Press Release: Two New Reports Examine Options for a Mandatory GHG Reduction Program

For Immediate Release
May 15, 2003

Contact:   Katie Mandes, 703-516-0606

DESIGNING U.S. POLICY TO ADDRESS CLIMATE CHANGE:
Two New Reports Examine Options for a Mandatory GHG Reduction Program

Washington, DC - The Pew Center on Global Climate Change today released two new reports examining design options for a U.S. greenhouse gas emissions reduction program. One report reviews lessons of emissions trading; the other evaluates multiple options for program design. "With growing Congressional interest in policy to address climate change-including the recent introduction of economy-wide cap-and-trade legislation controlling greenhouse gas emissions-the analysis of potential U.S. greenhouse gas reduction programs is timely," said Pew Center President Eileen Claussen. "These reports draw from previous experience with environmental regulation, examining the strengths and weaknesses of various policy approaches, and providing critical guidance for policy-makers."

In recent decades, emissions trading has become an important element of programs to control air pollution both domestically and internationally. In Emissions Trading in the U.S.: Experience, Lessons, and Considerations for Greenhouse Gases, report authors A. Denny Ellerman and Paul L. Joskow of MIT, and David Harrison, Jr. of NERA review six diverse U.S. emissions trading programs, drawing general lessons for the development of greenhouse gas reduction programs. The report finds that an emissions trading program, if designed and implemented effectively, can achieve environmental goals faster and at lower costs than traditional command-and-control alternatives. The analysis suggests that a cap-and-trade program is especially attractive for controlling greenhouse gases because the warming effects of greenhouse gases are the same regardless of where they are emitted, the costs of reducing emissions vary widely by source, and the cap ensures that the environmental goal is attained.

The second Pew Center report released today - Designing a Mandatory Greenhouse Gas Reduction Program for the U.S., written by Robert R. Nordhaus and Kyle W. Danish-examines options for designing a domestic greenhouse gas reduction program. In addition to cap-and-trade programs, this report evaluates greenhouse gas taxes and a "sectoral hybrid" program that combines efficiency standards for automobiles and consumer products with a cap-and-trade program applicable to large sources of greenhouse gases. Each option is evaluated according to the following criteria: environmental effectiveness, cost-effectiveness, administrative feasibility, distributional equity, and political acceptability. The report's analysis suggests that the comprehensive, upstream cap-and-trade (or similar) approach and the sectoral hybrid approach are the most viable alternatives for a domestic program.

"In order for the United States to achieve the greenhouse gas reductions necessary to address climate change, it must implement a mandatory greenhouse gas reduction program," said Claussen. "Careful design of a domestic program is pivotal to the ultimate success of achieving greenhouse gas reductions in a cost-effective manner."

 


The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.