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The Future of U.S. Climate Policy

The article originally appeared in the Council on Foreign Relations, August 2009

 

Interviewee: Eileen B. Claussen, President, Pew Center on Global Climate Change
Interviewer: Stephanie Hanson, Associate Director and Coordinating Editor, CFR.org

 

In June 2009, the House of Representatives approved legislation that would establish a cap-and-trade program to reduce U.S. greenhouse-gas emissions. The bill now awaits action by the Senate. Meanwhile, a controversial program (NYT) for trading in used vehicles for new cars with higher fuel efficiency standards has been extended by Congress. Eileen Claussen, president of the Pew Center on Global Climate Change, says Congress might pass U.S. climate legislation in 2010, after it finishes dealing with health care reform. In the interim, the Obama administration is "moving forward in a very deliberate way under the Clean Air Act because in fact they have to. They don't actually have much of a choice." She stresses the importance of U.S. domestic policy for making progress on global climate talks, set for December 2009 in Copenhagen. "Everything globally is dependent upon [U.S. domestic legislation] before all the other pieces can fall into place, which might take a considerable amount of time. But until you at least get this, it's not clear that you can get any of the other pieces."

The cash for clunkers program has been billed as partly an environmental plan and partly an economic stimulus. In your opinion how does this program rate as climate policy?

One of the important parts of the climate policy is to deal with transportation. The cash for clunkers program moves vehicles in the right direction. This particular legislation doesn't move them, I think, as far as they need to be moved or as far as they will be moved when the rulemaking is done [i.e. when new national fuel efficiency standards are set] and there are specific standards for automobiles. But you do have to trade in a vehicle with poor mileage for one with better mileage. The statistics on the first phase of this program, the one that would have just run out, had an average trade-in mileage of just under sixteen miles per gallon, and the cars that people then bought [had an average of] twenty-five miles per gallon, which is actually a 61 percent improvement. That will cut down on greenhouse-gas emissions from vehicles within the transportation sector. It's a big first step for the climate.

In any future kind of iteration of the program, are there specific recommendations that you would make for modifying it to be more beneficial in terms of climate policy?

The bigger the gap between the car you bring in and the car you go away with, the better it is in terms of climate. Here the requirement, I think, was four miles per gallon but it turns out that people actually traded in [for] cars that were considerably more efficient than that. The more you can move that up to make sure that you only get more efficient vehicles, the better it is for the climate. It isn't clear to me that they're actually going to do that. They're just going to put more money into the existing program, which still makes a significant difference.

The administration has been spending a lot of political capital on health care reform, something that a lot of Americans consider a priority. With climate change, there was a Pew poll late last year that found that nearly 40 percent of those polled didn't think that climate change should be a policy priority. What does this mean for the U.S. Congress and climate policy? Will Congress be able to pass legislation, or will the Obama administration need to resort to using the Environmental Protection Agency or the Clean Air Act to make progress on greenhouse-gas reduction?

Health care is much more difficult than the administration thought it would be. I don't think they thought it would be easy, but it looks like it's going to be very very difficult to pass something. Then the administration would be in the position of asking Congress to take on another difficult, controversial issue, which can also [be] relatively partisan in how Congress looks at it. There's no question that everyone in the administration would prefer a legislated solution to moving forward with the Clean Air Act, but they also don't have that much choice. They're going to have to move forward with the Clean Air Act in the absence of legislation. So, I don't think it's the first choice. They're going to try to push Congress pretty hard after health care is done to pass something. There's a fair chance that you might get something passed in 2010. But they're moving forward in a very deliberate way under the Clean Air Act because in fact they have to. They don't actually have much of a choice.

How does that timing of potentially moving climate legislation forward in 2010 mix with the UN climate meeting in Copenhagen in December 2009?

If I were the administration, I would want much more certainty than just having a bill through the House before I negotiated a target. And the odds of the Senate actually passing something and having a conference before Copenhagen are very small. I just don't think that's going to happen. But it's important to understand that there are a whole set of issues that have to be resolved in Copenhagen and it isn't entirely clear that any of them could be resolved. There is of course the issue of what the developed countries agree to in terms of an absolute reduction [in greenhouse-gas emissions]. But there is also the issue of what the major developing countries would agree to, which I think is not going to be targets. There would have to be some fairly robust policy, and I'm not sure that we're that close to figuring out what these kinds of policies might be. And then there's a third issue which has to be resolved in Copenhagen and that is what kind of money the developed countries are going to put on the table to help developing countries move to a less carbon-intensive economy. This is not an easy year for any of the developed countries to come forward with significant sums of money, certainly not in the range that the developing countries are now asking for.

So, yes, what the United States is willing to do is crucial to a deal, but so is the resolution of all of these other issues. I myself think that the best we can get from Copenhagen given the complexities and where countries are is a framework, and then try to spend 2010 filling in the details. Hopefully by then we will have a better idea in the United States of the kinds of details that we ourselves can fill in.

How important do you think the United States is in that Copenhagen process? If what you felt to be the best-case scenario for U.S. climate policy unfolded in the next year, how much effect will that have on global climate talks?

The United States is crucial. There cannot be and there will not be another global agreement without the United States. I mean there just won't. We are too big a contributor to the problem and we're a big economy. I don't think any other country would agree to anything unless the United States was a full participant. We have to work very hard to see if we can pass legislation in the United States, which means working very hard on the Senate to see if you can find a piece of legislation and sixty votes that are a good step for the climate. I don't think it's impossible to do that, but we have to work very hard on it, to figure out what the compromises are and whether you can do it. If health care is really difficult, there's a question of whether the Senate wants to take up something else that is really difficult after they do that, assuming that they actually come to a conclusion on that.

But [U.S. climate change legislation] would be the highest priority. Everything globally is dependent upon that step before all the other pieces can fall into place, which might take a considerable amount of time. But until you at least get this, it's not clear that you can get any of the other pieces. To me the most important thing is getting a domestic policy in place.

Can you outline three or four things that are critical components of any kind of U.S. legislation on climate policy?

Obviously we need to have targets that are ambitious but achievable. The House bill did have targets that are ambitious but achievable. Once you have that which is environmentally the most important thing you can have, you have to work very hard to find ways to make sure that the costs are manageable. That can be done through a variety of different means. One issue is how you allocate allowances, assuming it's a cap-and-trade [program] which it probably will be, how you allocate so that people do not experience sharp increases in electricity prices or in gasoline prices, so that companies do not have electricity increases that they can't deal with. You can do that through allocation; you can do it through a cost-containment mechanism; you can do it through the use of offsets. You probably need to do it through some kind of combination of all of those. And all of those, by the way, are controversial.

A final issue--you have to tie U.S. domestic action to the international picture, and there the House bill included some trade measures which the Obama administration has said they do not support, and actually we at the Pew Center do not either. There's now been a letter sent by a group of moderate Democrats in the Senate saying that they must have something like that [trade measures] because of the possible competitiveness impact from countries that don't have significant climate change programs. How you work that out and how you find a compromise there that can still get you sixty votes is extremely hard.

If something like that does go through in the Senate, what effect do you think that will have on global climate talks?

It depends on exactly what it looks like, but if for example it is somewhat automatic, which it is in the House bill, that's going to have a very negative effect internationally. If, on the other hand, the president has a fair amount of discretion, that would be helpful. If the trigger for the trade measures is [climate] programs that are similar to what we do, that's a huge problem because the developing countries, and this is [who] the measures would be directed toward, need to do something that is significant, but it's not going to be the same as what we do. So if the test is the same, or equivalent to, or something like that, that's a huge problem as well. Clearly those are the two things that are most important if you're going to have [trade measures]. We don't like them, but if you're going to have them, [it's important] to make sure that they're not automatic and that they're not triggered by something which developing countries would find impossible to meet.

Interview with Eileen Claussen, President-- Appeared in the Council on Foreign Relations, August 2009
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Distribution of Allowances under the ACES Act

Climate Policy Memo #4: Distribution of Allowances under the American Clean Energy and Security Act (Waxman-Markey)

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August 2009

For more information on this subject and other memos in this series, click here.

The U.S. House of Representatives passed the American Clean Energy and Security (ACES) Act on June 26, 2009 by a vote of 219-212. The ACES Act includes a cap-and-trade program designed to limit emissions of greenhouse gases in the United States. This policy memo presents an overview of how emission allowances are distributed—the extent to which they are auctioned or freely allocated and the policy objectives achieved by their distribution.

Why Are Allowances Valuable?
Under a cap-and-trade system, a “cap” or limit is placed on the amount of greenhouse gases that can be emitted and this cap declines over time.  Emission permits, called allowances, are created annually in amounts equal to this cap. The holder of an allowance can legally emit one ton of carbon dioxide (or its equivalent for other greenhouse gases) into the atmosphere.  By limiting and reducing the number of allowances over time, the forces of supply and demand result in a market for allowances which, in turn, produces an allowance price.  

Regardless of the allowance price, the environmental objective under a cap-and-trade system is set by the total number of allowances issued.  From an environmental perspective, the price of the allowances is irrelevant, as is whether the allowances have been freely granted or auctioned.

Auctions v. Free Allocation
Allowances are valuable, and whether or not these allowances are auctioned or distributed free of charge, policymakers must decide how best to distribute that value.  For example, if the policy goal is to level the playing field for energy-intensive industries that face competition from countries without comparable climate policies, this could be done by either auctioning allowances and providing these companies with the resulting revenue, or by giving these companies free allowances.  Under either approach (auctions or free allowances) the same amount of value could be provided to the same companies.  Thus, the key issue is really the purpose for which auction revenue or free allowances are distributed and not whether allowances are auctioned or freely distributed. Figure 1

In the ACES Act, a large percentage of the allowances are provided for free in the early years of the program (See Figure 1).  For example, through 2026, 75 percent of allowances are freely provided for a wide range of uses. Over time fewer allowances are distributed free of charge and more allowances are auctioned.  Over the life of the program, (2012-2050), 40 percent of the total available allowances would be auctioned and 60 percent would be distributed free of charge. 

Uses of Allowance Value  
Regardless of whether allowances are auctioned or freely provided, the more consequential issue is the purpose for which the value of the allowances is used.  Under the ACES bill, allowance value is used to meet a range of policy goals, including: to provide rebates for low and moderate income families; to offset higher costs to consumers (residential, commercial, and industrial) of electricity, natural gas and heating oil; to spur deployment of commercial-scale carbon capture and storage (CCS) technology; to support other domestic and international technology programs; to safeguard the competitiveness of energy-intensive, trade-exposed industries (including aluminum, paper and glass, among others); and to support domestic and international adaptation programs. 

The largest slice of the allowance pie, approximately 58 percent, goes to consumers (See Figure 2 for a cumulative breakout by category over the entire program). Figure 2 This slice is made up of three large components.  About 23 percent of allowances are given to local electricity and natural gas distribution companies, primarily in the early years of the program, with the stipulation that the value is passed on to consumers to offset higher energy prices.  In addition, consumers benefit from another 15 percent of the allowances, which are auctioned annually and the value provided in the form of payments to low and moderate income families.  Finally, 20 percent of the total allowances are provided to consumers in the form of a climate change dividend, mostly in the latter years of the program.  The next largest cumulative amount, about 15 percent, goes to support technology (CCS, renewables, advanced autos, etc.), and the third largest (8 percent) goes to protect the competitiveness of energy intensive industries.  

The ACES bill also provides for a shift over time in how allowance value is used.  In the early years there is a heavier emphasis on enabling and easing the transition to a low-carbon economy by protecting consumers, workers, and communities and spurring technology developments. This shifts over time to more resources being returned directly to households through a climate change dividend. 

Conclusions
The use of allowance value under a cap-and-trade system provides an important means of managing the transition to a clean energy economy. How the value of the allowances is distributed to meet various policy goals is significantly more important to the policy debate than whether they are auctioned or allocated freely. Under the ACES Act, most of the allowance value is used to protect energy consumers from the impacts of higher costs and to provide incentives to advance the development and deployment of low carbon and energy efficient technologies.

 

This series was made possible through a generous grant from the Doris Duke Charitable Foundation, but the views expressed herein are solely those of the Pew Center on Global Climate Change and its staff.

 

 

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Policy Options for Reducing GHG Emissions from Transportation Fuels

Policy Brief
August 2009

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Transportation is the second largest contributor to total U.S. greenhouse gas (GHG) emissions and responsible for about one-third of U.S. carbon-dioxide emissions from the combustion of fossil fuels. There are a variety of policy strategies that can be used to address GHG emissions from the transportation sector; this paper focuses on two such mechanisms. The first policy is an economy-wide cap-and-trade program, which would include transportation fuels under the cap and, thus, limit GHG emissions from fossil fuel combustion. The second is a low-carbon fuel standard (LCFS), which would set a carbon intensity targets for the entire range of transportation fuels. Either one or both policies can be implemented as a means to reduce GHG emissions from transportation.

 

 

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In Brief: What the Waxman-Markey Bill Does for Agriculture

July 2009

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Agriculture, likely one of America’s most vulnerable sectors to a changing climate, has much to gain from a comprehensive climate policy.  Agriculture’s vulnerability to climate change was highlighted in a recent study by the U.S. Global Change Research Program (including USDA), which reported that a variety of climate-related factors could have significant negative impacts on U.S. agricultural productivity (see “Potential Climate Impacts on Agriculture” below).  To deal with this critical issue, farmers and ranchers are not directly regulated by the Waxman-Markey American Clean Energy and Security Act (ACESA), H.R.2454. Instead, the bill makes them part of the solution to climate change by offering incentives, greenhouse gas (GHG) offsets, and opportunities to supply bioenergy. Agriculture and forestry can take carbon dioxide, the major greenhouse gas, out of the atmosphere and store it as carbon in plants and soils. Agriculture can also produce energy from biomass that can displace fossil fuels, the major contributor to greenhouse gas emissions.

Offset Opportunities for Agriculture and Forestry
Notably, Title III of ACESA provides incentives in the form of emission allowances for agricultural projects that reduce GHG emissions, sequester carbon, adapt to climate change, or prevent the conversion of land that would increase GHG emissions. This program would be administered by the USDA. Regarding offsets, ACESA establishes an agricultural and forestry offset program at the USDA.  The practices that will count as offsets, such as better manure management, have numerous environmental and economic co-benefits. The bill specifies the types of agricultural offsets that will qualify and allows the USDA to add more categories. These provisions ensure that agriculture will supply a significant portion of total offsets and that the USDA will play a strong role in the domestic offset program.  The graphic below illustrates the revenue generating potential of the ACESA provisions for agricultural and forestry offsets.

Bioenergy Opportunities
ACESA is designed to increase the demand for biobased forms of energy and provides incentives to stimulate the growth of the bioenergy industry to meet this new demand.  The Act’s combined efficiency and renewable electricity standard requires that 20% of electricity come from energy savings and renewable power, including biomass energy, by 2020.  This measure will also incentivize wind power on agricultural lands. The bill includes liquid fossil fuels under the cap-and-trade program but exempts biofuels, providing a major new incentive to increase biofuel production and utilization as a compliance strategy. The bill also establishes a National Bioenergy Partnership to support the infrastructure needed to facilitate the deployment of sustainable biofuels and bioenergy technologies. A 2008 Pew Center report, Biofuels for Transportation: A Climate Perspective, found that biofuels have the potential to satisfy a significant portion of U.S. on-road fuel needs, assist in addressing climate change, augment and diversify rural income, and enhance energy security. 

 

Potential Cost Increases
While there are significant economic opportunities for agriculture associated with addressing climate change and converting to a low-carbon economy, there will be costs associated with the transition away from fossil fuels.  The potential also exists for near-term costs of fossil-based energy and products, like nitrogen fertilizer, to rise.  Fortunately, several are employed in the bill to minimize these cost impacts in the short term.  Fuel cost impacts are likely to be small in any case, especially in comparison to the volatile gasoline price swings of recent years.

Under the bill, all electric distribution companies, including rural electric cooperatives, are required to use the allowances granted to them exclusively for the benefit of their ratepayers.  All electric distribution companies have to submit a report to the EPA Administrator explaining exactly how the allowances have been used, and the EPA Administrator must periodically audit the companies to ensure that the allowances are being used exclusively for the benefit of all classes of retail ratepayers, including industry.

The bill includes provisions to mitigate the cost impacts on energy-intensive and trade-exposed industries in the United States, including manufacturers of pesticides and fertilizers. According to an initial analysis by EPA, ACESA provides a sufficient number of emission allowances to those sectors to fully compensate for their increased transitional costs.

The EPA results highlight the relatively small carbon price impacts on future gasoline prices ($0.13 in 2015, $0.25 in 2030, and $0.69 in 2050).  EPA also reports that these price impacts are too small to significantly change consumer driving or vehicle choice behavior.  This finding is no surprise considering that gasoline prices swung wildly by more than $2 per gallon in just the past year.

Climate Change Impacts on Agriculture
The climate is already changing in ways that are likely to be detrimental to agriculture. Although it is too early to document a long-term effect of climate change on agricultural productivity, extreme weather events do reduce crop and livestock productivity. Since climate change is making such events more frequent, American farmers will likely feel these effects in the next few decades if not sooner.

The Midwest has seen a 31 percent increase in the amount of very heavy precipitation over the past 50 years, and this trend is projected to continue. As a result, more flash flooding can be expected in the future similar to the spring floods that destroyed many crops in the Midwest in 2008. Similarly, hurricanes have become more intense over the past three decades, making them potentially more damaging when they hit land. As an example of how this could affect agriculture, in 2008 the remnants of Hurricane Ike caused severe flooding and wind damage in Arkansas, Kentucky, and Ohio. An estimated 4,000 cattle were killed in Texas, and rice and corn crops were severely damaged in several states.

Snowpack has also declined in the north, and the timing of stream flow has changed so that peak flows occur earlier in the year and often end before the growing season ends. Along with decreasing summer rainfall, this trend has led to historic drought conditions in the western United States and crop yields have dropped in California’s Central Valley, leading to job losses on top of the already difficult economic situation there.

Damage from weeds and insect pests are also increasing. This signal is strongest in some unmanaged ecosystems, such as the devastating effects of the pine bark beetle in the western U.S. forests. Warmer winters kill fewer beetle larvae and longer growing seasons allow them to produce more offspring each year. Combined with drought that prevents the trees from making enough protective sap, the beetle infestation is leading to massive forest die off. In the Southeast, kudzu is responsible for the loss of a large fraction of the soybean crop because it carries a fungus that infects soybeans. Kudzu has proven impossible to control and in a warmer climate is expected to move north, bringing its soybean fungus with it.

In June 2009, the U.S. Global Change Research Program released a report titled “Global Climate Change Impacts in the United States,” a joint product of 13 federal agencies including the USDA. The report delivered five key messages3 about agriculture:

  1. “Many crops show positive responses to elevated carbon dioxide and low levels of warming, but higher levels of warming often negatively affect growth and yields.
  2. “Extreme events such as heavy downpours and droughts are likely to reduce crop yields because excesses or deficits of water have negative impacts on plant growth.
  3. “Weeds, diseases, and insect pests benefit from warming, and weeds also benefit from a higher carbon dioxide concentration, increasing stress on crop plants and requiring more attention to pest and weed control.
  4. “Increased heat, disease, and weather extremes are likely to reduce livestock productivity.”
  5. “Forage quality in pastures and rangelands generally declines with increasing carbon dioxide concentration because of the effects on plant nitrogen and protein content, reducing the land’s ability to supply adequate livestock feed.

That some plants grow faster in warmer conditions and with more carbon dioxide is not necessarily a good thing. Such conditions generally benefit weeds more than they benefit cash crops. Glyphosate (RoundUp®), the most widely used weed-control herbicide in the United States, loses its efficacy at higher carbon dioxide levels, necessitating increased usage and higher environmental and economic costs.4 Crops often grow larger under elevated carbon dioxide concentrations, but some crops are less nutritious under these conditions. Forage quality in pastures and rangelands generally declines for the same reason, reducing the land’s ability to supply adequate livestock feed.5  Increased heat, disease, and weather extremes are likely to reduce livestock productivity.6

With continued warming, northern farmers could lose the weed-control benefit that colder climates provide. Currently, northern farmers lose 22 percent of their soybean crop to weeds compared to 64 percent for southern farmers.7 Rising temperatures also allow insects and disease agents to expand their ranges northward. Rapidly rising winter temperatures allow more insects to survive over the winter months. In addition to directly damaging crops, some of these insect pests carry diseases that infect crops and reduce their yields.8,9

Higher temperatures will mean a longer growing season for crops that do well in the heat, such as melon, okra, and sweet potato, but a shorter growing season for crops more suited to cooler conditions, such as potato, lettuce, broccoli, and spinach. Higher temperatures also cause plants to use more water.10 Mild winters and warm, early springs, which are occurring more frequently, induce premature plant development and blooming, exposing vulnerable young plants to late-season frosts.11

Warming causes plants to grow faster, which can have benefits. But for some plants, such as cereal crops, faster growth means less time for the grain development, reducing yield and nutritional value.12  For many high-value crops, just hours or days of moderate heat stress at critical growth stages can reduce farmers’ profits by diminishing quality, even if the total yield remains high.13

Precipitation has become less frequent but more intense, and this pattern is seen throughout the United States and is projected to intensify with continued warming. Excessive rainfall can cause delayed spring planting, which is especially problematic for early season production of high-value crops such as melon, sweet corn, and tomatoes.14 Longer periods between rain events portend longer dry spells and more intense droughts, with obvious negative impacts on agriculture.

Conclusion
Agriculture has much to offer in helping to reduce net GHG emissions to the atmosphere, while at the same time improving the environmental and economic sustainability of the agricultural sector. The Waxman-Markey bill will not only help protect agriculture from the negative effects of climate change, it will also make better land management practices and bioenergy more profitable.


1. EIA’s analysis of gasoline price movements is available at http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp.
2. Karl, T., J. Melillo, T. Peterson and S.J. Hassol (eds.), 2009. Global Climate Change Impacts in the United States. U.S. Global Change Research Program, Washington, D.C. (http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts)
3. Karl, et al., ibid, p. 71
4. Wolfe,W., L.  Ziska, C.  Petzoldt,A.  Seaman, L. Chase, and K. Hayhoe, 2007: Projected change in climatethresholds in the northeastern U.S.: implications for crops, pests, livestock, and farmers. Mitigation and Adaptation Strategies for Global Change, 13(5-6), 555-575.
5. Hatfeld, J., K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.Thomson, and D. Wolfe, 2008: Agriculture. In: The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in  the United  States  [Backlund, P., A.  Janetos, D. Schimel,  J. Hatfeld, K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.  Thomson, D. Wolfe, M.G. Ryan, S.R. Archer, R. Birdsey, C. Dahm, L. Heath, J. Hicke, D. Hollinger, T. Huxman, G. Okin, R. Oren,  J. Randerson, W. Schlesinger, D. Lettenmaier, D. Major, L. Poff, S. Running, L. Hansen, D. Inouye, B.P. Kelly, L. Meyerson, B. Peterson, and R. Shaw (eds.)].Synthesis and Assessment Product 4.3. U.S. Department of Agriculture, Washington, DC, pp. 21-74.
6. Hatfeld, J., K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.Thomson, and D. Wolfe, 2008: Agriculture. In: The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in  the United  States  [Backlund, P., A.  Janetos, D. Schimel,  J. Hatfeld, K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.  Thomson, D. Wolfe, M.G. Ryan, S.R. Archer, R. Birdsey, C. Dahm, L. Heath, J. Hicke, D. Hollinger, T. Huxman, G. Okin, R. Oren,  J. Randerson, W. Schlesinger, D. Lettenmaier, D. Major, L. Poff, S. Running, L. Hansen, D. Inouye, B.P. Kelly, L. Meyerson, B. Peterson, and R. Shaw (eds.)].Synthesis and Assessment Product 4.3. U.S. Department of Agriculture, Washington, DC, pp. 21-74.
7. Hatfeld, J., K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.Thomson, and D. Wolfe, 2008:Agriculture. In: The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in  the United  States  [Backlund, P., A.  Janetos, D. Schimel,  J. Hatfeld, K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.  Thomson, D. Wolfe, M.G. Ryan, S.R. Archer, R. Birdsey, C. Dahm, L. Heath, J. Hicke, D. Hollinger, T. Huxman, G. Okin, R. Oren,  J. Randerson, W. Schlesinger, D. Lettenmaier, D. Major, L. Poff, S. Running, L. Hansen, D. Inouye, B.P. Kelly, L. Meyerson, B. Peterson, and R. Shaw (eds.)].Synthesis and Assessment Product 4.3. U.S. Department of Agriculture, Washington, DC, pp. 21-74.
8. Hatfeld, J., K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.Thomson, and D. Wolfe, 2008: Agriculture. In: The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in  the United  States  [Backlund, P., A.  Janetos, D. Schimel,  J. Hatfeld, K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.  Thomson, D. Wolfe, M.G. Ryan, S.R. Archer, R. Birdsey, C. Dahm, L. Heath, J. Hicke, D. Hollinger, T. Huxman, G. Okin, R. Oren,  J. Randerson, W. Schlesinger, D. Lettenmaier, D. Major, L. Poff, S. Running, L. Hansen, D. Inouye, B.P. Kelly, L. Meyerson, B. Peterson, and R. Shaw (eds.)].Synthesis and Assessment Product 4.3. U.S. Department of Agriculture, Washington, DC, pp. 21-74.
9. Frumhoff, P.C., J.J. McCarthy, J.M. Melillo, S.C. Moser, and D.J. Wuebbles, 2007: Confronting Climate Change  in  the U.S. North-east: Science, Impacts and Solutions. Synthesis report of the Northeast Climate Impacts Assessment. Union of Concerned Scientists, Cambridge, MA, 146 pp.
10. Hatfeld, J., K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.Thomson, and D. Wolfe, 2008: Agriculture. In: The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in  the United  States  [Backlund, P., A.  Janetos, D. Schimel,  J. Hatfeld, K. Boote, P. Fay, L. Hahn, C. Izaurralde, B.A. Kimball, T. Mader, J. Morgan, D. Ort, W. Polley, A.  Thomson, D. Wolfe, M.G. Ryan, S.R. Archer, R. Birdsey, C. Dahm, L. Heath, J. Hicke, D. Hollinger, T. Huxman, G. Okin, R. Oren,  J. Randerson, W. Schlesinger, D. Lettenmaier, D. Major, L. Poff, S. Running, L. Hansen, D. Inouye, B.P. Kelly, L. Meyerson, B. Peterson, and R. Shaw (eds.)].Synthesis and Assessment Product 4.3. U.S. Department of Agriculture, Washington, DC, pp. 21-74.
11. Gu, L., P.J. Hanson, W.M. Post, D.P. Kaiser, B. Yang, R. Nemani, S.G. Pallardy, and T. Meyers, 2008: The 2007 eastern U.S. spring freeze: increased cold damage  in  a warming world? BioScience, 58(3), 253-262.
12. Field, C.B., L.D. Mortsch, M. Brklacich, D.L. Forbes, P. Kovacs, J.A.  Patz, S.W. Running, and M.J.  Scott, 2007: North America.   In: Change  2007:  Impacts,  Adaptation  and  Vulnerabil-ity. Contribution of Working Group  II  to  the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [Parry, M.L., O.F. Canziani, J.P. Palutikof, P.J. van der Linden, and C.E. Hanson (eds.)]. Cambridge University Press, Cambridge, UK, and New York, pp. 617-652.
13. Peet, M.M.  and D.W. Wolf,  2000: Crop  ecosystem  responses  to climate change: vegetable crops.  In: Climate Change and Global Crop  Productivity  [Reddy, K.R.  and H.F. Hodges  (eds.)].  CABI Publishing, New York, and Wallingford, UK, 472 pp.
14. Kunkel, K.E., P.D.  Bromirski, H.E.  Brooks,  T.  Cavazos, A.V.   Douglas, D.R.  Easterling, K.A.  Emanuel, P.Ya. Groisman, G.J. Holland, T.R. Knutson, J.P. Kossin, P.D. Komar, D.H. Levinson, and R.L. Smith, 2008: Observed changes in weather and climate   extremes. In: Weather and Climate Extremes in a Changing Climate: Regions of Focus: North America, Hawaii, Caribbean, and U.S.   Pacifc Islands [Karl, T.R., G.A. Meehl, C.D. Miller, S.J. Hassol, A.M. Waple, and W.L. Murray (eds.)].Synthesis and Assessment   Product 3.3. U.S. Climate Change Science Program, Washington,   DC, pp. 35-80.

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Congressional Testimony of Eileen Claussen - Climate Change Legislation: International Trade Considerations

Testimony of
Hon. Eileen Claussen, President
Pew Center on Global Climate Change

Submitted to
the Committee on Finance
United States Senate

July 8, 2009

For a pdf version, please click here.

Mr. Chairman, Mr. Grassley, members of the Committee, thank you for the opportunity to testify on the international trade considerations of climate change legislation.  My name is Eileen Claussen, and I am the President of the Pew Center on Global Climate Change.

The Pew Center on Global Climate Change1 is an independent non-profit, non-partisan organization dedicated to advancing practical and effective solutions and policies to address global climate change.  Our work is informed by our Business Environmental Leadership Council (BELC), a group of 44 major companies, most in the Fortune 500, that work with the Center to educate opinion leaders on climate change risks, challenges, and solutions.  The Pew Center is also a founding member of the U. S. Climate Action Partnership, a coalition of 25 leading businesses and five environmental organizations that have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.

Addressing global climate change presents policy challenges at both the domestic and the international levels, and the issue of competitiveness underscores the very close nexus between the two.  The immediate task before this Committee, and before the Senate, is developing and enacting a comprehensive domestic program to limit and reduce U.S. greenhouse gas (GHG) emissions.  Moving forward with a mandatory program to reduce U.S. emissions in advance of a comprehensive international agreement presents both risks and opportunities.  On the one hand, domestic GHG limits may lead to a shift of some energy-intensive production to countries without climate constraints, resulting in “emissions leakage” and posing competitiveness concerns for some domestic industries.  On the other hand, a mandatory domestic program in the United States is an essential step towards the development of an effective global climate agreement.

In the long term, a strong multilateral framework ensuring that all major economies contribute their fair share to the global climate effort is, I believe, the most effective means of addressing competitiveness concerns.  Achieving such an agreement must be a fundamental objective of U.S. climate policy.  In designing a domestic climate program, the question before Congress is what to do about the potential for leakage in the interim – until an effective global agreement is in place.  In considering this question, it is important to distinguish two distinct but closely related policy challenges: (1) how best to encourage strong climate action by other countries, and in particular, by the major emerging economies; and (2) how best to minimize potential competitiveness impacts on U.S. industry.  I believe that each of these two objectives is most effectively addressed through a different set of policy responses, and it is important to ensure that our efforts to address one do not undermine the other.

I will focus today primarily on the second of these challenges: designing transitional policies to minimize potential competitiveness impacts on U.S. industry.2  Our analysis of the underlying issues leads us to conclude that the potential competitiveness impacts of domestic climate policy are modest and are manageable. 

In my testimony, I will:

1) present our analysis of the nature and potential magnitude of the competitiveness challenge;

2) discuss a range of options for addressing competitiveness concerns; and

3) outline what we believe would be the most effective approach.  This approach would employ output-based emission allocations to vulnerable industries, phased out over time, and other transition assistance to affected workers and communities.

Understanding Competitiveness Concerns

A first step in considering options to address competitiveness is assessing the potential scope and magnitude of potential competitiveness impacts.  It is important to note that it is not the competitiveness of the U.S. economy as a whole that is at issue.  (According to the Environmental Protection Agency’s (EPA) analysis of the American Clean Energy and Security (ACES) Act of 2009 passed last month by the House, the cost of meeting the bill’s emission reduction targets in 2030 would be a 0.37 percent loss in GDP.3  Put another way, GDP would reach $22.6 trillion, nearly 60 percent higher than today, approximately two months later than without the bill.)  Rather, the concern centers on a relatively narrow segment of the U.S. economy: energy-intensive industries whose goods are traded globally, such as steel, aluminum, cement, paper, glass, and chemicals.  As heavy users of energy, these industries will face higher costs as a result of domestic GHG constraints; however, as the prices of their goods are set globally, their ability to pass along these price increases is limited.

Competitiveness impacts can be experienced as a loss in market share to foreign producers, a shift in new investment, or, in extreme cases, the relocation of manufacturing facilities overseas.  In assessing the economic consequences of past environmental regulation in the United States, most analyses find little evidence of significant competitive harm to U.S. firms.  Many studies conclude that other factors—such as labor costs, the availability of capital, and proximity to raw materials and markets—weigh far more heavily in firms’ location decisions.  One comprehensive review—synthesizing dozens of studies of the impact of U.S. environmental regulation on a range of sectors—concluded that while new environmental rules imposed significant costs on regulated industries, they did not appreciably affect patterns of trade.4

In the case of GHG regulation, the additional cost to firms could include the compliance cost of purchasing allowances to cover direct emissions; indirect compliance costs embedded in higher fuel or electricity prices; further demand-driven price increases for lower-GHG fuels such as natural gas; and the costs of equipment and process changes to abate emissions or reduce energy use.

In gauging the potential impacts of GHG regulation, it is important to distinguish the “competitiveness” effect from the broader economic impact on a given industry or firm.  A mandatory climate policy will present costs for U.S. firms regardless of what action is taken by other countries.  In the case of energy-intensive industries, one potential impact of pricing carbon could be a decline in demand for their products as consumers substitute less GHG-intensive products.  This is distinct, however, from the international “competitiveness” impact of GHG regulation, which is only that portion of the total impact on a firm resulting from an imbalance between stronger GHG constraints within, and weaker GHG constraints outside, the United States.

To empirically quantify the potential magnitude of this competitiveness impact, the Pew Center commissioned an analysis by economists at Resources for the Future. This work, which we published in May, analyzes 20 years of data in order to discern the historical relationship between electricity prices and production, consumption, and employment in more than 400 U.S. manufacturing industries.  On that basis, the analysis then projects the potential competitiveness impacts of a U.S. carbon price, assuming no comparable action in other countries.  The analysis assumes a CO2 price of $15 per ton.  (EPA’s preliminary analysis of the American Clean Energy and Security Act (ACES) Act estimates an allowance price of $16 per ton CO2 in 2020.6

The Pew/RFF analysis finds an average production decline of 1.3 percent across the U.S. manufacturing sector as a whole, but also a 0.6 percent decline in consumption.  This suggests that the decline in production that can be attributed to increased imports – in other words, the competitiveness effect -- is just 0.7 percent.  For energy-intensive industries (those whose energy costs exceed 10 percent of shipment value), the analysis projects that average U.S. output declines about 4 percent.  However, consumption declines 3 percent, so that only a 1 percent decline in production (or one-fourth of the total decline) can be attributed to an increase in imports, or a loss of competitiveness.  For specific energy-intensive industries, including chemicals, paper, iron and steel, aluminum, cement, and bulk glass, the analysis projects a competitiveness impact ranging from 0.6 percent to 0.9 percent, although within certain subsectors, the impact could be higher. 

What this analysis demonstrates very clearly is that most of the projected decline in production stems from a reduction in domestic demand for these products, not an increase in imports.  In other words, most of the projected economic impact on energy-intensive industries reflects a move toward less emissions-intensive products—as would be expected from any effective climate change policy, even one with global participation—and not a movement of jobs and production overseas.  At the carbon price level studied, the projected competitiveness impacts, as well as the broader economic effects on energy-intensive industries, are modest and, in our view, can be readily managed with a range of policy instruments.

Policy Options

In the design of a domestic cap-and-trade system, competitiveness concerns can be addressed in part through a variety of cost-containment measures, such as banking and borrowing and the use of offsets, which can help reduce the costs to all firms, including energy intensive, trade-exposed industries.  However, other transitional policies may be needed to directly address competitiveness concerns in the period preceding the establishment of an effective international framework.  Options include: fully or partially exempting potentially vulnerable firms from the cap-and trade system; compensating firms for the costs of GHG regulation through allowance allocation or tax rebates; transition assistance to help firms adopt lower-GHG technologies, and to help communities and workers adjust to changing labor markets; and border measures such as taxes on energy-intensive imports from countries without GHG controls.  In addition, a domestic policy could be designed to encourage and anticipate international sectoral agreements establishing the respective obligations of major producing companies within given sectors.

Exclusion from Coverage – One option is to fully or partially exclude vulnerable sectors or industries from coverage under the cap-and-trade program.  For instance, under the Lieberman-Warner Climate Security Act of 2008,7 the direct “process” emissions of many energy-intensive industries would not have been subject to GHG limits.  This type of exclusion would have reduced the number of emission allowances a trade-exposed firm would need to hold and would thereby eliminate some of the direct regulatory costs, shielding it not only from competitiveness impacts but also from some of the broader economic effects of pricing carbon.  However, by limiting the scope of the cap-and-trade system, exclusions of trade-exposed industries would undermine the goal of reducing GHG emissions economy-wide, and would reduce the economic efficiency of a national GHG reduction program.  Exemptions could also give exempted industries an economic advantage over nonexempt domestic firms and sectors, including competitors.  Moreover, firms whose emissions are exempted would still face the indirect costs of higher energy prices and would not be completely shielded from the competitive impact associated with this cost increase.

Compensation for the Costs of GHG Regulation – Another option is to include these sectors in the cap-and-trade system but compensate them for the costs of GHG regulation.  Key design considerations include the scope, form, and means of calculating such compensation, and whether and how it should be phased out.  As noted earlier, firms covered by the cap-and-trade system face both direct and indirect costs of regulation.  Direct compliance costs include the cost of purchasing any allowances needed to cover direct emissions regulated under the cap and/or the cost of equipment and process changes to abate emissions.  Indirect costs include higher prices for electricity and natural gas (reflecting an embedded carbon price and, in the case of natural gas, rising demand for this less GHG-intensive fuel).  For energy-intensive industries, the indirect cost of higher energy prices represents a significant portion of the total potential cost.

One form of compensation is providing free emission allowances.  Because free allocation provides the same economic incentive to reduce emissions as does an auction,8 keeping energy-intensive sectors under the cap, but providing free allowances, provides for greater environmental effectiveness and economic efficiency than excluding them.  Furthermore, additional allowances could be provided to compensate for indirect costs, thus providing a more complete shield from international competitiveness impacts. 

Another form of compensation for direct and/or indirect costs could be tax credits or rebates.  One potential source of revenue for such measures is proceeds from the auction of emission allowances.  A tax rebate would be a direct payment to compensate a firm for GHG regulatory costs; a tax credit could alternatively offset those costs by reducing a non-GHG burden such as corporate or payroll taxes, or healthcare or retirement costs.9

Whatever form the compensation takes, the central challenge is determining the appropriate level.  In the case of direct compliance costs, allowances could be granted on the basis of historical emissions (“grandfathering”) and energy-intensive sectors could receive more generous allocations than other emitters.  For instance, energy-intensive industries could receive a full free allocation while others receive 80 percent of their historical emissions.  Over time, the energy-intensive sectors could continue to receive a higher proportion of free allowances than other sectors as the allocation system transitions to fuller auctioning.  However, granting allowances on the basis of historical emissions can effectively penalize early action and reward relatively heavier emitters within an industry.  In addition, it does not necessarily guard against emissions leakage or a loss of jobs, as a firm could choose to maximize profits by selling its free allowances and reducing production.  There is also the risk that firms will be over-compensated and realize windfall profits.

Alternatively, compensation could be “output-based,” pegged to actual production levels and/or energy consumption.  This would shield energy-intensive firms from regulatory costs, and lower the risk of emissions leakage and competitiveness impacts, while providing an incentive for continued production.  Firms could be compensated in full for their direct and indirect costs.  Or, an output-based approach could incorporate a performance standard (i.e., emissions or energy use per unit of production) to encourage and reward lower GHG-intensity production.  For instance, free allowances could be pegged to the level needed by a firm whose emissions intensity is only 85 percent of the sector average; that percentage could decline over time, providing an ongoing incentive to switch to lower-GHG processes and energy sources.  This was the approach adopted in the Inslee-Doyle Carbon Leakage Prevention Act introduced in the 110th Congress.10  The ACES Act adopts an output-based approach, initially allocating 15 percent of the total allowance pool to energy-intensive industries to compensate for both direct and indirect costs based on a facility’s level of output.  However, as allocations to individual firms would be based on average emissions intensity within the sector, rather than a stronger benchmark, there is no added incentive to improve GHG performance beyond the average.

If compensation is provided, one important consideration is how long it should be maintained and at what level.  Phasing out the compensation would give firms additional incentive to improve their GHG performance but would also make them more vulnerable to competitiveness impacts.  A mandatory program could provide for periodic review of any allowances or other compensation to vulnerable sectors to consider adjusting them on the basis of new information.  For instance, if the legislation establishes a specific timetable for moving from free allocation to auctioning, this transition might be slowed for specific industries if there are clear indications of competitiveness impacts.  Alternatively, compensation could be phased out or ended if other countries take stronger action or new international agreements are reached.  The ACES Act incorporates such approaches.  It would phase down the output-based allowance rebates 10 percent a year starting in 2026, but allow the President to adjust that rate depending on an assessment of emissions leakage.
 
As with the exclusion of trade-exposed sectors from the cap, the remedy provided by these compensation approaches extends beyond any actual competitiveness effect.  Whether based on output or historical emissions, most of the proposals offered to date aim to compensate firms for most or all of the increased costs associated with GHG regulation, not just for the impacts they may face due to the asymmetry between GHG constraints within and outside the United States.  To limit compensation to competitiveness impacts alone would require in-depth financial knowledge of each firm and/or complex calculations that could be reliably performed only once the impacts have occurred.  A drawback of a broader compensation approach is that the financial resources required—whether drawn from auction revenue or other sources—are not available for other climate- or non-climate-related purposes.

Transition Assistance – Another option is to provide transition assistance to vulnerable firms to help them adopt lower-GHG technologies, and to communities and workers affected by competitiveness impacts.  In the case of firms, measures could include tax incentives such as accelerated depreciation to encourage the replacement of inefficient technologies, or tax credits for the development or adoption of lower-GHG alternatives.  Firms could also be incentivized to switch to low-carbon energy sources, for example through subsidies for the purchase or generation of renewable energy.

Where competitiveness impacts are unavoidable, assistance can be provided to both workers and communities.  Previous government efforts to help communities adjust to economic changes resulting from national policies provide lessons for shaping similar efforts as part of climate change policy.11 At the level of individual workers, policies such as the Workforce Investment Act providing income support and retraining to help move workers into new jobs can provide a blueprint for transition programs to assist workers adversely affected by competitiveness imbalances under a climate policy.12  The ACES Act would provide worker transition assistance through two set-asides of emission allowances: one to support retraining and other benefits when employers, unions or other groups of workers demonstrate that employment has suffered as a result of the bill; the other to support training for new jobs in clean energy industries.

Border Adjustment Measures – Another strategy is to try to equalize GHG-related costs for U.S. and foreign producers by imposing a cost or other requirement on energy-intensive imports from countries with weaker or no GHG constraints.  One option is a border tax based on an import’s “embedded” emissions (equal to the compliance costs for a domestic producer of an equivalent good).  Alternatively, under a cap-and-trade system, emission allowances could be required for the import of energy-intensive goods.  In the 110th Congress, the Lieberman-Warner bill, the Bingaman-Specter bill, the Markey ICAP bill, and the Dingell-Boucher discussion draft all adopted variations of this approach.  Under the ACES Act, “international reserve allowances” would be required for energy-intensive imports starting in 2020 unless a new international agreement meeting the bill’s negotiating objectives has entered into force, or unless Congress concurs with the President’s determination that the requirement is not in the national interest.

One major shortcoming of unilateral border measures is their limited effectiveness in reducing competitiveness impacts.  As the border adjustment measures would apply only to imports to the United States, they would not help “level the playing field” in the larger global market where U.S. producers may face greater competition from foreign producers.

Among the other issues raised by unilateral border measures is their consistency with World Trade Organization (WTO) rules.  The legality of a given measure would depend in part on its specific design and on the types of climate policies in place domestically.  As such approaches have not been previously employed, there are no definitive rulings, and experts differ in their interpretation of relevant WTO precedents.13   The legal uncertainties ultimately would be resolved only through the adjudication of a WTO challenge, a likely prospect if unilateral border measures were to be applied by the United States or another country.

Another important consideration is the potential impact on trade and international relations.  If the United States were to impose border requirements, there is a greater likelihood that it would become the target of similar measures.  European policymakers also are weighing the use of border measures and have argued that the emission targets under consideration in the United States are not comparable to those adopted by the European Union.  U.S. trade officials and others also have voiced strong concern about the potential for retaliatory trade measures by targeted countries, leading to escalating trade conflicts.14  Proponents argue that the threat of unilateral trade measures would give the United States greater leverage in international climate negotiations.  However, there is a significant risk that they would engender more conflict than cooperation, in the end making it more difficult to reach agreements that could more effectively address competitiveness concerns.

International Sectoral Agreements – All of the preceding options are measures that would be implemented domestically.  Another approach that would help reduce emissions within and outside the United States, while addressing competitiveness concerns, is to negotiate international agreements setting GHG standards or other measures within energy-intensive globally-traded sectors.  For example, major steel-producing countries could agree on standards limiting GHGs per ton of steel, which could be differentiated initially according to national circumstances and converge over time.  Sectoral agreements could take a number of forms, depending on the specific sectors, and could be stand-alone agreements or integrated into a comprehensive climate framework.15

Within the domestic context, a purely sector-by-sector approach would sacrifice the broad coverage and economic efficiency of an economy-wide cap-and-trade program.  However, sectoral agreements could exist alongside a cap-and-trade program, and the system could be designed to encourage U.S. producers to work toward their establishment.  One option would be to provide for a sector’s exclusion from the cap once an international agreement of comparable stringency is in place (although, as noted, diminishing the scope of the cap-and-trade system by exempting one or more sectors would limit its economic efficiency).  An alternative is to keep the sectors under the cap but align their obligations under the domestic program and the international sectoral agreement.  For instance, a firm’s emissions allowance allocation under the trading system could be based on the GHG standard that is agreed to internationally.

In keeping with the principle of “common but differentiated responsibilities,” an international sectoral agreement may not set fully equivalent requirements for all countries, particularly at the outset.  In that event, compensation for energy-intensive industries could be maintained at some level and phased out as the requirements for other countries rise to those borne by the United States.

Recommendations

Based on our assessment of the available options, the Pew Center believes that the Senate should seek to address competitiveness concerns by:

1) strongly encouraging the executive branch to negotiate a new multilateral climate agreement establishing strong, equitable, and verifiable commitments by all major economies;

2) including in domestic legislation incentives for such an agreement, including support for stronger action by major developing countries; and

3) including in cap-and-trade legislation transitional measures to cushion the impact of mandatory GHG limits on energy-intensive trade-exposed industries and the workers and communities they support.  These transitional measures should be structured as follows:

  • In the initial phase of a cap-and-trade program, free allowances should be granted to vulnerable industries to compensate them for the costs of GHG regulation.  For direct costs, allowance allocations should be based on actual production levels.  For indirect costs, allocations should reflect the emitter’s production-based energy consumption, taking into account the GHG intensity of its energy supplies. 
  • Based on an analysis of GHG performance within a given sector, allocations should be set initially so that producers with average GHG performance are fully compensated for regulatory costs, while those performing above or below the norm receive allowances whose value is greater or less than their costs, respectively.  This factor should be adjusted over time as an incentive to producers to continually improve their GHG performance.
  • Free allocation levels should decline over time, gradually transitioning to full auctioning, although at a slower rate than for other sectors.  
  • A review should be conducted periodically to assess whether sectors are experiencing competitiveness impacts and, if warranted, to adjust allocation levels and/or the rate of transition to full auctioning.  
  • A portion of allowance auction revenue should be earmarked for programs to assist workers and communities in cases where GHG constraints are demonstrated to have caused dislocation.  
  • Transition assistance should be curtailed for a given sector upon entry into force of a multilateral or sectoral agreement establishing reasonable obligations for foreign producers, or upon a Presidential determination that such measures have been instituted domestically.

We believe this approach addresses the transitional competitiveness concerns likely to arise under a mandatory cap-and-trade program, while maintaining the environmental integrity of the program and providing an ongoing incentive for producers to improve their GHG performance.  We commend the Committee for focusing the attention of the Senate on this critical issue, and would be happy to work with you as you develop legislation to address this and other dimensions of the climate challenge.

I thank you for your attention and would be happy to answer your questions.

 


 

1 For more information on the Pew Center on Global Climate Change, please visit  http://www.c2es.org
For a discussion of how best to encourage strong climate action by other countries, see the testimony on The Roadmap from Poznan to Copenhagen – Preconditions for Success by Elliot Diringer, Vice President for International Strategies for the Pew Center on Global Climate Change, submitted to the Select Committee on Energy Independence and Global Warming, U.S. House of Representatives, February 4, 2009. (http://www.c2es.org/testimony/diringer/02-04-09)
3  EPA Analysis of the American Clean Energy and Security Act of 2009 H.R. 2454 in the 111th Congress 6/23/09: Data Annex http://www.epa.gov/climatechange/economics/economicanalyses.html
4  Jaffe, A.B., S.R. Peterson, P.R. Portney, and R.N. Stavins, “Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?,” Journal of Economic Literature, Vol. 23, March 1995.
5  Aldy, J.E. and Pizer, W. A., The Competitiveness Impacts of Climate Change Mitigation Policies, Pew Center on Global Climate Change, May 2009.  http://www.c2es.org/international/CompetitivenessImpacts.
6  EPA Analysis of the American Clean Energy and Security Act of 2009 H.R. 2454 in the 111th Congress 6/23/09http://www.epa.gov/climatechange/economics/pdfs/HR2454_Analysis.pdf .
7  S.3036 of the 110th Congress.
8  The cap in a “cap-and-trade” system determines its environmental stringency by setting the number of emission allowances that are available.  These allowances are equal to the amount of emissions that are permitted under the cap and their number declines over time as the cap is tightened.  From an environmental perspective, it doesn’t matter how the emission allowances are distributed.  They could be auctioned or freely distributed or any combination of the two.   All that matters is the total number of emission allowances that are distributed -- the environmental goal is determined by the cap itself and is not in any way impacted by whether the allowances are auctioned or distributed freely. A company that is included in the cap-and-trade program but given free allowances still has an incentive to reduce its emissions because that would free up allowances that the company could sell. 
9  Houser, Trevor et al., Leveling the Carbon Playing Field: International Competition and US Climate Policy Design, Peterson Institute for International Economics and World Resources Institute, May 2008.
10  H.R. 7146 in the 110th Congress.
11  Greenwald, Judith M., Brandon Roberts, and Andrew D. Reamer, Community Adjustment to Climate Change Policy, Pew Center on Global Climate Change, December 2001.
12  Barrett, Jim, Worker Transition and Global Climate Change, Pew Center on Global Climate Change, December 2001.
13  For a discussion of WTO-related issues, see Bordoff, Jason E., International Trade Law and the Economics of Climate Policy: Evaluating the Legality and Effectiveness of Proposals to Address Competitiveness and Leakage Concerns, Brookings Institution, June 2008.
14  Remarks of U.S. Trade Representative Susan C. Schwab to U.S. Chamber of Commerce, January 17, 2008.
15  Bodansky, Daniel, International Sectoral Agreements in a Post-2012 Climate Framework, Pew Center on Global Climate Change, May 2007.

The American Clean Energy and Security Act (Waxman-Markey Bill)

The U.S. House of Representatives passed the American Clean Energy and Security Act of 2009 (H.R. 2454 of the 111th Congress) on June 26, 2009, by a vote of 219 to 212. The (ACES, Waxman-Markey) Act is a comprehensive national climate and energy legislation that would establish an economy-wide, greenhouse gas (GHG) cap-and-trade system and critical complementary measures to help address climate change and build a clean energy economy. The House Energy and Commerce Committee voted 33-25 to approve Waxman-Markey on May 21, 2009. Committee Chairman Henry Waxman (D-CA) and Rep. Edward Markey (D-MA), chairman of a key subcommittee, introduced the bill on May 15, after floating a discussion draft in March.

 

C2ES Resources

USCAP Resources:

Committee Documents and other External Resources

Opening Remarks by Eileen Claussen at Pew Center State-Federal Workshop

Opening Remarks by Eileen Claussen, President, Pew Center on Global Climate Change

Innovative Approaches to Climate Change Policy: Workshop on State-Federal Interactions
Washington, D.C.

June 24, 2009

 

I join with our cosponsors in welcoming all of you to our annual workshop on state-federal interactions.  The Pew Center on Global Climate Change is delighted to be working with the Georgetown Climate Center, the Pew Center on the States, and the National Association of Clean Air Agencies to present what we hope will be a very engaging and informative program over the next two days.

It’s wonderful to be here at the Newseum. The Newseum, of course, is home to such exhibits as the News Corporation News History Gallery, the NBC News Interactive Newsroom and the Cox Enterprises First Amendment Gallery. I understand that the Newseum has plans for several new exhibits in the months ahead.  These include:

  • The Fox News Gallery of Fairness and Balance … except you’re the one who has to keep your balance because everything is a little bit slanted to the right. 

  • The Hall of Cheerleading Journalism … brought to you by CNBC and its friends on Wall Street.  Led by the cheer: Two, four, six, eight … how much can we make stocks appreciate! 

  • And then there is a great exhibit on the Future of Newspapering … it’s sponsored by the Boston Globe, although I understand that the New York Times is trying to shut the exhibit down. 

In all seriousness, as we consider the innovative approaches to climate change policy that are the focus of this workshop, I want to set the stage with some observations about where we stand on this issue right now, how far we’ve come, and where things are headed in the months and years ahead. Given the focus of this workshop on state-federal interactions, I also want to talk about the varying yet complementary roles of the state and federal governments in addressing this issue, especially given the increased appetite for real action on climate change here in Washington. 

Last year, I opened this workshop with the observation that states were beginning to act on the climate issue because of an absence of federal leadership. Well, it’s one year later and the tide is turning. Now we are entering a period when the federal government is finally moving to address this issue. And we need to think about what this means for the states. 

Does it mean the states will have a smaller role now in addressing climate change, presuming that the federal government comes through with a serious program? Or does it mean something else? Well, count me as a vote for “something else.” Because I continue to believe the states have an essential role to play when it comes to addressing this issue. 

I will be discussing the intersection of state and federal roles in more detail, but first I’d like to share a couple of observations about the science of climate change. Because every week, it seems there is new data or a new study that adds to our understanding of the seriousness of the problem we face. U.S. Energy Secretary Steven Chu recently gave a commencement address at Harvard and in that address, he said: “For the first time in human history, science is now making predictions of how our actions will affect the world fifty or a hundred years from now.”

And what science is predicting is something that should be of grave concern to each and every one of us. According to the Intergovernmental Panel on Climate Change, the earth is on track to warm by as much as 2 to 11.5 degrees Fahrenheit over the next century – that’s in addition to the 1.5-degree rise we already experienced in the century gone by. As Secretary Chu pointed out at Harvard, a few-degree rise in temperature may not sound like much on a given day, but the Earth was only 11 degrees colder during the last ice age than it is now – the same amount of warming projected at the upper range for the end of this century. Clearly, a few degrees can and will make an enormous difference.

Scientists also have reached a high level of consensus about what the temperature projections mean, and the federal report released last week, “Global Climate Change Impacts in the United States,” confirms this. Whether it is increases in the number and intensity of rainstorms (in the northeastern United States heavy storms have become 67% heavier over the last century); or sea levels, which are already rising and are projected to rise from two to three feet along the Eastern seaboard of the United States, the risks to our health, environment and economy are huge. And every region and sector of the country are vulnerable.

Without immediate and aggressive climate action, the West will experience reduced snowpack, less available water, and more wildfires. More intense heat waves will plague the Midwest while the water levels in the Great Lakes will decline. Extreme weather, including more flash floods and longer droughts, will hit the Great Plains. And in parts of the South, the average number of 90-plus-degree days could jump from 60 to 150 by 2100. And Washingtonians complain about our muggy summers now.

Clearly, the science tells us we have an enormous problem on our hands, and have no choice but to take action to reduce these very real risks. And it is largely because of the science that public opinion on this issue has shifted in recent years. 

A national survey conducted earlier this spring found that 77 percent of voters now favor action to reduce greenhouse gas emissions. Further evidence of the shift in public opinion came in another spring poll showing that 59 percent of voters believe efforts to tackle global warming will create new American jobs. 

Now, my intention is not to stand up here and paint a completely rosy scenario of public support for climate action. While public opinion has shifted, there is still some pretty significant polling that shows we have a ways to go. 

For instance, earlier this year, in a widely touted poll, global warming ranked last in a survey of the nation’s top 20 policy priorities. Among Republican voters, only 16% considered it a priority. And while this polling has gotten a lot of mileage in particular policy circles – what is important to know is this: In the same survey, 60% identified energy as a top policy concern – a 20% increase from six years ago. And as we know, energy and climate change are inextricably linked – so I am OK with 60% of respondents listing energy among their top priorities – a win for energy could well be a win for climate. And the climate-energy connection is being made by more and more policymakers at the state level and in Washington.

We’re meeting in Washington at a crucial moment for this nation’s efforts to address climate change. We have a President and Cabinet that are fully committed to action on this issue – with cap and trade legislation being their preferred approach. We have an EPA that is poised to regulate greenhouse gas emissions – in response to the recent Supreme Court ruling in Massachusetts v. EPA. And we will be hearing more about the EPA’s approach to these issues later today from EPA Assistant Administrator Gina McCarthy, and tomorrow from EPA Administrator Lisa Jackson.

The White House’s commitment to action on this issue is matched at the other end of Pennsylvania Avenue. Most recently, on May 21st, the House Energy and Commerce Committee achieved something extraordinary – passage of a climate and energy bill out of committee that has the potential to set the United States on a path to tackle climate change in a serious way. This bill will be debated on the House floor beginning Friday, when it may reach a vote by the full House. (The bill passed the House on June 26, 2009 by a vote of 219-212). 

Looking beyond Washington, we have teams of negotiators around the world preparing for a December meeting in Copenhagen. Their hope is to reach agreement this year on a new framework for global action on climate change. And, of course, in addition to all of these other developments, we have a number of state and regional initiatives moving forward around the United States – and we will be talking a lot about these in the course of the next two days. 

I believe the states have an essential role to play in the nation’s effort to address climate change. As the federal government begins to assert itself as a force for change, I believe we are entering a new phase in the state-federal relationship where the two levels of government are working as partners to tackle our nation’s energy and climate challenges. It’s not about one level assuming control over the other, or about one level filling gaps that are there because the other level isn’t doing its job. No, it’s about the two levels working in tandem, working together … with each side playing to its strengths.

Which then begs the question: What are the strengths of the states as we enter this new phase in our nation’s effort to respond to climate change? What is the role of the states in addressing this issue when you have the federal government on the verge of making cap-and-trade the law of the land, and on the verge of adopting other national policies aimed at reducing emissions and spurring the development of cleaner sources of energy?

As I look at it, I believe there are three ways to think about the role of the states in this new environment.

First, states are laboratories for learning about what works (and what doesn’t) as we develop policies and programs aimed at reducing emissions and spurring the development of clean energy technologies. In fact, states have played this role quite well in influencing federal cap-and-trade legislation. For example, the Waxman-Markey bill draws heavily from the northeast Regional Greenhouse Gas Initiative’s auction design and standards-based approach to offsets, that under the federal bill will be administered by EPA. The federal bill also takes an economy-wide cap-and-trade approach, much like the design put forward by the Western Climate Initiative.

Now that we are poised to enact a national cap-and-trade program, the role states play as learning labs will change. This is not to say their role disappears. Rather, I see ample opportunity for states to continue to serve as centers of innovation and learning. But going forward, the most critical information-sharing will occur between states themselves – not between states and the federal government. Because it will be states that are responsible for setting building standards, reducing vehicle miles traveled, ensuring  renewable electricity and efficiency goals are achieved, and adapting to climate change. And when the time comes to reauthorize federal climate legislation, states will again be in the best position to help shape an effective policy.

The national renewable electricity standards being debated in the House and Senate are also modeled on renewable portfolio standards enacted by 30 states and the District of Columbia. But until federal climate and energy policy is enacted, states continue to pursue a broad range of initiatives. For example, on June 8th Nevada Governor Jim Gibbons signed a comprehensive energy bill that increased the state’s renewable portfolio standard. Nevada is now set to generate 25 percent of its electricity from renewables by 2025. 

And on the same date, June 8th, members of the Midwestern Greenhouse Gas Reduction Accord released their draft final recommendations for the design of a regional cap-and-trade program covering six states and the Canadian province of Manitoba. Tomorrow, Governor Jim Doyle of Wisconsin will share his thoughts on actions being taken in his state and across the Midwest to address our climate and energy challenges, and what the Midwest needs from national climate and energy policy.

The second way to think about the role of the states in addressing climate change is to think of them as offering a Plan B in case federal actions fall short. Regional cap-and-trade initiatives like RGGI aim to achieve real, verifiable reductions in greenhouse gas emissions. In the case of RGGI, the states involved are committed to reducing CO2 emissions from the power sector by 10 percent by 2018. These states are already working toward this goal, and they will continue doing so if we can’t get quick agreement on a national cap-and-trade program, and if the national program does not deliver the reductions it promises down the line. 

The same goes for other state policies such as renewable portfolio standards. As federal lawmakers continue to haggle over the details of a national standard, many states already have ambitious RPS programs in place. For instance, Texas is expected to avoid 3.3 million tons of CO2 emissions annually with its RPS, which requires 5,000 megawatts of new renewable generation by 2015. This is going to happen whether or not we ultimately have a national standard. What’s more, if the national standard is not sufficiently strong or ambitious, Texas and many other states will have their own stronger standards to assure that, within their borders at least, folks are doing what’s needed to develop and deploy renewables. That’s an important fallback, a Plan B, as we try and calibrate the specific elements of a federal climate and energy program. 

The third and final way to think about state roles is to remember that states have the authority to take action in some areas where the federal government cannot. And states also are better suited than the feds to do certain things. For example, states can promote clean electricity and energy efficiency with policy tools such as net metering, green pricing, and public benefit funds. States also have authority to adopt building efficiency codes, which can have a major impact when you consider that energy use in buildings produces about 38 percent of U.S. carbon dioxide emissions. States also have great control over smart growth policies and transportation policies aimed at reducing emissions from cars and trucks. These are examples of things that fall within a state’s authority and in many instances, outside the authority of the federal government. 

States as a laboratory for innovative solutions and information-sharing, especially between each other. States as a Plan B in case federal actions fall short. And states as entities with unique authority to take action themselves on these issues. These are three ways to think about the role of the states as we enter a new phase in the state-federal effort to address climate change.

But, of course, a national role is important as well. It’s crucial. For example, certain actions, if they are taken nationally, can be more cost-effective. And we also have to keep in mind that there is no guarantee that all states would act individually. In order to reduce emissions of greenhouse gases, and to do so both cost-effectively and to the levels scientists say are necessary, I believe we need the federal government to step up to the plate at the same time that the states are doing their part.

Let’s look at cap-and-trade as an example. This is a solution that works best when it covers many emission sources. The more states, or the more countries, that are part of the system, the more you can achieve efficiencies of scale and the more you can lower the cost of reducing emissions. This is why many states are reaching across their borders to establish regional cap-and-trade programs. They understand that the economics of cap-and-trade get better when more states and more communities are involved. But if regional approaches are better than going state-by-state, it is also true that a national approach is better than doing this on a region-by-region basis.

Ultimately, we need a national cap-and-trade program. And this is why the developments in Washington over the last several weeks are so important. Last month’s vote of the House Energy and Commerce Committee on the American Clean Energy and Security Act marks the first time that a serious climate bill has made it this far in the House.

The Waxman-Markey bill combines ambitious but achievable greenhouse gas emission reduction targets with a market-based cap-and-trade program. It is a good bill that protects consumers and provides the certainty businesses need to make substantial investments in clean energy technologies. 

Of course, the Senate is an entirely different matter. Majority Leader Harry Reid and Senator Barbara Boxer, who chairs the Environment and Public Works Committee, have made cap-and-trade legislation a priority for 2009. Last week, the Senate Energy and Natural Resources Committee approved a broad energy measure that among its many provisions includes a 15% national renewable electricity standard. But action in the Senate on a combined energy and cap-and-trade bill will be far more difficult than in the House, and while Senator Reid has said he hopes for a vote this year, it’s nowhere near certain this will happen. Although a bill can pass the House along partisan lines, this is not a possibility in the Senate. Sixty votes is a high hurdle, and bipartisan leadership will be needed. I also believe a bill can only move through the Senate if there is active engagement from the White House in mobilizing support from both Republican and Democratic senators.   

But it’s hard to dispute the fact that serious climate legislation is on the move and that the United States will have a cap-and-trade policy in place before long – maybe not this year but perhaps in 2010. When this happens, Washington finally will be doing its part to begin to build a true partnership with the states on climate and energy issues.

As passed by the committee in the House, the American Clean Energy and Security Act enables states to reserve the right to take action to reduce emissions should federal efforts fall short. More specifically, states must suspend any cap-and-trade program until 2018 … but they are within their rights to act after that date if the federal program is not getting the results states had hoped for. States and businesses and others overwhelmingly prefer a federal program to a patchwork of state efforts, and the idea of suspending state efforts is to provide an incentive for the federal program to work.  But if the federal effort is not working as promised, then the states can step in after 2017. States can be Plan B.

The legislation also includes many other provisions that highlight how both the federal government and the states have important roles to play in this work. For example, the bill supports state and local adoption of advanced building codes, it supports state building retrofit programs, and it instructs states to submit goals for transportation-related reductions in greenhouse emissions. 

At the beginning of the cap-and-trade program, states will receive 9.5 percent of federal emission allowances for investments in renewable energy and energy efficiency – this figure would decline over time and hold at 4.5 percent after 2021. In addition, funds raised through the federal efficiency and renewable electricity standard in the bill would be given directly to states for use in renewable energy and energy efficiency programs. 

Last but not least, the House bill allows for the exchange of state and regional emission allowances for federal allowances. This is limited to allowances issued by California, the Regional Greenhouse Gas Initiative, or the Western Climate Initiative. 

In conclusion, I want to say that U.S. states are acting in the best traditions of federalism by advancing an array of solutions to climate change that showcase the states as laboratories of democracy, as a Plan B solution when federal efforts fall short, and as entities with unique authority to bring about real changes in energy use and emissions. Today, as we anticipate a more active federal role in addressing this issue, the challenge is to create a more balanced state and federal partnership. If we can do it right, such a partnership will bring much-needed certainty to the question of how we as a nation are going to address the most critical global issue of our time.

Thank you very much. 

Climate Policy Hill Briefing on Carbon Market Design & Oversight in a U.S. Greenhouse Gas (GHG) Cap-and-Trade System

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This briefing addresses the role of agricultural offsets in energy and climate policy, the potential for bioenergy, and the impacts that agriculture could face from a changing climate.

Briefing on Carbon Market Design & Oversight in a U.S. Greenhouse Gas (GHG) Cap-and-Trade System
June 26, 2009

The Pew Center on Global Climate Change and the Nicholas Institute for Environmental Policy Solutions at Duke University held a briefing on the design and oversight of a successful carbon market. The briefing was jointly hosted by the Senate Environment and Public Works Committee, and the Committee on Agriculture, Nutrition and Forestry.
 
As Congress debates climate change legislation, one of the most critical yet least discussed issues is the development and oversight of a well-functioning carbon commodity market.  This briefing framed and discussed many of the central issues in this process, including: overall market design, options for the choice of regulator, the role and importance of the derivatives market, the role of the Over-the-Counter (OTC) market, and the types of rules and enforcement necessary to prevent market manipulation and abuses.

This series was made possible through a generous grant from the Doris Duke Charitable Foundation, but the opinions expressed herein are solely those of the presenters.

 

Watch the video of each panelist below:

Janet PeaceJanet Peace
Vice-President of Markets & Business Strategy, Pew Center on Global Climate Change (moderator) 
Presentation: Windows Media    
De’Ana DowDe’Ana Dow
Managing Director, Government Relations, CME Group
Presentation: Windows Media    Slides (pdf)
Mark LenczowskiMark Lenczowski
Managing Director and Associate General Counsel, JP Morgan Chase
Presentation: Windows Media    Slides (pdf)
Betsy Moler

Betsy Moler
Executive VP of Government and Environmental Affairs and Public Policy, Exelon Corporation, and former FERC Chair

Presentation: Windows Media   
Jonas MonastJonas Monast
Co-Director, Duke University Climate Change Partnership
Presentation: Windows Media     Slides (pdf)
Andy Stevenson

Andy Stevenson
Finance Advisor in NRDC's Center for Market Innovation, and a former hedge fund manager and investment banker

Presentation: Windows Media     Slides (pdf)
Question and AnswerQuestion & Answer Session
Presentation: Windows Media    

 

Related Materials:

 

Back to list of Briefing Videos

Statement: House Passes Landmark Climate Bill

 – This statement was issued following passage of the American Clean Energy and Security Act of 2009 by the U.S. House of Representatives. –

Statement of Eileen Claussen
President, Pew Center on Global Climate Change

June 26, 2009

Today’s vote is an historic turning point for climate action in the United States. For far too long we have abdicated our responsibility as a leader on an issue of epic proportions. Today the U.S. Congress has signaled a willingness to take responsibility for our past – and show leadership for our future. The passage of the American Clean Energy and Security Act of 2009 (ACES Act) by the U.S House of Representatives sends a clear signal to families, workers, and businesses that a clean energy future is possible. The ACES Act will help tackle climate change, drive our economic recovery, and advance energy independence.
 
The ACES Act combines ambitious but achievable targets for reducing U.S. greenhouse gas emissions with a market-based program that will reward business leaders for deploying clean energy technologies as quickly and inexpensively as possible. The science is clear that human-induced climate changes are already occurring and are projected to increase. The benefits of taking action now far outweigh the manageable costs. 

The Congressional Budget Office estimates that the ACES Act would in 2020 have an average annual cost of $175 per household and that households in the lowest 20 percent by income would actually receive a net benefit of $40 per year. The Environmental Protection Agency projects that the bill would cost American households $80 to $111 a year. Neither of these estimates account for the benefit the ACES Act would provide to the U.S. public and economy by avoiding the costs of increased climate change. Nor do they account for the fact that the ACES Act will help U.S. businesses lead the race already under way to develop clean energy technologies – a race that will dominate the 21st century global economy. 

As this legislation moves to the Senate, it is also important to consider its international implications. Enactment of a comprehensive energy and climate bill along the lines of the ACES Act will finally allow the United States to help lead the efforts toward a global agreement in which the major economies of the world, both developed and developing, play their part to address the climate challenge.

I commend Speaker Pelosi, Chairmen Waxman and Markey, and their colleagues who have seized their opportunity to begin building a stronger U.S. economy and a better, safer world. Climate change presents an unprecedented challenge – but it is one we must tackle now. I urge the Senate to build on this work to advance strong climate and energy legislation.

 

Pew Center Contact: Tom Steinfeldt, 703-516-4146

Innovative Approaches to Climate Change Policy: Workshop on State-Federal Interactions

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The Pew Center on Global Climate Change, National Association for Clean Air Agencies (NACAA), Georgetown State-Federal Climate Resource Center, and Pew Center on the States hosted a two-day workshop on State and Federal Action on Climate Change.

On June 24th and 25th, 2009, the Pew Center on Global Climate Change, National Association for Clean Air Agencies (NACAA), Georgetown State-Federal Climate Resource Center, and Pew Center on the States hosted a workshop on state and federal action on climate change. The event brought together executive and legislative officials and stakeholders from both the state and federal levels to share their experience developing climate policies and discuss the appropriate roles of each level of government in addressing climate change. A series of panels and keynote speakers spoke about a wide range of issues, including the outlook for federal action—particularly the American Clean Energy and Security Act of 2009—, complementary policies for greenhouse gas emission reductions, and new research on U.S. clean energy jobs.

The following materials were made available during the workshop:


Speaker and panelist presentations can be viewed by clicking on the presenter's name below.

Wednesday, June 24, 2009


Welcome from the Co-sponsors:

  • Arturo Blanco, Bureau Cheif, Bureau of Air Quality Control, Houston Department of Health and Human Services, and Co-President of NACAA
  • Colleen Cripps, Deputy Administrator, Nevada Deivision of Environmental Protection, and Co-President of NACAA
  • Susan Urahn, Managing Director, Pew Center on the States
  • Vicki Arroyo, Executive Director, Georgetown State-Federal Climate Resource Center

Opening Address: Eileen Claussen, President, Pew Center on Global Climate Change

Panel 1: U.S. Congressional Update and Outlook

Moderator: Bill Becker, Executive Director, NACAA

Panelists:

  • Chris Miller, Senior Policy Advisor, Office of U.S. Senator Harry Reid (D-Nevada)
  • Todd Johnston, Senior Policy Advisor, Office of U.S. Senator George Voinovich (R-Ohio)
  • Manik Roy, Vice President of Federal Government Outreach, Pew Center on Global Climate Change
  • Bill Tyndall, Senior Vice President of Federal Government and Regulatory Affairs, Duke Energy

Panel 2: Federal Regulatory Authorities and Tools

Moderator: Vicki Arroyo, Executive Director, Georgetown State-Federal Climate Resource Center

Panelists:

  • Gina McCarthy, Assistant Administrator for Air and Radiation, U.S. Environmental Protection Agency
  • Andy Ginsburg, Administrator, Air Quality Division, Oregon Department of Environmental Quality
  • Dianne Nielson, Energy Advisor to Utah Governor Jon Huntsman, Jr.

Panel 3: Green Jobs

Moderator:  Susan Urahn, Managing Director, Pew Center on the States

Panelists:

  • Jeremy Kalin, Representative, Minnesota House of Representatives
  • William Coleman, Partner, Mohr Davidow Ventures
  • Chris Adamo, Senior Policy Advisor for Environment and Energy, Office of U.S. Senator Debbie Stabenow (D-Michigan)

Panel 4: Cap and Trade Design and Lessons from Regional Programs

Moderator:  Judi Greenwald, Vice President of Innovative Solutions, Pew Center on Global Climate Change

Panelists:

  • Janice Adair, Special Assistant to the Director, Washington Department of Ecology
  • Laurie Burt, Commissioner, Massachusetts Department of Environmental Protection
  • Doug Scott, Director, Illinois Environmental Protection Agency

Thursday, June 25, 2009


Keynote Speaker: Governor Jim Doyle, Wisconsin
See an interview with Gov. Doyle

Panel 5: Electricity: Energy Efficiency and Renewables

Moderator: Mark Shanahan, Executive Director, Ohio Department of Environmental Quality and Energy Advisor to Governor Ted Strickland

Panelists:

  • Karl Rábago, Vice President, Distributed Energy Services, Austin Energy
  • Frank Murray, President and CEO, New York State Energy Research and Development Authority (NYSERDA)
  • Marsha Smith, Commissioner, Idaho Public Utilities Commission

Keynote Speaker: Lisa Jackson, Administrator, U.S. EPA

Panel 6: Transportation: Fuels, Vehicles, System Efficiency, and VMT

Moderator: Larry Greene, Executive Director, Sacramento Metropolitan Air Quality Management District

Panelists:

  • Margo Oge, Director, U.S. Environmental Protection Agency Office of Transportation and Air Quality
  • Eileen Tutt, Deputy Secretary for Climate Change and Environmental Justice, California Environmental Protection Agency
  • Bill Northey, Secretary, Iowa Department of Agriculture and Land Stewardship    
  • Beverly Swaim-Staley, Acting Secretary, Maryland Department of Transportation  

Panel 7: Adaptation

Moderator: Stephen Seidel, Vice President for Policy Analysis and General Counsel, Pew Center on Global Climate Change

Panelists:

  • Daniel Ashe, Science Advisor to the Director, U.S. Fish and Wildlife Service   
  • Richard Leopold, Director, Iowa Department of Natural Resources 
  • Adam Freed, Deputy Director, New York City Mayor's Office of Long-Term Planning and Sustainability
  • Larry Hartig, Commissioner, Alaska Department of Environmental Conservation

Closing: Judi Greenwald, Vice President of Innovative Solutions, Pew Center on Global Climate Change

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