Statement by
Elliot
Diringer
Pew Center on Global
Climate Change
July 11, 2007
regarding
The Kyoto Protocol and U.S.
Climate Action: An Update
submitted to
The Subcommittee on Asia,
the Pacific and the Global Environment
The Committee on Foreign Affairs
U.S. House of
Representatives
Mr.
Chairman and members of the subcommittee, thank you for the opportunity to
testify on the Kyoto Protocol and U.S. Climate Action. My name is Elliot Diringer, and I am the
Director of International Strategies for the Pew Center
on Global Climate Change.
The Pew Center
on Global Climate Change is a non-profit, non-partisan and independent
organization dedicated to advancing practical and effective policies to address
global climate change. Forty-three major companies in the Pew Center’s
Business Environmental Leadership Council (BELC), most included in the Fortune
500, work with the Center to educate opinion leaders on climate change risks,
challenges and solutions.
Mr.
Chairman, I would like to commend you and the members of this subcommittee for
convening this hearing today on U.S.
re-engagement in the global effort to fight climate change. The U.S. Congress is at long last engaged in
a genuine debate on how – not if, but how – the United States should address global
warming. So far, this debate has focused
primarily on questions of domestic climate policy. This is a critical first step. But truly meeting the challenge of climate
change will require global solutions as well. These will be possible, I believe, only with
strong leadership from the United
States.
By broadening the scope of debate here in Washington,
and by focusing attention on the international dimension of climate change,
this hearing will help set the stage for constructive U.S. engagement and for an
effective multilateral response.
In responding
to Chairman Lantos’ questions, I would like to focus in particular on the post-2012
international climate framework – what it should look like, and the steps the United States
must take at home and internationally to ensure its success. I will focus as well on how the United States
can best address the questions of competitiveness and developing country
participation.
1) Aside from the Asia Pacific
Partnership for Clean Development and Climate, and given that the United States
has neither ratified nor withdrawn from the Kyoto Protocol, what is the
Administration doing to advance international cooperation on climate change?
An
effective global response to climate change will be possible only with U.S.
engagement and leadership. Lack of
action by the United States
stands today as the major impediment to stronger efforts by other
countries. Of the steps the United States can take to encourage global
action, the single most critical is to establish unilaterally a mandatory
program to limit and reduce U.S.
greenhouse gas emissions. Demonstrating
the will – and establishing the means – to reduce U.S. emissions will greatly alter
the international political dynamic and improve prospects for international
cooperation.
Unfortunately,
the Administration has strongly opposed efforts by Congress to establish mandatory
policy to reduce U.S.
greenhouse gas emissions.
In parallel with stronger domestic
action, the United States
also must help lead the way to an effective multilateral climate effort. In our view, this must be accomplished
through a new treaty establishing binding commitments for all major emitting
countries. The appropriate venue for
negotiating this treaty is the U.N. Framework Convention on Climate Change,
which was signed in 1992 by the first President Bush and unanimously ratified
by the Senate. Unfortunately, while
remaining a party to the Convention, the United States under the present
Administration has consistently resisted any consideration of new commitments.
Last month, the G-8 endorsed
President Bush’s proposal for a new set of discussions among the major emitting
countries to be hosted by the United
States.
The stated goal is to achieve a consensus contributing to a new global
agreement in 2009 under the Framework Convention. As proposed by the President, the primary focus
of this major emitters process was to be the question of a long-term climate
goal. While consensus on a long-term
goal would be beneficial, it is not essential to advancing the climate effort,
and should not be a precondition for moving forward with near- and medium-term
commitments. In accepting the
President’s offer, the other G-8 leaders rightly insisted on a broader agenda
for the major emitters process, including “national, regional and international
policies, targets and plans…(and) an ambitious work program within the UNFCCC.”
To be truly effective, any
consensus achieved through the major emitters dialogue must ultimately be
translated into binding commitments. Accordingly, as this dialogue is getting
underway, parties to the Framework Convention should at the same time begin the
process of negotiating a post-2012 climate agreement. The next opportunity to launch these
negotiations will be at the Conference of the Parties later this year in Bali. A critical
test of the Administration’s support for an effective multilateral response to
climate challenge will be its willingness to support a decision in Bali initiating negotiations toward post-2012
commitments.
2) Given that the Protocol lapses in 2012, what measures
should the United States
as the largest emitter of carbon dioxide, take to slow growth in greenhouse
emissions?
The Pew Center
is a founding member of the U.S. Climate Action Partnership (USCAP), a
partnership of 29 major companies and nonprofit organizations. USCAP urges Congress to promptly enact an
economy-wide, market-driven approach that includes, among other things, a
cap-and-trade program that places specified limits on U.S. greenhouse
gas emissions; sector-specific policies and measures to complement the
cap-and-trade program; and a fully funded federal technology research,
development, demonstration and deployment program for climate-friendly
technologies.
3) What is preventing our U.S. industries from setting up
markets for buying and selling emission credits?
The largest
obstacle to the buying and selling of emission credits by U.S. industries
is the absence of a mandatory cap on emissions and an economy-wide emissions
trading system. Under a number of
voluntary programs, there is a small amount of emissions trading occurring now
among companies that want to demonstrate their environmental commitment and
prepare for the eventuality of carbon constraints. However, a robust market requires both supply
and demand, and in the case of a commodity like greenhouse gas credits, a cap
or limit is the only way to create this demand.
Without a mandatory cap on emissions, companies have no financial
incentive to buy emission credits, since they can emit greenhouse gases for
free.
It is important to remember,
however, that creating a market is not the goal. Reducing emissions is the goal, and the
establishment of a emissions market is a means of achieving that goal as
cost-effectively as possible. Once a
mandatory cap on GHG emissions is established in the United States, there will
very likely be a robust market for emission credits and, more importantly, for climate-friendly
technologies.
4) Given that more than 400 U.S.
cities support and adhere to the Kyoto
Protocol, what is being done at the federal level to accelerate the development
of technology that can be used to reduce emissions?
Over the
forty year history of federal environmental law, nearly all major federal
environmental laws have been based on state and local precedents. As envisioned by the Founding Fathers, the
states have served as laboratories of democracy when it comes to environmental
policy, and have been joined in this role by many major municipalities. History appears to be repeating itself with
climate policy, with climate friendly measures being embraced by most states
and a large number of U.S.
cities.
Unlike many
previous environmental problems, however, climate change is a global problem. Minimizing the greenhouse gas emissions of
any one city, state or country alone will not solve the problem even for that
city, state or country.
Regarding
federal efforts to deploy the use of climate-friendly technologies, the U.S.
Department of Energy (DOE) has developed a strategic plan for its climate
change technology programs, and has spent a large amount of money ostensibly to
advance the technologies.
While
DOE’s plan provides a fine overview of GHG-reducing technologies and the
opportunities each could present over the long term, and the technology R&D
has provided some useful advances, they do not constitute a program for
deploying these technologies, nor for providing a path to stabilizing
concentrations of GHGs. Merely
developing and compiling information about climate-friendly technologies is not
sufficient to ensure their widespread penetration into the marketplace.
A combination of
technology “pushing” activities (such as those discussed in DOE’s plan) with
technology “pulling” legislation that mandates reductions of U.S. GHG emissions
would be the most effective and efficient way to deploy climate-friendly
technology throughout the economy. Studies
indicate that combining R&D incentives with carbon caps will cost the
economy an order of magnitude less than relying on either R&D incentives or
emissions reduction policies alone.
5) Given that 70 percent of greenhouse gas emissions come
from the production and consumption of energy, what should the United States
be doing to encourage its energy sector to provide people with clean energy
while reducing greenhouse emissions?
With the
vast majority of U.S.
greenhouse gas emissions coming from the production and consumption of energy,
climate policy and energy policy are inextricably linked. The combination
of technology-pushing activities and technology-pulling policies mentioned
above in Questions 2 and 4 would help to encourage the U.S. energy
sector to be more climate-friendly. In addition, a wide range of targeted
policies could drive the energy system towards greater efficiency, lower-carbon
energy sources, and carbon capture technologies. Energy consumption can
be reduced through policies that increase energy efficiency, such as stronger appliance
and vehicle fuel economy standards, improved building codes, and consumer
education. Wider use of low-carbon
energy sources can be promoted by extending and expanding the production tax
credit for renewable energy sources, and through incentives and standards
ensuring that transportation biofuels achieve net GHG reductions. Finally, increased and sustained funding to
develop and demonstrate carbon capture and sequestration technologies is
absolutely essential so that we can continue to rely on coal-fired electricity
while reducing U.S.
emissions.
6) What policy suggestions could the United States make at the 2007 Summit
to make the Kyoto Protocol more effective in
slowing the pace of global warming, and to make it more equitable among the United States
and other developed nations?
The Kyoto
Protocol is a major milestone. It
established the first binding international commitments to address climate
change and in many industrialized countries is driving action to reduce
emissions. However, Kyoto represents just one stage in the evolution
of the multilateral climate effort.
Achieving broader participation and stronger commitments requires going
beyond the Kyoto Protocol. A post-2012
agreement could well incorporate the Protocol or some of its features, such as
the use of emissions trading and other market-based mechanisms. It is worth noting that these market
mechanisms were built into Kyoto largely at the
insistence of U.S.
negotiators and business, recognizing their importance in minimizing the cost
of emissions reduction. However, a
comprehensive post-2012 agreement must include new approaches and elements and
it may be more practical to fashion these under Kyoto’s parent agreement, the Framework
Convention. Consequently, the most
important step the United States can take at the Bali summit is to support the
launch of negotiations under the Convention, which, subsuming or in parallel
with the negotiations already underway under the Kyoto Protocol, lead toward a
comprehensive post-2012 agreement with binding commitments by all the major
economies.
What
should a post-2012 climate framework look like?
The Pew Center’s perspective on this question
reflects not only our own detailed analysis but also the collective views of an
impressive group of policymakers and stakeholders from around the world. As part of our effort to help build consensus
on these issues, we convened the Climate Dialogue at Pocantico, a group of 25
from government, business, and civil society in 15 key countries, all participating
in their personal capacities. The
group included senior policymakers from Britain,
Germany, China, India,
Japan, Australia, Canada,
Mexico, Brazil and the United States. It also included senior executives from
companies in several key sectors, including Alcoa, BP, DuPont, Exelon, Eskom
(the largest electric utility in Africa), Rio Tinto, and Toyota.
The group’s report was released in late 2005 at an event here in
Congress hosted by Senators Biden and Lugar.
Despite a very diverse range of
interests and perspectives, the Pocantico group succeeded in reaching consensus
on a broad vision of a post-2012 climate framework. This vision begins with a set of key
objectives that a post-2012 framework must meet. I would like to emphasize the two most
critical objectives.
First, the post-2012 framework must
engage all of the world’s major economies.
Twenty-five countries account for about 85 percent of global greenhouse
gas emissions. These same countries also
account for about 70 percent of global population and 85 percent of global
GDP. The participation of all the major
economies is critical, first and foremost, from an environmental perspective,
because all must take sustained action if we are to achieve the steep
reductions in emissions needed in the coming decades to avert dangerous climate
change. But the participation of all
major economies is critical from a political perspective as well. For reasons of competitiveness, none of these
countries will be willing to undertake a sustained and ambitious effort against
climate change without confidence that the others are contributing their fair
share. We must agree to proceed
together.
At the same time, we must recognize
the tremendous diversity among the major economies. This group includes industrialized countries,
developing countries, and economies in transition. Their per capita emissions range by a factor
of 14 and their per capita incomes by a factor of 18. This leads directly to the second objective identified in our Pocantico
dialogue: The post-2012 framework must provide flexibility for different national strategies and circumstances. The kinds of policies that effectively
address climate change in ways consistent with other national priorities will
vary from country to country. We must
allow different pathways for different countries. An economy-wide emissions target may work for
some but it will not work for others. If
it is to achieve broad participation, the future framework must allow for variation
both in the nature of commitments
taken by countries and in the timeframes within
which these commitments must be fulfilled.
With these
key objectives in mind, the Pocantico group then identified the potential
building blocks of a post-2012 framework. The first of these is targets and
trading. This is the approach employed
in the Kyoto Protocol, as well as in the European Union’s Emissions Trading
Scheme and the Regional Greenhouse Gas Initiative being undertaken by ten
states in the northeastern United
States.
There are very sound reasons why U.S. negotiators insisted so
strongly on a market-based architecture for the Kyoto Protocol – and why many
of the major climate bills now before Congress adopt the same approach. Emission targets provide a reasonable degree
of environmental certainty, while emissions trading harnesses market forces to
deliver those reductions at the lowest possible cost.
While
targets and trading should remain a core element of the international effort,
we must recognize that China,
India,
and other developing countries are highly unlikely to accept binding
economy-wide emission limits any time in the foreseeable future. In their view, binding targets, by holding
them to specific emission levels regardless of the economic consequences, would
be an undue constraint on their development.
Economy-wide targets also may be technically impractical for them: to
accept a binding target, a country must be able to reliably quantify its
current emissions and project its future emissions, a capacity that at present
few if any developing countries have.
A future framework, therefore, must allow for other
approaches as well. A second potential
element identified in the Pocantico dialogue is policy-based commitments. Under this approach, countries would commit
to undertake national policies that will moderate or reduce their emissions
without being bound to an economy-wide emissions limit. This is a more bottom-up approach, allowing
countries to put forward commitments tailored to their specific circumstances
and consistent with their core economic or development objectives. A country like China, for instance, could commit
to strengthen its existing energy efficiency targets, renewable energy goals,
and auto fuel economy standards.
Tropical forest countries could commit to reduce deforestation. For this to work, the commitments would need
to be credible and binding, with mechanisms to ensure close monitoring and
compliance. Developed countries also may
need to provide incentives for developing countries to adopt and implement
stronger policies. One option is
policy-based emissions crediting, similar to the Kyoto Protocol’s Clean
Development Mechanism, granting countries tradable emission credits for meeting
or exceeding their policy commitments.
A third
potential element is sectoral agreements, in which governments commit to a set
of targets, standards, or other measures to reduce emissions from a given
sector, rather than economy-wide. In
energy-intensive industries whose goods trade globally, which are the sectors
most vulnerable to potential competitiveness impacts from carbon constraints,
sectoral agreements can help resolve such concerns by ensuring a more level
playing field. Such approaches are being
explored by global industry groups in both the aluminum and cement
sectors. We believe it is also worth
exploring sectoral approaches in other sectors such as power and transportation
where competitiveness is less of an issue but where large-scale emission
reduction efforts are most urgent.
A fourth
potential element is technology cooperation.
This could include two types of agreements. The first would provide for joint research
and development of “breakthrough” technologies with long investment
horizons. Such agreements could build on
the Asia Pacific Partnership and other technology initiatives but commit
governments to the higher levels of funding needed to accelerate and better
coordinate critical research and development.
The second type of agreement could help to provide equitable access to
both existing and new technologies by addressing finance, international
property rights, and other issues that presently impede the flow of low-carbon
technologies to developing countries.
The four
elements I have outlined thus far fall under the heading of mitigation. A fifth critical element is adaptation. We need stronger adaptation efforts within
the international climate framework but extending far beyond it as well. The top priority within the framework should
be addressing the urgent needs of those countries most vulnerable to climate
change. But the broader goal must be to
spur comprehensive efforts to reduce climate vulnerability generally by
integrating adaptation across the full range of development activities.
Having outlined the potential
elements of a post-2012 climate effort, I now turn to the question of how these
approaches can be integrated in a common framework. While different countries should be allowed
different pathways, they cannot simply each go their own way. An ad hoc series of parallel initiatives will
not produce an aggregate effort nearly adequate to the need. By linking actions, and negotiating them as a
package, nations are likely to undertake a higher level of effort than they
would acting on their own. Such a
negotiation could take the form of sequential bargaining, with countries
proposing what they are prepared to do under one or more of the different
tracks I have described, and then adjusting their proposals until agreement is
reached on an overall package. To help
ensure a balanced and therefore stronger outcome, it may be necessary to agree
at the outset that certain countries will negotiate toward particular types of
commitments most appropriate to their circumstances. The objective would be an integrated
agreement that is flexible enough to accommodate different types of
commitments, and reciprocal enough to achieve a strong, sustained level of
effort.
7) Given that the U.S.
is not a signatory to the Kyoto
Protocol, what influence does it have, if any, to promote global action?
Whether or
not a party to the Kyoto Protocol, the United States has enormous power to
shape – or to impede – global action against climate change. As the world’s largest economy and world’s
largest emitter, the United
States is arguably the single most
influential force in determining the future of the international climate
effort. As noted earlier, the two most
critical steps the United States
can take to strengthen global action are to unilaterally establish a mandatory
program to limit and reduce U.S.
emissions, and to lead in the development of an effective multilateral
framework. Other countries eagerly await
this leadership.
There are other steps the United
States can take through domestic legislation to encourage developing country
participation, and to address the issue of competitiveness. These issues are closely related. Ultimately, I believe, both are most
effectively addressed through binding multilateral commitments. But it is important to distinguish these two
issues because, in advance of a stronger global framework, each will require a
different set of interim policy responses.
Competitiveness
is a potential concern not for the U.S. economy as a whole, but rather
for specific sectors – primarily energy-intensive industries, such as steel and
aluminum, whose goods trade globally. In
establishing a mandatory domestic climate program, steps can be taken to
minimize or mitigate competitiveness impacts.
For instance, in the design of a mandatory cap-and-trade program,
potentially vulnerable sectors could be allowed special consideration in the
emission allowance allocation process.
Another option is to provide technology and transition assistance to
affected industries and communities, possibly funded by auctioning a portion of
allowances. As a longer-term option,
legislation also could stipulate that if the major developing countries have
not taken stronger action to reduce emissions within a specified timeframe, the
United States,
in concert with other industrialized countries, will consider tariffs on their
energy-intensive exports or other mechanisms to correct the resulting
competitive imbalances. I would note,
however, that unless accompanied by positive incentives, these latter
approaches are not likely to induce strong developing country action, and could
lead to more confrontation than cooperation.
Engaging
developing countries will require a firm but balanced approach. To begin with, we must be absolutely clear in
our expectation that the major developing countries assume binding commitments
in a post-2012 framework. It is true
that the United States
is by far the largest historic contributor to climate change. In establishing mandatory limits on domestic
emissions, the United States
will have begun to fulfill the commitment it made with other industrialized
countries to lead the climate change effort.
And having done so, it will then be reasonable to expect that countries
like China
fulfill their responsibilities as well. China’s
emissions have grown 80 percent since 1990 and could rise another 80 percent by
2020. It is essential that these trends
be reversed. Realistically, given the
greater capacity and historic responsibility of industrialized countries, China, India and other developing
countries will require incentives to undertake strong climate efforts. The United States should provide
market-based incentives through a domestic cap-and-trade program by recognizing
credits for emission reductions achieved in developing countries. In addition, targeted bilateral and
multilateral assistance should be provided for the deployment of critical
high-cost technologies such as carbon-capture-and storage. However, in return for these incentives, China
and the other major developing countries must assume appropriate commitments
that will slow and ultimately reverse the growth of their greenhouse gas
emissions.
To
summarize, I believe it is incumbent upon the United States to lead both by
strong action at home and by actively
and constructively reengaging in the international climate effort. Only with strong U.S. participation and leadership
can we achieve a fair and effective global response to the critical challenge
of climate change. I thank the subcommittee
for the opportunity to present these views and would be happy to answer your
questions.