HON. EILEEN CLAUSSEN, PRESIDENT
PEW CENTER ON GLOBAL CLIMATE CHANGE

Submitted to the United States Senate,
The Foreign Relations Committee

November 13, 2007

Regarding International Climate Change Negotiations: Restoring U.S. Leadership

Mr. Chairman and members of the committee, thank you for inviting me to submit written testimony on the need to restore U.S. leadership in the international climate change negotiations. My name is Eileen Claussen, and I am the President of 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 providing credible information, straight answers and innovative solutions in the effort to address global climate change. Forty-five major companies in the Pew Center’s Business Environmental Leadership Council (BELC), most included in the Fortune 500, work with the Center to educate the public on the risks, challenges and solutions to climate change.

Mr. Chairman, I would like to commend you, Sen. Lugar, Sen. Kerry, and the other members of this committee for convening this hearing today on the international climate change negotiations. As one who has worked for many years to advance efforts on this and other critical environmental challenges, it is very gratifying to me that 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 climate change. So far, this debate has focused primarily on questions of domestic climate policy, and we are farther along in that debate than ever. But truly meeting the challenge of climate change will also require global solutions, and these will be possible, I believe, only with strong leadership from the United States. By broadening the scope of debate here in Washington to focus attention on the international dimension of climate change, this hearing will inform constructive U.S. engagement in the upcoming conference in Bali – a conference that hopefully will set the stage for an effective multilateral response to global climate change.

The Bali meeting presents an enormous opportunity for the United States to help move nations toward a fair, effective, comprehensive post-2012 climate agreement, one that serves U.S. interests by ensuring that all major economies are on board. However, producing such an agreement first requires the launch of a new round of negotiations. That must be the key objective in Bali.

In my testimony today, I would like to set the Bali conference in context by highlighting recent international developments addressing climate change, and by outlining the key objectives a post-2012 climate framework must meet, and the form it should take. Finally, I would like to elaborate on the type of decision needed in Bali to start nations on the path toward such an agreement.

Recent international developments addressing climate change

As the United States moves closer to taking comprehensive action on climate change, it is not alone in its efforts. Last week, British Prime Minister Gordon Brown presented legislation to mandate a 60 percent reduction in U.K. carbon dioxide emissions by 2050. The European Union—which has established the Emissions Trading Scheme, the largest emissions trading market in the world—has now committed to reduce its emissions 20 percent below 1990 levels by 2020. Several EU member states also have joined with other countries and ten U.S. States in the International Carbon Action Partnership, which will work towards international linkage of greenhouse gas markets. The Australian government has declared its intention to establish a nationwide cap-and-trade system. Canada is developing a regulatory framework that the government projects will reduce emissions 20 percent by 2020. China, Mexico, and Brazil all issued national climate change programs within recent months. China’s policies include an economy-wide goal of reducing energy intensity 20 percent by 2010, ambitious renewable energy targets, and vehicle fuel economy standards more stringent than those here in the United States.

Climate change is figuring much more prominently in international fora as well. The potential security implications of climate change drew the attention of the UN Security Council earlier this year. In June, G8 leaders called for a global agreement on a post-2012 framework under the United Nations Framework Convention on Climate Change (UNFCCC) by 2009, and agreed to “consider seriously…at least a halving of global emissions by 2050.” At the APEC summit in September, leaders agreed on aspirational goals to reduce energy intensity 25% by 2030 and increase forest cover by at least 20 million hectares by 2020. Later that month, more than 150 countries, most represented by heads of state or government, participated in a UN High-Level Event on Climate Change to urge a breakthrough at the Bali conference. This was followed a few days later by the Major Economies Meeting convened here in Washington by President Bush with the goal of forging a consensus contributing to a global agreement under the UNFCCC in 2009.

Key objectives of a post-2012 climate framework

So what form should such an agreement take? The Pew Center’s perspective on the future international framework 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, whose report was released in late 2005 at an event here in Congress, hosted by Senators Biden and Lugar. The Pocantico group included senior policymakers from Britain, Germany, China, India, Japan, Australia, Canada, Mexico, Brazil and the United States; as well as senior executives from companies in several key sectors, including Alcoa, BP, DuPont, Exelon, Eskom (the largest electric utility in Africa), Rio Tinto, and Toyota. Despite this 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, and I would like to emphasize the two most critical of these 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. Participation of all the major economies is critical not only from an environmental perspective, but from a political perspective as well, as we cannot reasonably expect any of these countries to 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 critical 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. 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 asked: what could be the key elements of a post-2012 framework? The group recommended several policy approaches.

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. 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. These could include policy-based commitments, under which countries would commit to undertake national policies that will moderate or reduce their emissions without being bound to an economy-wide emissions limit. 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.

In addition to these approaches to mitigate greenhouse gas emissions, a sound international agreement must address adaptation. The top priority within the framework should be addressing the urgent needs of those countries most vulnerable to climate change, with a broader goal of spurring comprehensive efforts to reduce climate vulnerability generally by integrating adaptation across the full range of development activities.

The decision needed in Bali: To begin negotiation

I have described the building blocks of a comprehensive agreement. Precisely how they fit together can be determined only through negotiation. What is needed in Bali is a clear decision by governments to begin that negotiation.

Two years ago, parties to the Kyoto Protocol opened negotiations on post-2012 commitments for those countries that have emission targets under the protocol. In their present form, these negotiations are very unlikely to succeed because those countries are unlikely to commit internationally to stronger action without commitments from the United States and from the major emerging economies. The negotiations must be broadened with the goal of establishing commitments for all the major economies. The best way to accomplish that is to establish a new negotiating process under the Framework Convention, where the United States is party. These new negotiations should either be linked to or encompass those underway under Kyoto, with the aim of producing a comprehensive agreement with elements under both the convention and the protocol. A decision to launch such negotiations must set out a clear process and timeline. Ideally, it also should set clear terms of engagement specifying the types of commitments to be negotiated and for which countries.

At present, while I expect that parties will agree on some type of process in Bali, I am not confident that it will be the type needed to produce a comprehensive and effective set of commitments. Of one thing, however, I am certain – a genuine negotiation will be possible only with the full and committed participation of the United States.

Whether negotiations are launched in Bali or later, one of the most difficult challenges will of course be engaging developing countries. Meeting this challenge requires 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, the world’s largest economy, is also 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. 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 Committee for the opportunity to present these views.