Affairs of state

In spite of increasing scientific consensus that human-induced climate change is occurring, U.S. action to address this problem is currently stalled. Much of the domestic policy debate has focused on the cost of reaching reduction targets for greenhouse gas emissions such as carbon dioxide (CO2) and the lack of similar targets for developing countries. Meeting such targets will require that Americans reduce the burning of fossil fuels such as coal and oil. But this debate often ignores the growing number of countries and companies that are taking serious steps to address climate change. By acting now and developing new approaches and technologies, these governments and businesses are hoping to yield both environmental and economic benefits.

Global dialogue

While many countries, including the United States, signed and ratified the 1992 United Nations Framework Convention on Climate Change, pledging to reduce greenhouse gas emissions to 1990 levels, a later protocol to the convention developed in a 1997 conference in Kyoto, Japan has not yet entered into force. The Kyoto Protocol establishes emissions reductions targets for 38 developed countries and provides for the use of flexible mechanisms, such as emissions trading, joint implementation among developed countries and the Clean Development Mechanism (funding projects in developing countries). The 1990 U.S. levels of CO2, the primary greenhouse gas, were estimated by the U.S. Environmental Protection Agency (EPA) to be approximately 1,344 million metric tons carbon equivalent (MMTCE). Total 1990 emissions of all greenhouse gases, including CO2, were estimated to be about 1,632 MMTCE. EPA's calculations compiled in 1997 show total greenhouse gas levels to be roughly 1,814 MMTCE, which is 11 percent above the 1990 baseline levels. Because greenhouse gases are ubiquitous and contribute to warming regardless of where they are emitted, the ability to pursue cost-effective reductions anywhere through emissions trading or projects in other countries can reduce atmospheric levels of greenhouse gases at the lowest possible cost. The international negotiations to further define the protocol continue, but the specifics concerning the structure and use of flexible mechanisms, how to address carbon sequestration (storage of CO2 in trees and soils to help reduce atmospheric levels) and how to ensure compliance are still being hammered out. As these negotiations continue, many nations and companies are moving forward with emissions reductions.

Initiatives by other countries

Many member states of the European Union (EU) are taking action to reduce contributions of greenhouse gases to the atmosphere. In addition, the EU itself has committed it member states to CO2 emissions levels in 2000 that do not exceed 1990 levels. It appears that the EU will reach this objective, according to a Pew Center report to be released this summer. The EU's ability to reach this target is largely due to efforts undertaken by Germany and the United Kingdom. Germany has initiated a program that includes a reduction of coal use and production, voluntary agreements with industry, traffic measures, pollution taxes and an emphasis on renewable energy and combined production of heat and power. The United Kingdom has already achieved a more than 14 percent reduction - exceeding its Kyoto target of 12.5 percent - primarily by switching from coal to natural gas. The UK has also announced a program that includes domestic emissions trading and energy taxes. The Danish government has already secured legislative authority to implement a trading program of its own and similar programs are under development in Norway and Sweden. The parliament of the Netherlands has approved a more traditional regulatory program in an effort to curb emissions and energy tax increases. In other parts of the world, Australia has invested $400 million in the development and commercialization of renewable energy technologies and has embarked on a reforestation effort. Japan has amended its laws to promote higher energy efficiency standards - increasing efficiency of automobiles, appliances and buildings. In spite of the lack of developing country targets in the Kyoto Protocol, some key countries (such as India and China) have begun to seek cost-effective options to slow their greenhouse gas emissions growth.

Private action, public results

In the private sector, a growing number of companies are taking action. Energy companies BP/Amoco and Shell have established their own reduction targets of 10 percent below 1990 emission levels for greenhouse gases and are implementing emissions trading programs that are yielding efficiency benefits at their facilities worldwide. DuPont's pledged goal of reducing their greenhouse gas emissions from its facilities to 65 percent below 1990 levels by 2010, with an additional commitment to obtain 10 percent of their energy from renewable sources, far outstrips the 7 percent reductions slated for the United States as a whole under the Kyoto Protocol. Unfortunately, because there is currently no U.S. government program to limit greenhouse gas emissions, companies that take action do so at some risk that their reductions may not be considered or credited under a possible future domestic policy regime.

U.S. legislative proposals

To provide some protection to companies taking steps to reduce their emissions while policy prescriptions are being deliberated as well as to encourage reductions now, a bill to reward credit for early action (S. 547) was crafted by the late Sen. Lincoln Chafee (R-RI) and Sens. Connie Mack (R-FL) and Joseph Lieberman (D-CT) in 1999. Congressmen Rick Lazio (R-NY) and Calvin Dooley (D-CA) introduced similar legislation in the House last year (H.R. 2520). Voluntary "early action" legislation would encourage businesses and other entities to reduce their contributions to climate change at the earliest possible time. The concept is simple - provide credit toward a future domestic regime to those entities acting now to reduce their emissions. Such legislation would remove barriers to action by protecting those who act first and by creating credits for reductions - credit that could have value to companies in a global or domestic greenhouse gas market. Such credits would create incentives to curb emissions at the earliest opportunity. Yet while the principle is sound, crafting sound and viable legislation has proven to be a challenge. The current political climate as well as the loss of Chafee's leadership on this issue makes movement unlikely. Some opposed to early action crediting are promoting an alternative approach that extends existing voluntary reporting programs and research. Bills such as S. 882 by Sen. Frank Murkowski (R-AK) and S. 1776 by Sen. Larry Craig (R-ID) - both introduced in 1999 - promote research on climate science and technologies and expand and consolidate the existing voluntary reporting system managed by the U.S. Department of Energy. In addition, Craig's S.1777 provides for a research and development (R&D) tax credit to technologies and facilities that reduce greenhouse gas emissions. In contrast to such economy-wide approaches intended to lower emissions, more targeted bills have also been introduced to limit emissions from power plants and to encourage sequestration, or storage, of carbon through forest and soil management. While not a panacea, capturing and storing carbon, if done well, can help to offset warming and potentially buy time while policies and more efficient technologies are developed and put in place. Some in Congress (Congressmen David McIntosh (R-IN) and Joe Knollenberg (R-MI)) have taken a more restrictive approach, seeking to force a debate on Kyoto ratification now and prohibiting any government action in the interim that could be interpreted in any way as implementing the protocol. In the near-term, development of a comprehensive domestic program to address climate change appears unlikely.

Trading for success

While the prospects for legislative movement this year are dwindling, there is growing consensus among business and government leaders that ultimately some action to reduce greenhouse gas emissions will be required. Some analysts and advocates outside of government are making attempts to design such a program, in hopes that the political situation may ripen in the future. Resources for the Future and the Progressive Policy Institute (two Washington, D.C.-based think tanks) have suggested emissions trading programs generally modeled on the successful U.S. acid rain program, aimed at reducing sulfur dioxide (SO2) emissions. Such programs allow businesses complete flexibility to choose their compliance methods and to buy and sell the right to emit. While both the RFF and PPI proposals would establish an emissions trading market, their approaches differ in several important respects. The PPI proposal places a cap on emissions at year 2000 levels. This emissions cap declines over time so that near-1990 levels are achieved by 2012. In contrast, the RFF program establishes a "cap" on emissions of 1990 levels; however, this cap is effectively lifted should costs exceed $25 per ton of carbon. While the RFF and PPI proposals attempt to harness market forces through creation of a domestic trading system, the viability of any cap and trade program is questionable in the current political climate. The challenge of translating the success of the relatively small acid rain program to the much more complex climate policy realm will also be significant. Both the RFF and PPI approaches have important unresolved issues. For example, while appealing from a "polluter pays" perspective, the RFF approach of auctioning permits is unprecedented in the emissions trading area and likely to be quite controversial (the SO2 trading scheme allocated an initial amount of permits to pre-existing sources.). It is also currently unknown whether the safety valve of $25 per ton is set too high (thus, the price signal could drive up the cost of reductions) or too low (and thus will not achieve the environmental benefits sought). The PPI program's applicability to numerous "downstream" entities, including government agencies, raises concerns regarding program complexity, transaction costs and possible conflict of interest for regulators. In spite of these and other concerns, the dialogue regarding what a domestic program could look like and the growing list of policy approaches and range of their proponents are encouraging.

Support for a new economy

Addressing the challenge of climate change is likely to require a mix of approaches. Important aspects of any future program should include protecting the baseline of, and, preferably, rewarding, companies that act early to reduce their emissions, support for R&D and the diffusion of new energy efficient technologies and using market mechanisms such as emissions trading and tax credits. And while we focus on the effectiveness of any proposed policy, we should also be mindful of its distributional impacts. Facilitating a transition to a new economy based on lower consumption of fossil fuels will not be painless. However, actions being taken by countries and companies like those profiled here prove that action to address climate change can occur consistent with economic growth. In order to begin this process, we need to move away from debating what developing countries are doing or not doing and focus instead on what makes sense for us in the United States. Rather than be paralyzed at the thought of how expensive emissions reductions could be, we need to actively harness American ingenuity through technological innovation and market-based policies to minimize costs and reap potential benefits on the world market. Rather than focus on the discomfort that weaning ourselves from fossil fuels can cause, we should craft solutions that help affected industries, their workers and communities to cope with the transition. Formulating a politically viable and effective domestic policy program that will significantly reduce our contribution to climate change will undoubtedly be a challenge. But if we act now, we can afford to do things smarter. The United States should take aggressive steps to develop the energy sources and technologies that will take us into the next century without compromising our economy or our children's future. E-sources Pew Center on Global Climate Change - United Nations Framework Convention on Climate Change - Intergovernmental Panel on Climate Change - United Nations Environment Programme (UNEP) - UNEP/World Meteorological Organization, Common Questions about Climate Change: World Meteorological Organization - World Business Council for Sustainable Development - International Energy Agency - EPA global warming site - EPA global warming state impacts - EPA's quarterly journal Inside the Greenhouse - U.S. Department of Energy - DOE Energy Efficiency and Renewable Energy Network (EREN) - Energy Information Administration (EIA) - National Oceanic and Atmospheric Administration - National Climatic Data Center - US Global Change Research Program - US Global Change Research Information Office (GCRIO) - US State Department Spotlight on Climate Change - Office of Science and Technology Policy (OSTP) - Goddard Institute for Space Studies - Global Change Electronic Edition - World Wildlife Fund Climate Change Campaign - Resources for the Future Global Climate Change - American Council for an Energy Efficient Economy - Global Environmental Management Initiative (GEMI) - American Forests Global Releaf - Environmental Defense - Natural Resources Defense Council global warming page - Sierra Club global warming campaign - World Resources Institute (WRI) -

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This article appeared in Environmental Protection magazine, July 2000, Vol. 11, No. 7, p. 32.

This article originally appeared in the 07/01/2000 issue of Environmental Protection.

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