Climate Change: Myths and Realities

Climate Change: Myths and Realities
Remarks of Eileen Claussen, President, Pew Center on Global Climate Change
Emissions Reductions: Main Street to Wall Street
"The Climate in North America"
New York, New York
July 17, 2002
Thank you very much. It's a pleasure to be here. I'd like to congratulate Swiss Re for its vision and initiative in pulling this conference together and I'd like to say how delighted I am that the Pew Center has been able to collaborate with you in shaping this wonderful program. And it's a great venue. Some of you, I imagine, have been visiting this museum since you were kids. And if you were like most kids, what probably impressed you was the dinosaurs. When I knew I'd be coming here to talk about climate change, I couldn't help but recall a very funny "Far Side" cartoon I'd seen once. A dinosaur is standing at a lectern before a group of other dinosaurs. And he says: "The picture's pretty bleak, gentlemen. The world's climates are changing, the mammals are taking over, and we all have a brain about the size of a walnut."

Now I don't know if it was climate change, a giant meteor, or puny brains that drove the dinosaurs to extinction - or maybe all three. But whatever the scientists ultimately decide, I think it really all boils down to this: the dinosaurs disappeared from the face of the earth because they couldn't adjust to new realities. And that lesson applies quite aptly, I think, to our topic today - the challenge of global climate change. I don't mean to imply that we are in imminent danger of being wiped off the face of the earth - at least, not on account of global warming. But climate change does confront us with profound new realities. We face these new realities as a nation, as members of the world community, as consumers, as producers, and as investors. And unless we do a better job of adjusting to these new realities, we will pay a heavy price. We may not suffer the fate of the dinosaurs. But there will be a toll on our environment and on our economy, and the toll will rise higher with each new generation.

What I'd like to do this morning is lay out some of the new realities thrust upon us by global warming. And I'd like to do that in part by examining - and, I hope, dispelling - some common myths about global warming. These are persistent myths, and I believe they are persistent for two reasons: first, because some people, including some people of influence, would rather deny the realities than face up to them; and second, because there are some modern-day dinosaurs who are not prepared to evolve. These relics thrived under the old realities, and they think the key to their survival is persuading us that these old realities still hold. Instead, I think, they are hastening their own extinction.

Before taking up some of these myths one by one, let me share with you a brief example. It comes from the Wall Street Journal. I have to say that on its news pages the Journal does a very good job with this issue. Its reporting on climate change is fair and it's insightful. But when it comes to the editorial page, I am afraid the Journal has distinguished itself as one of the most persistent and most powerful purveyors of climate change mythology. My example comes from an editorial that ran last July. It takes the form of a question. "Why," the Journal asks, "Why require the nations of this planet to spend the hundreds of billions of dollars necessary to reduce carbon dioxide and other emissions when we don't even know if the earth's climate is getting permanently hotter or if that temperature change is caused by human activity or if that change is even dangerous?" Before reading this, I didn't know it was possible to squeeze so many myths into a single sentence.

So allow me to begin unpacking them. Our first myth: We don't really know if the climate is changing or, if so, why. Here's the reality: there is overwhelming scientific consensus that the earth is warming, that this warming trend will worsen, and that human activity is largely to blame. Certainly you can find scientists who will argue otherwise. But these are the findings of the Intergovernmental Panel on Climate Change, a U.N. body that draws on the expertise of hundreds of climate scientists around the world. President Bush was among those who doubted the science, so he asked the National Academy of Sciences to undertake a special review. The NAS established a very well balanced panel, including some well-known skeptical scientists, and then came back with the very same conclusions: the planet is warming and we are largely responsible.

How significant is this warming? The earth's temperature has always fluctuated, but ordinarily these shifts occur over the course of centuries or millennia, not decades. The 1990s were the hottest decade of the entire millennium. The last five years were among the seven hottest on record. Scientists project that over the next century average global temperature will rise two to ten degrees Fahrenheit. A ten-degree increase would be the largest swing in global temperature since the end of the last ice age 12,000 years ago. In some communities, this is no longer a theoretical matter. The impacts are being felt right now. Just ask the people of Alaska, where roads are crumbling and homes are sagging as the permafrost begins to melt.

Which leads me to the second myth: Even if the earth is warming, that may actually help us more than hurt us. Here's the reality: In the short-term there will be winners and there will be losers. For instance, farms and forests will be more productive at some latitudes, but less productive at others. In the long term, though, any possible benefits from global warming will be far outweighed by the costs.

You may have heard about a new climate report that the United States submitted recently to the United Nations. The President tried to distance himself from the report, even though the White House had approved it, because some of his supporters didn't like its implications. But the "bureaucracy," as the President put it, actually did a very credible job of presenting what we know about the likely impacts of global warming here in the United States.

We face both increased flooding and increased drought. Extended heat waves, more powerful storms, and other extreme weather events will become more common. Rising sea level will inundate portions of Florida and Louisiana, while increased storm surges will threaten communities all along our nation's coastline. New York City could face critical water shortages as rising sea level raises the salinity of upstate aquifers and reservoirs. And a good chunk of lower Manhattan that's built on landfill could again be submerged. We can adjust to some of these things, if we're willing to pay the price. But many of the projected impacts are irreversible - when we lose a fragile ecosystem like the Everglades or Long Island Sound, it can never be replaced.

Let's turn now to a third myth: There's so much uncertainty - about the science, about the economics - that we need to wait for better information before we can decide how to respond. The reality is that there are several very compelling reasons that we must begin to act right now - and uncertainty itself is one of them.

It's important to understand the long-term nature of this challenge. There's a lot of inertia in the system, in both the economy and the climate, and overcoming it is going to take time. The greenhouse gases we've already placed in the atmosphere will continue to warm the planet for many decades if not centuries. Right now, there is about 40 percent more carbon dioxide in the atmosphere than there was at the dawn of the Industrial Revolution. The CO2 concentration is projected to reach twice the pre-industrial level by the middle of this century. This doubling of CO2 is the scenario most scientists have relied on in projecting the likely impacts of global warming. But here's what's really troubling: If we continue with business as usual, by the turn of the century greenhouse gas concentrations will be approaching three times the pre-industrial levels. In other words, we may be facing consequences far more severe than those already projected.

In order to stabilize concentrations anywhere within this range - two to three times the pre-industrial level - we must significantly reduce greenhouse gas emissions in the decades ahead. That will require major new technologies. Developing those technologies and turning over the existing capital stock will take time. We need to figure out the right mix of approaches to move us to a climate-friendly economy as cost-effectively as possible. And we'll do a better job at that if we allow ourselves time to learn by doing. All of these are reasons we need to start now.

But perhaps the most compelling reason is uncertainty itself. Uncertainty cuts both ways. It's possible the impacts of warming will be less severe than projected. They could also be worse. For instance, most of our computer modeling assumes a linear relationship between rising temperatures and impacts: as the planet warms, the impacts grow proportionately worse. But there's evidence that some parts of the climate system work more like a switch than a dial. That is why some scientists worry more about the non-linear event - the catastrophic event - like the breakup of the West Antarctic ice sheet or the collapse of the Gulf Stream. So, for me, uncertainty is hardly a reason to delay action. Quite the contrary - it's a powerful argument for acting right now.

Myth number four: We can't afford to address climate change. Well by now you can probably tell that as far as I'm concerned, we can't afford not to address climate change. But let's take a closer look at the cost question. Let's start with the numbers. They're all over the place. For every study you can cite showing that a serious climate program will mean certain economic ruin, I can cite one showing that it will be an economic boon. The point is: You shouldn't believe any of them. There does not yet exist an economic model capable of simulating the real costs and benefits of significantly reducing our greenhouse gas emissions.

Over the past few years, we have been working with top economists from some of our leading universities to methodically dissect the models and expose their weaknesses. Most models, for instance, do a poor job of projecting how rising energy prices will lead producers or consumers to substitute other goods and services; how price signals will drive new technology and innovation; or how businesses will respond to changes in policy. The models also have a difficult time weighing the near-term costs of emission reduction against the long-term benefits of avoiding climate change impacts. Some projections look only at the cost side and don't even consider the benefits. Our goal now is to build a better model, and we're getting close. But until then, I suggest you be very wary of anyone claiming to know precisely what it will cost to tackle climate change over the long term.

There is another source of data that I believe is instructive, though, and that is the experience of companies that are taking serious steps right now to reduce their emissions. A growing number of companies are voluntarily committing themselves to greenhouse gas reduction targets. At last count, we had identified more than 40, most either based in the United States or with significant operations here. Some of you may have seen the television ads being run by BP touting its success. The company has cut emissions 10 percent below 1990 levels - eight years ahead of target - and now has pledged to keep them there at least until 2010. Alcoa is aiming to reduce its emissions 25 percent below 1990 levels by 2010. DuPont is aiming for a 65 percent reduction.

We recently studied several companies that have taken on targets and found that they are motivated by several things. They believe the science of climate change is compelling. They know in time the public will demand strong climate protections, and they can get ahead of the curve by reducing their emissions now. They want to encourage government policies that will work well for business. The companies also cited one other important motivation: To improve their competitive position in the marketplace. And that, in fact, has been the result. The companies are finding that reducing emissions also helps to improve operational efficiencies, reduce energy and production costs, and increase market share - all things that contribute to a healthier bottom line. I'm not going to argue that addressing climate change is necessarily profitable. But I think the evidence so far suggests that it is certainly affordable.

Finally, our fifth myth: Even if climate change is real, and even if addressing it is affordable, the issue is so big and so complex, and the threat is so far off in the future, we will never motivate people to do anything about it. As to whether we can get people to move fast enough, or far enough, I think the jury is still out. But the reality is: people are beginning to act. And some who may not be prepared to act will soon be forced to.

Exhibit A is Kyoto. You'll notice I've gotten this far without even mentioning the Kyoto Protocol, but that's not because it's no longer relevant. In fact, it's more relevant than ever. True, President Bush rejected Kyoto. But the result was even stronger support among other nations. The negotiations are now complete. Japan and the European Union have already ratified it. All that is needed to bring the treaty into force is for Russia to ratify, and odds are that will happen next year if not sooner. Now the U.S. may be out of Kyoto. But U.S. companies are not. Any company producing or selling in a Kyoto country - and that includes all of Europe - will soon know what it means to operate in a carbon-constrained world. U.S. business has a direct stake in ensuring that Kyoto, and any domestic requirements that flow from it, are implemented sensibly and fairly.

There are promising signs of action closer to home as well. The President's rejection of Kyoto not only helped save the Protocol - it elevated this issue in the United States. Climate change has become a political story and the press is keeping it alive. The recent report to the United Nations is a good example. The report contained no new information, it outlined no new policy initiative, and the administration made no announcement of it. Yet it made network news and page one of the Times.

In Congress, meanwhile, members of both parties suddenly seem eager to demonstrate their interest in climate protection. Nearly twice as many climate change bills were introduced in Congress over the past year as in the previous four years combined. The energy bill passed in April by the Senate includes two bipartisan climate provisions - one establishing a new office in the White House charged with developing a long-term climate strategy, the other establishing a system for tracking and reporting greenhouse gas emissions that is voluntary at first but after five years could become mandatory. These are only modest first steps, and there's no saying they will wind up in the final energy bill, if there is a final energy bill. But I think some form of reporting bill will probably be enacted by the end of next year. And some lawmakers are already looking much further down the road. Senators John McCain and Joe Lieberman, an interesting bipartisan duo, plan to introduce legislation later this year to cap greenhouse gas emissions in the United States and establish an economy-wide emissions trading system. It is, frankly, hard to imagine such legislation being enacted anytime soon. But the fact that it is even being drafted shows that this issue is taking on a new political potency.

For real action, though, you need to look at the states. At least two-thirds of the states have programs that, while not necessarily directed at climate change, are achieving real emission reductions. For instance, Texas and 13 other states have enacted renewable portfolio standards, requiring utilities to generate a share of their power from renewable sources. A growing number of states are tackling climate change head on. New York, for instance, just adopted a state energy plan that sets a goal of reducing emissions 10 percent below 1990 levels by 2020. The New England states have agreed to the same target as part of a compact with neighboring provinces in Canada. Some states are going beyond target-setting and establishing direct controls on carbon. New Hampshire recently became the third state to enact mandatory controls on carbon from power plants. And California, of course, is out ahead of everyone with a new law regulating carbon from cars and light trucks. The new law is headed straight to the courts. But whether or not it survives, it has already sent a powerful message: With or without Kyoto, and with or without Washington, there is growing support in the United States for getting serious about climate change.

So let's recap. Five myths: We don't know if the earth is warming or, if so, why. If it is warming, don't worry - climate change will do us more good than harm. With all this uncertainty, we just don't know enough to act. We can't afford to act. And even if we could, people will never be motivated enough to tackle a problem so big and so complex. And five realities: The earth is warming, largely because of human activity. In the long run, any benefits from warming will be far outweighed by the costs. There are plenty of reasons to start acting right now - and uncertainty is one of them. The companies that understand this are demonstrating that we can afford to do it. And people are in fact beginning to act - internationally, in statehouses, in corporate boardrooms, and maybe even in the U.S. Congress.

Let me add one more reality: The actions we are seeing today, while encouraging, are barely a start. The only way to keep our planet from overheating is to dramatically reduce emissions of carbon dioxide and other greenhouse gases. There are plenty of steps we can take right now, starting with a systematic effort to improve energy efficiency throughout the economy - in our cars, our factories, our offices and our homes. In generating electricity, we can substitute natural gas for dirtier coal and oil. We can expand the capacity of our farms and forests to soak up carbon from the atmosphere. And we can invest in similar efforts around the world. But these are all intermediate steps. In the long run we need to fundamentally transform the way we power the global economy. Our goal, over time, must be to steadily reduce our reliance on coal and oil and adopt clean sources of energy that can power our economy without endangering our climate. It is a tall order. In fact, it requires nothing short of a new industrial revolution.

I believe that to get this revolution going, four major forces must be brought to bear. The first is technology - or, more accurately, a vast array of new technologies: new fuels, new engines, new industrial processes, and new ways to generate electricity. The second major force is the marketplace, because only the marketplace can mobilize the investment, the productive capacity, and the ingenuity that will be needed. But the market will deliver only if it perceives a demand. And for that we must bring to bear a third force - the force of government. Government must signal the market that the time to start investing is now. It must set clear, enforceable goals, and it must provide sensible rules giving companies the flexibility to meet those goals as cost-effectively possible. And government will do that when the fourth and most critical force is brought to bear - the force of public opinion. That, I believe, is only a matter of time.

I'd like to elaborate just a bit on one of these forces, and that is the marketplace. The market, of course, helped create global warming - although the economists, I suppose, would say it was more a case of "market failure." The climate, as they say, is the quintessential "commons," the public good that is free to everyone, and therefore valued by no one. But even now that we understand its value, and the risks of continuing to overburden it, the market cannot possibly fix the problem of its own accord. It is simply incapable of factoring in the very long-term costs and benefits, of giving them sufficient weight, to drive the investments that are needed in the short-term. That is why government must give it direction. But given the right direction and the right incentives, harnessed instead of stifled, the market can be a very powerful force for climate protection.

Now if you are a business, or an investor, the market is the environment within which you operate. And as society comes to grips with climate change, the rules of the market will change. The climate will stop being free. There will be a cost for emitting carbon. From the business perspective, that will be the most important new reality. And it will require some adjustment. Those who understand that reality, and make the adjustment, will not only survive but thrive. Because in every change there is opportunity, and the rewards flow to those who seize it first. But by the same token, those who ignore this new reality and fail to adjust will pay the price. The market is a harsh arbiter. It will figure out quickly enough who's done a good job of managing their carbon risk, and who has not. If you want to make sure you're a market winner in the carbon-constrained world of the future, and not a loser, the time to start is now.

Those are some of the new realities we face, some of the realities we have brought upon ourselves. I think we would all be well advised to start adjusting to them. We have one advantage over the dinosaurs: our brains our bigger. Only time will tell whether we have the collective will to put all of that brainpower to work. Thank you very much.