Eileen Claussen: Managing Expectations & Maintaining Momentum: A Climate Policy Outlook

Speech by Eileen Claussen, President, Pew Center on Global Climate Change

Nikkei Seminar
New York, NY

September 29, 2009

Thank you very much.  It is a pleasure to be here in New York, and I am honored to be your keynote speaker today. The organizers of this seminar have asked me to provide an overview of what's been happening in Washington, DC on the climate issue in recent months. And I want to preface my remarks with a request. If you happen to disagree with anything I say, please refrain from shouting "You lie." 

In all seriousness, I want to commend the organizers of the seminar for their excellent sense of timing. Over the past two weeks, we have seen a whirlwind of activity on the climate issue.  As we speak, talks are under way in Bangkok in one of many, many such meetings in preparation for the U.N. climate meeting in Copenhagen at the end of the year. Two weeks ago, there was a meeting in Washington of representatives of the nations that are part of the Major Economies Forum.  This was followed by the September 22nd U.N. summit on climate change here in New York that included President Obama, Prime Minister Hatoyama and many other heads of state.  

It is a wonder we don't all have climate meeting fatigue.  And whether all of this meeting and all of this talking will lead to definitive action is really the question of the hour when it comes to climate change.  

In his remarks at the UN last week, President Obama captured the urgency and challenges facing global climate action. He said: "Difficulty is no excuse for complacency.  Unease is no excuse for inaction.  And we must not allow the perfect to become the enemy of progress."

Later in my remarks, I will talk in more detail about the progress taking shape on the international scene on the climate issue. I also will address the significance of the steps already taken by the Obama administration to tackle our climate and clean energy challenge. Finally, any discussion of U.S. policy by definition means a discussion of U.S. politics. So we may be here for awhile.  

The Science and the Polls

But before talking about the prospects for climate action in the United States, I want to open with a look at the science.  And I do this because I believe very strongly that it is important to preface any assessment of where we stand in addressing the climate issue - either domestically or internationally - with a clear illustration of why we are having this discussion.  

We have gathered here at the Japan Society not because of the delicious breakfast buffet or because they're offering free coffee (well, maybe one or two of us are here for these reasons).  But the main reason why we are here is because climate change is real, and we need to do something about it.  

It is so easy for many of us, including myself, to get caught up in the politics and policy discussions around this issue.  And, in the process, we can forget about the magnitude of the problem we are trying to solve.  In every debate about this issue, in every panel discussion, in every engagement with those who might disagree with us on the details of how to respond, we must always put the science first.   

And the science is clear: Climate change is happening now, it is happening in our own backyards and across the globe, and it is happening much faster than predicted. 

In recent years, we've observed significant melting in the Arctic and Antarctic, more intense storms wreaking havoc on small island nations and on global powers like the United States and China, and greater occurrences of severe drought in certain regions and floods in others that devastate crops and infrastructure. These problems will only worsen without significant action to cut back global emissions of greenhouse gases.

But while the science is one clear reason to act, there is another imperative, one that is particularly important in a time of economic recession. If we are to build ourselves out of this economic downturn, we must do it by creating a new economy, and the economy that is ripe for rebuilding is the energy economy.   

This is a point on which you can find broad agreement among Republicans, Democrats, and Independents.  The American people understand that our energy status quo is unsustainable.  Among the biggest problems: we rely too much on foreign sources of energy when doing so threatens our security and our economy.  And, at the same time, other countries are working hard to develop viable alternatives.  We must be a part of this competition.  Business leaders, policymakers, entrepreneurs, teachers, students, parents - all of us must capitalize on the opportunity to put American ingenuity to work and make the United States a global leader in advancing a clean energy transformation.

And so we really have no choice but to move forward.  Because of the science and the need to grow our economy, we cannot continue doing what we are doing.  And guess what?  The American people for the most part understand this. Despite all the noise emanating from town hall forums and rallies aimed at painting the climate issue as a political loser, most Americans want action from their government that starts us down the path to a new energy future.  

Two ABC News/Washington Post polls in April and June found that 75 percent of Americans support federal action to regulate emissions to address global warming ... 75 percent.  And just last month, a 52-percent majority of Americans said they support a cap-and-trade policy to reduce U.S. emissions. 

Voters in the U.S. also have a positive view of the potential for job creation under new climate and clean energy policies. For instance, two surveys this summer by Zogby and the Pew Charitable Trusts found that 68 percent and 65 percent of voters, respectively, said climate and clean energy legislation will drive job creation or have no adverse impact on jobs. 

Please do not get me wrong: I am not saying that the politics of this issue are a slam-dunk or that it will be easy to pass legislation. What I am saying is that a solid majority of the American people understand the need to act on this issue.  And they will support new policies that are cost-effective, that generate new jobs through investments in clean energy, and that start America on a path toward a higher level of energy security.   

And the truth is, American policymakers have begun to respond.  Despite Washington's deep immersion in the details of health care reform, there has, in fact, been a fair amount of discussion (and action) related to the climate issue this year in Washington.  

Will the Administration and Congress reach agreement in 2009 on a comprehensive plan to begin to slow the growth of U.S. greenhouse emissions?  Using the language of the health care debate, I would say the prognosis is very doubtful.  But at the same time, we know that this is a problem we cannot ignore if we want to see less damage to our environment and future economic growth.  Our priority must be to keep building on this effort and to keep moving forward.  

For months, everyone involved in the climate issue has been talking about whether the U.S. needs to pass comprehensive legislation before the climate talks in Copenhagen in December - many have suggested that without a completed U.S. plan in place, the international talks will fail.  

I don't share this view.  I believe what's important right now is that the U.S. be able to show progress in Copenhagen. We need to show: 1) that we are serious about this issue; and 2) that we are indeed taking action to begin to reduce emissions.  

Whether the negotiations in Copenhagen will produce anything close to a final agreement is a question I intend to explore later in my remarks.  But I do not believe that the talks are destined to fail solely on the basis of whether the U.S. has a cap-and-trade plan in place or not.

The Domestic Picture

With that, I want to address where we stand right now on the climate issue in this country.  In the middle of the current health care debate, we often forget that the U.S. House of Representatives did something quite remarkable back in June.  It passed by a vote of 219 to 212 a bill that would establish an economy-wide, greenhouse gas cap-and-trade system.  And this week a cap-and-trade bill will likely be introduced in the Senate. I'll address the Senate debate in a moment, but the significance of the House's action this summer deserves more than a passing mention.

The House bill, formally known as the American Clean Energy and Security Act, would reduce aggregate emissions for all covered U.S. sources to 83 percent below 2005 levels in the year 2050.  Interim reductions would be as follows: 3 percent below 2005 levels in 2012, 17 percent below those levels in 2020, and 42 percent below those levels in 2030.  

The House legislation also included a wide range of critical complementary measures to help address climate change and build a clean energy economy.  Yes, it was a narrow win ... and yes, it was a difficult vote for many in the House ... and yes, we still have a steep hill to climb in the Senate because there remains a great deal of opposition.  But the House effort led by Congressmen Henry Waxman and Edward Markey sent a clear signal to families, workers, and businesses that a clean energy future is possible.

Think back a few years to the early part of this decade - no one in their right mind would have predicted back then that American lawmakers would do this, that they would approve a measure this far-reaching, designed to achieve this level of reductions in U.S. emissions.  But they did.  And the vote in the House on the American Clean Energy and Security Act is just one in a string of actions taken in Washington in recent months that show a real commitment on the part of our elected leaders.  

As we approach the one-year anniversary of the election of President Obama, it is easy to forget how, in his first months in office, he made some crucial decisions that will result in real reductions in U.S. emissions of greenhouse gases, and real changes in how we produce and use energy in the decades ahead.  

Going back to February, the economic stimulus package signed by the President that month included more than $80 billion for everything from smart-grid technologies to renewable energy development to energy efficiency improvements and mass transit.  This funding represented a relatively small share of the overall stimulus, but it is a start - a down payment on building the clean energy infrastructure that we need to keep our economy strong for decades to come.  

Then there was the U.S. Environmental Protection Agency's decision in April, in response to a 2007 Supreme Court decision, to open the door to regulation of greenhouse gases.  The EPA's proposed finding is that these gases contribute to air pollution that may endanger public health or welfare.  If finalized, as is expected, this would mean that greenhouse gases could be regulated under the federal Clean Air Act.  Of course, the Obama administration still prefers a legislative solution to reducing U.S. emissions - but the EPA action is a clear sign to Congress and others that the White House will move forward on this issue in the event that Congress canít agree on a plan. And, in fact, there was an attempt last week to see if the Senate could agree to a rider on an Appropriations bill that would delay EPA action under the Clean Air Act.  It never came to a vote because there were not enough votes to pass it, which means that EPA action to deal with greenhouse gases can be expected.  

The Administration has, in fact, been quite busy on the climate issue over just the past few weeks.  For example, earlier this month the EPA proposed the first regulation under the so-called "endangerment" finding - it's a joint proposal with the Department of Transportation to require cars to achieve 35 miles per gallon by 2016.   By acting to reduce vehicle emissions, the Obama administration is acknowledging that we need to work on many fronts on this issue simultaneously if we want to achieve the broad-based reductions that are needed to protect the climate.  

Just last week, the EPA finalized a new reporting system that, for the first time, will provide accurate data on all significant greenhouse gas emitters in this country.  The new program will cover approximately 85 percent of the nationís GHG emissions and apply to roughly 10,000 facilities.  A greenhouse gas registry is the foundation for building a successful and transparent federal program and marks a significant step in the process to U.S. reduce emissions and protect the climate. 

Also in September, the White House floated a draft proposal that would set a goal for federal agencies to reduce their emissions by 20 percent by 2020.  The federal government is the nation's largest energy consumer.  This action, if approved, could help spur the development of clean-energy technologies and make it easier for the private sector to follow suit.  It is another clear sign of the White House's commitment to action on this issue, and a sign that we can begin making progress right now.  

So let me sum up where we stand: In his statements, his appointments, his stimulus plan, and his early executive actions, President Obama has given every indication that he understands the urgency of the climate challenge and is determined to meet it.  And, with the House having passed comprehensive cap-and-trade legislation, the United States is in a very different place on this issue than we were even one year ago.  

Adding to the sense that times have changed is the involvement of leading U.S. businesses in the search for solutions. There is a group that many of you may know about called the U.S. Climate Action Partnership.  And what's unique about this group is that its leadership includes a range of Fortune 500 companies, in partnership with the Pew Center and leading environmental organizations.  And, over the past couple of years, USCAP has become a powerful advocate for strong and swift action on climate change.  

A decade ago, it would have been unimaginable for leading businesses to sign on to an agenda advocating cap-and-trade and other measures to achieve dramatic reductions in U.S. emissions.  But the USCAP Blueprint for Legislative Action is part and parcel of a campaign that has engaged leading business executives from companies such as Alcoa, GE, Shell and many others to become active and very visible supporters of climate solutions.  Their call for strong action and regulatory certainty on this issue has found a receptive audience in Washington and has provided a vital push for Congress. 

Of course, now that the House has passed legislation, the focus has shifted to the United States Senate. Getting climate legislation through the Senate would be challenging in any circumstance - but it is especially challenging right now because the Senate is embroiled in a highly contentious debate on another topic: health care.  The idea that senators will pick up the mantle of transforming the nationís energy economy while still working on plans to reform the one-sixth of the U.S. economy connected to health care is frankly wishful thinking.

The bottom line is that until health care is resolved it will be hard to get traction for anything else.  Indeed, the manner in which health care is resolved could make it harder or easier to achieve progress in the Senate on climate and energy legislation.  I donít want to dig too deep into the details of Senate procedures except to note that winning health care through the reconciliation process - in other words, with a simple majority of senators, all of them (or almost all of them) Democrats, would not help the prospects for enactment of a cap-and-trade bill.  It might get health care through, but it will be decidedly unhelpful for the climate debate.  

And here's why ... Health care reform could potentially draw the support of the entire Democratic caucus in the Senate - or almost the entire caucus.  Climate change legislation is different.  We can't expect every Democratic senator to vote for cap-and-trade - for example, several Democrats from heavy manufacturing states and states that rely heavily on coal for electricity and jobs are not yet sold on this approach.  So cap-and-trade will need at least some solid Republican support - and right now even Republicans with years of leadership on climate change have been reluctant to step into the fray.  To the extent that the health care debate widens the partisan divide even further, then getting these Republicans on board for climate legislation will be that much harder.  

Adding to the challenge in the Senate are a number of other important items on the legislative calendar - namely financial regulatory reform and the annual spending bills, all of which could further push back the full Senate's consideration of climate legislation.

So where does this leave us?

Well, right now, Senators John Kerry of Massachusetts and Barbara Boxer of California are putting the finishing touches on a cap-and-trade bill to present to the Senate. The bill may include one Republican supporter as well.  Along with the majority leader, Harry Reid of Nevada, Senators Kerry and Boxer continue to say they want to see action in this Congress - perhaps by December, perhaps spring of next year - but the bottom line is that the leadership remains committed. And optimistic.  

However, getting the 60 votes required in the Senate for a cap-and-trade bill will be very hard.  Not only will the Senate need to overcome partisan divisions that will likely harden in the course of the health care debate, but senators also will need to resolve a number of very difficult issues standing in the way of agreement on climate legislation.  These include an array of very technical questions, such as the allocation of emission allowances, how we should reduce costs for consumers and businesses, how we should deal with carbon offsets, how much oversight of the carbon market we should insist on, and how we should treat nuclear power.  

So given all of these things, it's my belief that Senate passage of an energy and climate bill is unlikely to happen this year.  A better bet would be early 2010 - and I say early 2010 because, as we all know, next year is an election year, and the later we get into the year the harder it will be to draw sufficient support from politicians of both parties.

But even in 2010, getting climate legislation through the Senate will still be a heavy lift.  Among the keys to success: the White House will have to become much more deeply engaged in the details of the legislation.  

We have all seen how the Obama Administration was criticized for its tendency to push onto Congress the responsibility for forging a plan to reform health care.  And the opinion among the commentariat is that the President's re-engagement on the health care issue through his address to Congress earlier this month has helped to create new momentum for action.  At the appropriate time, there's no doubt that we'll need strong engagement from the White House on climate change as well.  

The Obama Administration will need to advance a fairly detailed vision for a climate bill and become more involved in the legislative process.  That vision would have to include solid answers to questions like: How will this program help (and not harm) the economy? How will energy intensive manufacturing industries not be disadvantaged? How will this bill advance key low-carbon energy technologies, such as carbon capture and storage, nuclear power, wind, and solar energy?  

To beat back the small but vocal anti-climate sentiment and to create enough cover for Republicans and moderate Democrats who are on the fence about supporting climate action in the current political environment, the White House needs to get out there and aggressively make the case for action - and, yes, flesh out the details of exactly what that action should entail.

People want to know how climate and energy legislation can ultimately benefit the economy in their hometowns and in their states.  The White House and its allies need to talk about that - and they also need to talk about the costs of not acting on this issue.  

This is something we often forget to emphasize in this debate.  In the same way that we need to base every discussion of this issue on the science and what it tells us, we also need to remind people that climate change will create very substantial costs for our businesses and our economy if left unaddressed.  Consider the costs of having less water available for farming, or of increased wildfires in the West, or of cleaning up and rebuilding after a greater number of floods and more violent storms.  All of these are real and substantial costs - and they need to be part of the discussion.  

Businesses and families will experience these costs of inaction. For instance, reductions in California's water availability could cost farmers upwards of $3 billion per year by 2050, and increased wildfires in the West could cost homeowners an additional $2 billion annually.   

To underscore these financial risks, I want to share with you a short quote from an article about the costs of addressing climate change. The article is by Jeff Sterba, chairman and CEO of PNM Resources, a leading electrical utility company in the southwestern United States.  

"Make no mistake," he wrote.  "There is a cost to addressing climate change that we will all bear.  But the highest cost would come from ignoring climate change, and the lowest cost will come from sound federal legislation."

I repeat: the highest cost will come from ignoring climate change.  We need to keep drilling that into people's heads. And, in fact, the costs of ignoring this issue are not limited to the costs of dealing with the impacts of climate change. There are also costs to business associated with not knowing how government is going to act.  

Businesses are poised to invest billions in advancing a clean energy economy, but right now, with the regulatory picture so uncertain, businesses will continue to delay making the necessary investments in new energy sources and new low-carbon technologies.  The longer they wait to do this, the more expensive it will be.  And the more we will cede to others the opportunity to lead the world toward a new energy future.

You can look at this issue from either an environmental or an economic standpoint - or both.  And no matter how you look at it, we need to act. President Obama recognized this last year when speaking about climate change. He said: "Now is the time to confront this challenge once and for all. Delay is no longer an option. Denial is no longer an acceptable response. The stakes are too high. The consequences too serious."

And the truth is, we are beginning to act.  As I have said, the Obama Administration already has taken important steps that ultimately will bring real reductions in emissions from cars and trucks, buildings, and other sources. Combined with the House legislation and the EPA's proposed greenhouse gas endangerment finding, the U.S. is sending a clear sign that that we are finally starting to give this issue the attention it deserves. 

Is all of this activity enough to convince the rest of the world that the United States is intent on doing its part to reduce emissions? Only time will tell.  All I can say right now about the international discussions is this: In the same way that we need to be realistic about the prospects for a breakthrough on cap-and-trade in the United States in 2009, we also need to be realistic about what can be achieved this year at the global level.  

International Outlook

Last week's U.N. climate summit in New York offered a welcome chance for the leaders of some of the key countries in this dialogue to clarify their positions and their intentions as we look ahead to the Copenhagen meeting in December.  

President Hu Jintao of China used the forum to say that his country would set a target to reduce the carbon intensity of its economy. While he did not provide exact figures, or say the government is prepared to make this an international commitment, he said China would cut carbon emissions in relation to gross domestic product by a "notable margin" by the year 2020.  He also talked about taking specific steps toward increasing forest coverage and increasing the share of non-fossil fuels in the nationís energy mix.

Japan's new Prime Minister, Yukio Hatoyama, reiterated his pledge that Japan would reduce its emissions 25 percent below 1990 levels by 2020 - a much more ambitious target than the one set by the previous government - provided that all major economies commit to do their fair share.  

Both Mr. Hatoyama and Mr. Hu also spoke of the importance of international cooperation in areas from technology transfer to financing for developing country mitigation efforts.  

President Obama, for his part, emphasized all the steps taken by his administration in just eight months to move this issue forward both domestically and internationally.  There is still quite a way to go.  But even as the administration is working toward an effective program at home, it is reaching out in a constructive way in search of diplomatic solutions. For instance, the United States is leading a revamped Major Economies Forum where 17 of the worldís largest-emitting nations meet to help narrow gaps in the broader global climate talks. The Pew Center, I would note, was among the very first to advocate a major economies dialogue of this type. 

The administration also has launched a high-level energy and climate dialogue with China. The two countries recently announced plans for a joint Clean Energy Research Center, and I expect we'll hear about other new partnerships when President Obama visits China in November.  

I mention these initiatives to underscore the value of maintaining momentum on the climate issue, and to highlight the fact that the United States and other nations are indeed engaged in serious work to begin to carve out a response. But I also believe in the value being realistic. So while there is indeed much work under way, achieving a full and final outcome in Copenhagen this year is unlikely. Instead, we believe the goal in Copenhagen should be a strong interim deal.  Under this scenario, negotiations would continue next year toward the ultimate goal of agreeing to a climate treaty that includes all of the major economies.  

The Pew Center has never believed it was likely that we would see a final, ratifiable treaty emerge from Copenhagen. Rather, we have suggested that it would be both important and ambitious for Copenhagen to produce an interim agreement. Such a deal would establish a new international legal structure - including the types of obligations to be taken, by whom, and how they will be verified - so that countries can move on to negotiating specific commitments in a final treaty.  

A good Copenhagen agreement must do a number of things.  First, it must outline a new legal framework for verifiable mitigation commitments by all major economies. In our view, these commitments should include economy-wide emission reduction targets for developed countries and a broader range of lower-carbon policy commitments for major developing countries.  Second, a Copenhagen agreement must establish the nature and scale of support that will go to developing countries to reduce emissions and adapt to climate change.  Third, it must include a clear mandate to conclude a final agreement by a date certain.  And fourth, it must set an ambitious level of effort. This should include a global goal of cutting emissions at least 50 percent by 2050; an aggregate 2020 target for developed countries; and a collective peaking year for developing countries. 

The United States doesnít need final legislation at home in order to negotiate an interim agreement of this type.  And once the framework is agreed, the United States and other countries will then be in a much better position to fill in the details, including their specific national commitments.

There's no doubt that anything short of a full and final agreement in Copenhagen will still strike some as a woeful failure.  But given how complex the issues are, and how far apart countries remain, achieving even a provisional agreement of this kind in the short time left is a huge challenge.  I think we can meet that challenge, and use the Copenhagen meeting as an opportunity to put some of the toughest issues behind us and create positive momentum going forward.  Rather than a grand culmination, Copenhagen could be a powerful springboard toward a final deal. 

And the United States can and must play a leadership role in making this happen.  

For those of us who are involved in this debate, the important thing right now is to keep our eyes on the prize.  The United States and other nations may not get everything done this year that we believe is necessary, but as long as we can continue to move forward, and as long as we can continue to see policymakers at all levels embracing steps that can result in real progress on this issue in the months and years ahead, then we are indeed getting somewhere.  

Does the dreamer in me hope we can do more this year?  Of course.  My dream is that health care moves forward in a bipartisan fashion and the economy shows clear signs of turning up ... and Congress then comes together across partisan lines to pass a robust cap-and-trade plan that then positions the United States to lead the way to a final agreement in Copenhagen.  What a year that would be.  

But I am also a realist, and the realist in me says stop dreaming.  And perhaps all of us involved in this discussion need to adjust our expectations and work to ensure that the process continues moving forward in a substantive way. We have a great number of accomplishments to point to, and there has been a great deal of progress on this issue in the last year alone. This is something to celebrate, and to build on, in the weeks and months ahead.

Thank you very much.