieve its reduction target. Similar performance targets could be set for products, such as automobiles and appliances. Companies would receive shelter from the stricter requirements so long as they achieve their proportionate share of the reduction target.

One advantage of this approach is that it would promote immediate action towards the reduction target, even while the details of the mandatory control program are being developed. Another advantage is that it would enable companies to coordinate their emissions control strategies for conventional air pollutants with their carbon dioxide reductions. This would be especially important for those sectors whose near-term control obligations for conventional air pollutants (involving major capital investments) may conflict with a long-term GHG control strategy for that sector.

New legislation would be required to either establish general criteria that apply economy wide or set out design elements specific to individual sectors. In the latter case, for example, the legislation could specify for the power generation sector: (a) the initial and “backstop” reduction levels, (b) the reduction timeframes, (c) allocation of emissions allowances through a generation performance standard, (d) the ability of participants to trade emissions credits, and (e) the flexibility to “bank” allowances for future use.

In addition, if a sector that makes products fails to meet its target, those companies not doing a proportionate share could have tighter efficiency standards imposed.

Allow an opt-in for coverage of carbon dioxide emissions in conjunction with air regulatory programs.

Many companies – particularly utilities – are interested in addressing their CO2 emissions in conjunction with new reduction obligations likely to be enacted for other pollutants. Many studies have documented substantial environmental and economic benefits of harmonizing the timing and reduction levels of multiple air pollutants.6 An “opt-in” approach would permit these companies to consider reduction obligations and goals comprehensively, thereby minimizing the chance of stranding pollution control investments aimed at conventional pollutants without regard for CO2. By providing an opt-in strategy, overall emissions (including GHGs) could be considered simultaneously – avoiding the now-common scenario that control strategies devised for reductions in traditional pollutants have little or no beneficial impact on GHG emissions. (Post-combustion controls aimed at reducing conventional pollutants, in fact, often increase GHG emissions. In contrast, all GHG reduction strategies that reduce fuel consumption – the largest GHG emissions source – also reduce conventional air pollutants.) Harmonizing time frames for achieving reductions could avoid piecemeal and uncoordinated implementation of conventional and GHG emissions.

At the same time, streamlining the existing New Source Review (NSR) program for changes in facilities could enable power plants, refineries, and other major stationary sources to improve their production efficiencies more easily. Such efficiency improvements directly translate into lower CO2 emissions. Companies participating in this “opt-in” could be allowed to implement environmentally beneficial projects without triggering the NSR requirements.

Design and implement an economy-wide domestic emissions program to meet a mandated cap.

Ultimately, the ability of the United States to achieve significant long-term GHG reductions depends on our success in the design and implementation of a mandatory program to reduce emissions. Since such a program will take time to design and administer, the near-term approaches discussed above should be developed in such a way that they are consistent with important design elements of a future mandatory program. The most cost-effective method of obtaining such reductions is likely to come in the form of a domestic emissions trading program that could be integrated with an international trading regime.

Elements of an effective domestic trading program could include:

  • allocation of permits to existing and new sources based on historic emissions, output levels, auction, or – preferably – some combination thereof;
  • creation of an independent authority to oversee the GHG registry and trading activity;
  • providing for a declining cap in permitted GHG levels over time;
  • including credit for other GHG emissions on a CO2-equivalent basis;
  • establishing a multi-year compliance period for meeting any GHG emissions reduction obligation; and,
  • recycling revenues from auctioned permits to reduce other tax burdens, increase R&D, and provide transition assistance to affected workers and communities.

Ideally, a domestic program should be compatible with trading programs in other countries to allow credit for reductions undertaken abroad. Also, with improved confidence in measuring and monitoring sequestration-related activities (both domestically and abroad), credit for carbon storage should be included.

Conclusion

To address global climate change effectively, the United States must actively pursue real reductions in GHG emissions at home and abroad. The steps outlined here chart a course for a sound, credible, and cost-effective domestic program. Starting now on a path to reduce these emissions is necessary both to meet the environmental objective of moderating human interference with the climate system and to avoid the need for more costly measures in the future.

 


Endnotes

1 A significant investment has been made in a variety of federal programs to encourage voluntary reductions. Such programs include: the U.S. DOE’s Climate Challenge Program for electric utilities; and U.S. EPA programs such as Climate Wise, the Landfill Methane Outreach Program, the Coalbed Methane Outreach Program, Energy Star, and the Green Lights Program, as well as the U.S. Initiative on Joint Implementation. In addition, DOE’s Voluntary Reporting of Greenhouse Gas Program required by Section 1605(b) of the Energy Policy Act of 1992 records the results of voluntary measures to reduce, avoid, or sequester carbon. During 1999, a total of 201 U.S. companies and other organizations reported on 1,715 projects that achieved reductions and sequestration equivalent to 226 million metric tons of carbon dioxide, or about 3.4 percent of total 1999 greenhouse gas emissions. (Voluntary Reporting of Greenhouse Gases, 1999, DOE/EIA – 0608(99), February 2001.)
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2 In the United States, the transportation, industry, and combined residential/commercial sectors are each responsible for roughly one third of overall emissions.
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3 EPA enjoyed considerable success in encouraging substantial voluntary reductions of 17 toxic chemicals by linking the TRI reporting program with a voluntary pollution prevention program. Entitled the 33/50 (Industrial Toxics) Project, this entirely voluntary program established an interim goal of a 33 percent reduction by 1992 and an ultimate goal of a 50 percent reduction by 1995 in aggregate emissions of 17 high-priority toxic chemicals. Individual companies entered into voluntary, non-binding commitments to achieve specific reductions on a company or facility basis. In addition to achieving the ultimate goal in 1994 (one year ahead of schedule), the 33/50 Program enhanced the effectiveness of the TRI reporting program. Most importantly, participating facilities reported substantially more reductions of the 33/50 targeted chemicals than of other TRI chemicals.
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4 Similar relief has been provided for voluntary early reductions in other regulatory contexts. For example, section 112(i)(5) of the Clean Air Act provides a 6-year compliance extension from air toxic control standards set under section 112(d) for achieving early reductions of hazardous air pollutants (HAPs). The 6-year extension applies to those facilities achieving a 90 percent reduction in listed HAPs (95 percent reduction in the case of HAP particulates) before the proposal of the applicable HAP emissions standard(s). The reduction obligation must be federally enforceable and incorporated into the facility’s permit issued under Title V of the Clean Air Act.
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5 In such cases, companies would make binding commitments to improve the performance of their products sold by specified amounts over the term of the agreement. Auto manufacturers, for example, could agree to meet declining GHG emissions budgets reflecting improvements in fuel efficiency of vehicle fleets sold for each model year during the agreement. Appliance manufacturers could commit to improving efficiency of their products by set amounts over a fixed period of time.
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6 See, for example, STAPPA/ALAPCO, Reducing Greenhouse Gases and Air Pollution: A Menu of Harmonized Options (October 1999); and EIA, Analysis of Strategies for Reducing Multiple Emissions from Power Plants: Sulfur Dioxide, Nitrogen Oxides, and Carbon Dioxide (December 2000).
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Press Release: Climate Change Could Cause Major Changes in U.S. Ecosystems, New Report Says

For Immediate Release :
Wednesday, December 13, 2000

Contact: Katie Mandes, 703-516-4146
             Dale Curtis, 202-777-3530

Climate Change Could Cause Major Changes in U.S. Ecosystems, New Report Says

Washington, DC -- Global climate change will cause major changes in natural ecosystems - and the plants and animal communities that make up these ecosystems - across the United States, according to a report released today by the Pew Center on Global Climate Change.

The report describes the very real possibility that global warming will disrupt the integrity of many of the terrestrial ecosystems on which we depend - ecosystems that provide humans such valuable goods and services as foods, raw materials, recreational opportunities, clean air and water, and erosion control. The importance of ecosystems extends beyond economics and tangible benefits, with many people placing a high value on the spiritual and aesthetic role nature plays in their lives. Despite the crucial roles of terrestrial ecosystems, they are increasingly threatened by the impacts of a growing human population, through habitat destruction and air and water pollution, and now as a result of global climate change.

"This report describes how climate change is likely to profoundly alter the natural environment," said Pew Center President Eileen Claussen. "It underscores the point that domestic and international action to deal with climate change is needed sooner rather than later." The report was commissioned by the Pew Center and written by two ecologists, Dr. Jay R. Malcolm of the University of Toronto and Dr. Louis F. Pitelka of the University of Maryland Center for Environmental Science. Among the authors' conclusions:

  • As the earth warms, the distribution of terrestrial ecosystems will change as plants and animals follow the shifting climate. For example, the eastern United States will likely lose many of its deciduous forests as climate zones shift northward. Thus, sugar maples, so much a part of northeastern states such as Vermont, are likely to be replaced by oaks. Likewise, some habitats - such as those found in the high elevations in mountainous regions of the West - are likely to shrink in a warming world.
  • Both the amount and rate of anticipated warming pose threats to the nation's biological diversity. The rate of anticipated climate change is estimated to be ten times that seen in the last Ice Age. As a result, certain species may face dwindling numbers and even extinction if they are unable to migrate fast enough to keep up with the changing climate.
  • Climate change is likely to alter the quantity and quality of the various goods and services that ecosystems provide. For example, climate change is likely to affect the ability of ecosystems to filter air and water pollutants and to control soil erosion.
  • Modeling studies estimate that the productivity of plants could change little or could increase substantially. However, these productivity changes will not be uniform and some regions could see declines. While productivity may rise, so could decomposition and, with it, the release of carbon to the atmosphere.
  • The effects of climate change on ecosystems must be considered in the context of a range of human-caused impacts on ecosystems. Overall, the new threat of climate change is likely to be especially damaging for ecological communities and species that have suffered the greatest disruption from human development. Natural ecosystems already under stress because of air and water pollution will have diminished capacity to adapt to climate change. Likewise, habitat destruction and fragmentation will lessen the chances that species will successfully migrate to more suitable climates and habitats.
  • It is important to remember that ecosystems are inherently complex, and our ability to predict how ecosystems will respond to climate change is limited. This uncertainty will limit our ability to anticipate and minimize the effects of climate change on ecosystems. In order to maximize nature's own capacity to adapt, government officials and community leaders should continue to support efforts to conserve biodiversity and protect natural systems.

A complete copy of this report and other Pew Center reports can be accessed from the Pew Center's web site, www.c2es.org. About the Pew Center: The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, leads the Pew Center.

The Pew Center includes the Business Environmental Leadership Council, a group of large, mostly Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center; it is solely supported by contributions from charitable foundations.

Op-Ed: Getting It Right: Climate Change Problem Demands Thoughtful Solutions

OPINION EDITORIAL
"Getting It Right: Climate Change Problem Demands Thoughtful Solutions"

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

Appeared in the Washington Post

November 14, 2000

Many of the government officials gathering this month for the climate change negotiations in The Hague are hoping to put the finishing touches on rules to implement the Kyoto Protocol. But getting those rules right is more important than getting them all completed.

Still unresolved on the eve of the meeting are a range of very complicated political and technical issues that will play a decisive role in determining whether we achieve our goal of stabilizing the earth's climate system. It is not a stretch to say that how we decide these issues will determine how we are judged by future generations.

Decision-makers in The Hague should remember that the Kyoto Protocol was designed as both a first step in reducing atmospheric concentrations of greenhouse gases and as a framework for long-term, cost-effective action. In other words, this is a treaty that will have to stand the test of time. Short-term political considerations-including the desire to resolve all remaining issues this year-should therefore take a backseat to the goal of creating a global system that is transparent, fair, environmentally effective, economically efficient, and as simple as possible.

The Remaining Issues

Four key sets of issues remain in play as the negotiators come together:

  1. The Kyoto Mechanisms. The Kyoto mechanisms were designed to allow countries to pursue the most cost-effective means of reducing their emissions-for example, by engaging in international emissions trading. But there are provisions being negotiated that would make the Kyoto mechanisms totally inoperable, and others that would seriously limit their use. If the negotiators are careless in defining the rules, or determined to constrain when and how the mechanisms can be used, this will simply increase the costs of complying with the Protocol. And the result might be a higher level of noncompliance, an outcome that no one should want.
  2. Carbon Sequestration. The question here is whether and how countries should receive credit toward their emissions reduction targets for using agricultural lands and forests to store carbon. A related question is whether credit should be given for investments in sequestration projects in developing countries. The important role of soil and forest sequestration in stabilizing the global climate system cannot be denied. However, we have not yet defined what types of sequestration activities ought to count-or even how to count them.
  3. Compliance. Yet another unanswered question is whether the Kyoto Protocol will include binding consequences for noncompliance. In other words, how will we penalize those countries that miss their targets? This is a crucial issue to the Protocol's success. Only by establishing and enforcing significant noncompliance penalties can we create a fair and efficient global system, and one that yields results.
  4. Assistance to Developing Countries. Developing countries properly argue that the industrialized world is not doing enough to implement provisions of the United Nations Framework Convention on Climate Change. In that precursor agreement to the Kyoto Protocol, the United States and other nations pledged to support developing countries in their efforts to reduce emissions through capacity building, technology transfer, and funding for "adaptation" initiatives. Decision makers in The Hague will have to respond seriously to these concerns at the same time as they are working on the more fractious issues of the Kyoto framework.

Looking Ahead

As if resolving these immediate questions were not enough of a challenge, everyone concerned with this issue must also give serious thought to the future. After all, the 2008-2012 deadline for achieving the first round of emissions reductions under the Kyoto Protocol is fast approaching. And, even if these initial targets are met (an unlikely prospect), they represent only a first step toward the sustained and significant reductions in emissions that will be necessary to reduce the threat of climate change throughout the 21st century.

A crucial issue for the future, then, is to think about what kind of targets we will have to establish in the years after 2012. At the same time, we need to think about how to involve developing countries in these future global efforts in a more active way. Developing countries are struggling to lift their people to a higher standard of living, and doing so will mean absolute increases in energy use and emissions.

We will accomplish very little, if anything, by requiring developing countries to achieve short-term emissions reductions. The better approach is to craft an equitable and effective framework for future targets for all countries, bearing in mind that we face a common challenge: maximizing the environmental benefits we are able to achieve while minimizing the costs of reducing and limiting our emissions.

Meeting the challenge of global climate change calls for no less than a second industrial revolution. We need to promote new technologies and new investments that will put the entire world on a path to clean economic development. And, in creating the global legal framework to make this happen, we need to make absolutely certain that we get it right.

Appeared in the Washington Post, Tuesday, November 14, 2000— by Eileen Claussen

Climate Change: A Challenge to the Conventional Wisdom

Climate Change: A Challenge to the Conventional Wisdom

Eileen Claussen
Executive Director, Pew Center on Global Climate Change

World Aviation Conference
San Francisco, California

October 20, 1999

Good morning. I had a lovely flight to San Francisco yesterday. So let me begin by thanking you for making that possible. And we can wait until my presentation is over to see whether you think I deserve a smooth flight back. I must tell you that I accepted your very kind invitation to speak at the World Aviation Congress because I thought it would be a perfect place to challenge two pieces of what could be called "the conventional wisdom:" the first is that industry always opposes responding to environmental problems by initially doubting the scientific basis of the problem, then arguing that responding to the problem is too costly, and finally, arguing for a delayed timetable for the response; the second is that leadership on public policy issues must always come from government.

But before I challenge these views, it may be useful for me to provide a little background on the global climate change issue. I believe this issue represents one of the most significant challenges of the next century: it's a science issue and an environmental issue; a global issue and a national issue; a technology issue and a fairness issue; a business issue and an economics issue. It is not likely to go away in the short term no matter what we do. And, if we don't do anything, it won't go away in the long term either. So let me give you a brief sketch of what we know and where we stand, and then spend a little time talking about practical solutions, the Pew Center on Global Climate Change, and the aviation industry. In so doing, I hope that I can convince you that the best response to the conventional wisdom is real information, analysis, assessment, and action, and that some in industry, and in the aviation industry in particular, are clearly up to the task. My job, I think, is to inspire all of you to take on this challenge and help provide the leadership that we need and that is so sorely lacking.

But to begin at the beginning, let's look at the science. The earth's atmosphere is made up mainly of oxygen and nitrogen, but it also contains other naturally occurring gases, including water vapor, carbon dioxide, methane and nitrous oxide, that are responsible for a natural greenhouse effect. Without this natural greenhouse effect, the earth would be about 34 degrees colder than it now is. But atmospheric concentrations of these gases have been rising, particularly since the late 1800's, as has the average surface temperature of the globe, which has warmed by 0.6 degrees centigrade. In their analyses of these and other data, most of the world's best scientists are agreed on two things: that the earth will continue to warm (we estimate 1.3 to 4.0 degrees centigrade by 2100), and that human-induced greenhouse gases will be at least partly responsible for that warming. I don't want to over simplify the consensus that exists here. There remain significant uncertainties (like how the formation and dissipation of clouds affect the climate), and there remain skeptical scientists. But the greatest uncertainties surround not whether there is, or will be, a change in the climate, but rather what the impacts of that change will be, where they will be felt, and when.

What do we know about the impacts of climate change? If the amount of warming over the next century is as currently predicted, it is quite clear that there will be a rise in sea level, estimated to be between 17 and 99 centimeters. For the United States, the rate of warming is expected to be noticeably faster than the global mean rate, particularly across the northern Great Plains and the northeastern states. These temperature changes are expected to increase winter precipitation in northern latitudes, increase the frequency of extremely hot days, and decrease the frequency of frosts. Changes in the incidence of daily precipitation extremes are highly uncertain, although there is some evidence suggesting an increase in the frequency of wet extremes. The effects of these temperature and precipitation change on agriculture, water resources, coastal resources, health and ecosystems are expected to be regionally significant. For example, while climate change is not expected to threaten the ability of the United States as a whole to feed itself, regional patterns of agricultural production are likely to change, and many crops will have to be grown in more northerly latitudes. Similarly, we can expect climate change to have impacts on our nation's water supply because of increased flooding in northern latitudes and snow-melt driven basins. At the same time, the frequency and severity of dry spells and droughts is also predicted to increase, although at different times and in different regions. Sea-level rise, with concurrent increases in storm frequency and/or intensity, is likely to affect some of our coastal areas, particularly the Atlantic coast, the Louisiana delta and the San Francisco basin. But my objective here is not to give you a laundry list of possible or probable environmental effects, but simply to suggest that we know enough about the science and the environmental impacts of climate change to begin taking steps to address its consequences. We all live in worlds where we analyze risks, make decisions, and take appropriate actions based on our risk assessments. This issue is clearly at a stage where we must move beyond denial and debate, and focus ourselves on rational action.

Rational action. It is probably a concept that we can all find appealing. But it seems to me that it is easier to say it than to take it, particularly when we are dealing with an issue like this where polarization of views is the norm, and coherent discourse and problem solving are rare. As some of you may imagine, and others of you may know first hand, this is a highly political issue, and I mean "big P" political: Republicans v. Democrats; Europe v. the United States; developed countries v. developing countries. It is also a "small p" political issue: scientists associated with the Intergovernmental Panel on Climate Change v. skeptical scientists; industry winners v. industry losers; the Kyoto Protocol as the solution to the climate change issue v. Kyoto as an agreement that will never enter into force. So perhaps I can be most helpful by giving you a little context, and then moving into a discussion of some practical paths forward.

In thinking about the climate change issue, it is both obvious and easy to suggest that climate change is a global problem that demands a global solution. And, of course, it is true. Greenhouse gases emitted in Delhi can affect the climate in Dallas, just as emissions in Chicago can affect the climate in Calcutta. On the other hand, global solutions cannot be found unless individual nations, businesses, and even individuals search for, and implement their own solutions. We have a broad global framework negotiated in 1992 and now ratified by 179 countries, including the United States, that establishes an overall goal of preventing dangerous anthropogenic interference with the climate system, and requires all countries to take policies and measures to reduce their greenhouse gas emissions, consistent with their circumstances and abilities. We also have the Kyoto Protocol, negotiated in December of 1997, and now signed by 84 countries, including the United States, and ratified by 15. This protocol establishes legally binding emission reduction targets for developed countries (7% below 1990 emission levels for the United States by 2012). It also allows for emissions trading and joint implementation among countries with targets, as well as use of a Clean Development Mechanism for project-based emission reductions between developed and developing countries. But perhaps the best way to look at the Kyoto Protocol is to look at what it does not contain, and what remains to be done.

It does not, for example, include any emission reductions or limitations beyond a first step for developed countries only. This is an obvious problem, since successfully addressing the matter requires more than one-step as well as participation from countries beyond those in the developed world. Yet the Protocol does not come to grips with what future steps might look like, for either developed or developing countries, or even what the framework for making decisions on these steps might be. What are the factors that should be considered in determining appropriate obligations for different countries or groups of countries to reduce or limit their emissions? To what extent should responsibility for the problem, past, present and future be a factor? Should it be tempered by a country's ability to pay for mitigation activities? Should emission rights be granted to countries based on historic emission levels, or should they be distributed on a per capita emissions basis? And what kind of system is effective, practical and fair?

The protocol does contain a framework for achieving emission reductions where they will be most cost-effective by including provisions on emissions trading, joint implementation, and the establishment of a Clean Development Mechanism, but it provides no specifics on how these mechanisms might work. It includes the possibility of sequestering carbon in forests and soils, but contains no specifics on how carbon that is sequestered should be included in a nation's total emissions budget. And it does not contain any provisions related to compliance, another issue that requires a serious and thoughtful response.

But as a practical matter, it seems to me that a framework for international action to deal with the climate change issue will evolve over the next decade no matter what current national and global politics suggest about the Kyoto protocol. And if you take this view of the inevitability of global action, and couple it with the view that the science is compelling enough to begin taking serious steps to address it, then the emphasis shifts to action frameworks and actions closer to home: national actions, company actions, and individual actions.

So where do we stand domestically? Unfortunately, the complications at home are as daunting as the complications abroad. While there is concern, interest, and a willingness to act on the part of the general public, some in the business community, and some in government, particularly at the State and local levels, the issue is now enmeshed in difficult and frustrating partisan politics. While the science remains somewhat controversial (although far less than even one year ago), it is the Kyoto Protocol that has raised the tensions dramatically. It is rare, in Washington, to be able to get past the question of whether to support Kyoto or declare it dead. As a practical matter, this has translated into arguments on the size and scope of the climate change budget, debates over whether Federal employees should be allowed to talk about the Kyoto Protocol, and attempts to use economic analysis to prove either that Kyoto implementation would ruin the economy or that it would be virtually free. What it has not translated into is the further development and implementation of programs that would change the expected trajectory of greenhouse gas emissions, or the passage of legislation that would either protect the 1990 baseline for companies that have voluntarily reduced their emissions over the past decade or provide incentives for more companies to move forward with emission reduction efforts.

I feel compelled to add here that the situation in the United States is unique among the countries of the world. The United Kingdom is now in the process of planning a domestic emissions trading experiment. The Danish government has already secured legislative authority to implement a trading program, and other emissions trading programs are under development in Norway and Sweden. The Germans are implementing a modest tax program. The Netherlands has a more traditional program full of different policies and measures that has been approved by their parliament. Whether these programs will work, or how well they will work, remains uncertain. But they do reflect serious attempts to experiment and move forward, to take the risk necessary to determine what approaches will ultimately be successful. There is even movement in the less developed world: privatization of the electricity sector is moving forward in India, where competition is expected to increase the use of natural gas and lower greenhouse gas emissions; Korea is beginning to plan for opening up their power sector to competition, again with a projected increase in the use of natural gas; and China, which has dramatically lowered its energy consumption per unit of output over the past decade, is on a path to continue making significant energy intensity improvements over the next decade.

Can more be done to deal with this problem than is apparent from the current level of activity? Of course. But if the U.S. government, or global governments more broadly, are either not able to come to grips with the more challenging issues that must be addressed, or unwilling to exercise real leadership, who will? I believe the answer is obvious and already in evidence, and I hope you will forgive me for the following advertisement. When the Pew Center on Global Climate Change was formed in May of 1998, there was little that was pushing 13 companies (the Washington Post, in an editorial, called them "a few brave firms") to publicly declare that

1 - they accept the views of most scientists that enough is known about climate change for them to take actions to address its consequences;

2 - that businesses can and should take concrete steps now in the U.S. and abroad to assess their opportunities for emission reductions; establish and meet emission reduction objectives; and invest in new, more efficient products, practices and technologies; 

3 - that the Kyoto agreement represents a first step in the international process but that more must be done to implement the market-based mechanisms that were adopted in principle in Kyoto, and to more fully involve the rest of the world in the solution;

4 - and that we can make significant progress in addressing climate change and sustaining economic growth in the United States by adopting reasonable policies, programs and transition strategies.

Three of these companies are leaders in your industry as well: Boeing, Lockheed Martin and United Technologies. And there was little pushing the additional 8 companies that have since affiliated with the Pew Center. And there was little pushing those companies that have already set reduction targets and established programs to implement those targets, including DuPont, BP Amoco, Shell and United Technologies. And if this isn't leadership and a serious challenge to the conventional wisdom, I'd like to know what is.

But the job is not over yet. In fact, it is barely beginning. This is not a problem that can be solved in one day or one decade. It is a long-term issue that will require a sustained and serious effort over a long period of time. And there is room for virtually everyone to play a role in developing solutions. In fact, without participation from everyone -- countries, industry sectors, companies, and individuals -- it is not clear that we can mount a serious response to the problem. And this brings me to the aviation community.

I recognize up front that you have a problem that inspires jealousy in most other industries: you have had, and are projected to continue to have, a strong annual growth rate. And with this growth rate comes a problem, for while you have been successful in reducing emissions per unit of output, continued growth will increase your total greenhouse gas contributions. Even at current levels, the aviation industry accounts for roughly 2 percent of total global carbon dioxide emissions. I also realize that this sounds like a relatively small contribution. But unfortunately most sectors make small contributions, and aviation outpaces chemicals, iron and steel, cement and aluminum. You could even compare yourselves to many countries. The global aviation sector emitted more carbon dioxide than China, Germany, France or the United Kingdom.

But I didn't come here to depress you. It seems to me that all of the players on this issue are different from one another. Their contributions to the problem differ; their opportunities for emission reductions differ; and the costs that these reductions would entail differ. There is no "one size fits all" solution, and while special pleadings have never appealed to me as ways to do business, there is much to be said for flexible systems that allow for these key differences to be addressed and resolved. So let me be specific in suggesting that you focus on three topics: governance, technology and flexibility.

The aviation industry is already in a unique position with respect to governance. Article 2.2 of the Kyoto Protocol grants the industry special recognition, and establishes ICAO, the International Civil Aviation Organization, as the body responsible for regulating international aircraft emissions. As someone who has worked for many years with various Convention Secretariats and their Conferences of the Parties, I can only assure you that you are very lucky to be dealing with an organization that knows your possibilities and your constraints. But what is important is that you not squander your good fortune; your credibility on environmental issues is at stake here. It should be possible to develop timely and effective solutions that allow you to grow your business in sustainable ways. Find them, before others find paths that are less in your interest.

The second topic that demands some attention is that of innovation and technological change. Your industry has been a leader in the development and diffusion of new, more advanced technologies for decades. As you make investments in research and development, and as you consider priority areas upon which to focus your efforts, I would urge you not to forget that growth in the 21st century will almost certainly have to be environmentally sustainable growth. It is no accident that several of the largest global oil companies (and I am referring here to Shell and BP Amoco) have begun to think of themselves as energy companies, and have begun to significantly expand their investments in less traditional, more environmentally friendly energy sources. I didn't come here to tell you how to spend your R&D dollars. But I would like to suggest that you think carefully about what may be required over the next several decades to deal with the issue of global climate change, and that you factor this picture of the future into your longer term planning. You should be the industry that is first at the starting gate, and first at the finish line.

And finally, I urge you to think constructively about the market mechanisms that are contained in the Kyoto Protocol. These mechanisms essentially allow firms and nations to achieve the lowest cost emission reductions regardless of where they occur. And by doing this, the mechanisms provide economic incentives for innovation and lowered compliance costs. The best known example we have of how emissions trading works can be found in the acid rain trading program under Title IV of the Clean Air Act, a program which coincidentally I managed while at the Environmental Protection Agency. That program was designed to be scrupulous in its accounting system, and highly flexible and open in its trading system, a balance that has worked well to ensure that emissions are lowered and costs are as low as possible. It seems to me that the "Kyoto mechanisms," emissions trading, joint implementation and the Clean Development Mechanism have a significant potential for use by the aviation sector, and I know that ICAO is exploring their use along with other policy choices. You should carefully consider whether they would work for you, and, if you become convinced (as I am) that they could be of value, work with governments to ensure that the rules that are used to implement these provisions are simple, straightforward and result in real emission reductions.

In closing, I would like to briefly come back to the conventional wisdom. Yesterday's Wall Street Journal contained several articles on climate change. The lead story was titled "Inside the Race to Profit from Global Warming: Big Business Produces some Unexpected Converts." I call your attention to these articles not because I am quoted in them (alas, I am, and my quotes are not always diplomatic), but because I think they do point directly to the issue of leadership. If the marketplace has triumphed, at least temporarily, over government, as Daniel Yergin contends in his book "The Commanding Heights," then the marketplace will also have to stand ready to be judged by its commitment and contribution to environmentally sound solutions. The aviation industry is viewed as clean and green: technological giants in a world where technology is king. I urge you to live up to your reputation, exercise leadership, make a constructive contribution to the solution, and turn the conventional wisdom on its head.

Thank you.

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

For Immediate Release:
September 27, 1999

Contact: Kelly Sullivan/Heather Fass
             202-289-5900

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

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

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

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

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

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

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

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

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

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

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

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

The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the nation's largest philanthropies and an influential voice in efforts to improve the quality of America's environment. The Pew Center supports businesses in developing marketplace solutions to reduce greenhouse gases, produces analytical reports on the science, economics and policies related to climate change, launches public education efforts, and promotes better understanding of market mechanisms globally. Eileen Claussen, former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, is the executive director of the Pew Center.

The Pew Center includes the Business Environmental Leadership Council, which is composed of 21 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center - it is solely supported by contributions from charitable foundations.

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

For Immediate Release:
February 10, 1999

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

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

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

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

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

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

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

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

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

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

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

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

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

A copy of the report, "A Review of Impacts to U.S. Agricultural Resources," is available on the Pew Center web site at www.c2es.org.

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

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.

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