U.S. Lawmakers Hear Stern Warnings on Climate Change

By J.R. Pegg

WASHINGTON, DC, February 14, 2007 (ENS) - The United States has vested economic interests and a moral obligation to tackle global warming, economists, corporate leaders, and environmentalists told two Senate committees Tuesday. The panelists urged U.S. lawmakers to quickly impose mandatory restrictions on greenhouse gas emissions and to demonstrate that the United States is willing to lead a global effort to confront climate change.

"Uncontrolled climate change constitutes a risk that we as a global community cannot afford to take," former World Bank economist chief economist Sir Nicholas Stern told the Senate Energy and Natural Resources Committee.

Stern

Economist Sir Nicholas Stern (Photo credit unknown)
Stern, head of the British Government Economic Service and lead author of the most comprehensive economic review of climate change to date, said climate change is a global problem that "requires a global response."

"Equity demands that rich countries takes the lead," Stern said. "It is they who are responsible for the bulk of the problem. And it is the poor countries will be hit earliest and hardest."

Stern's report, "The Stern Review," issued last October, warned that unabated climate change will sharply impact societies and ecosystems across the planet and could cost the world five to 20 percent of gross domestic product, GDP, annually.

The costs of acting now, however, can be limited to about one percent of annual global GDP, according to the report.

"That amount will not slow growth," Stern said. "The later we leave it the greater the risks and the higher will be costs of controlling them."

But lawmakers voiced lingering concern about the United States enacting mandatory emission reductions absent obligations from developing nations, namely China and India.

Senator Pete Domenici, a New Mexico Republican, said he is "more and more fearful" of the consequences of the U.S. acting alone.

China uses more coal than the United States, Domenici said, and is opening a new coal-fired power plant virtually every week.

power plant

The coal-fired Gongyi-2 power plant in China's Hebei province (Photo courtesy Peak Pacific (China) Investment Ltd)
"Somebody in a big leadership role has to get together with the Chinese and the Indians, and decide whether they have a stake or not - and if they do then we should try to do something together," Domenici told colleagues.

Stern called on U.S. lawmakers to recognize that China is taking steps to tackle climate change. China is no longer deforesting, he said, has a plan to cut its energy intensity 20 percent in five years, and has imposed an export tax on steel and other energy intensive goods.

"You cannot sell an American car in China because they don't meet emissions [standards]," Stern said. "It is not correct to say that China is doing nothing."

Stern added that China, India and other nations are also watching for the United States to act more aggressively and will go faster if the United States demonstrates leadership.

"Leadership in the world's largest markets sets the pace elsewhere," Stern said.

That message was echoed by panelists at a hearing held by the Senate Environment and Works Committee, which focused on the recommendations of the U.S. Climate Action Partnership, USCAP.

A coalition that consists of the chief executives of 10 major corporations, including DuPont, General Electric, and Duke Energy, and leaders of four national environmental groups, USCAP has called for mandatory controls to reduce greenhouse gas emissions by some 60 to 80 percent from today's levels by 2050.

"We share a view that climate change is the most pressing environmental issue of our time and we agree that as the world's largest source of global warming emissions our country has an obligation to lead," said Peter Darbee, chairman and CEO of PG&E Corp., California's largest gas and electric utility.

Darbee

Peter Darbee is chairman and CEO of Pacific Gas & Electric Corporation (Photo courtesy PG&E)
The U.S. economy "is the world's locomotive," Darbee told the panel, adding that the members of USCAP "believe it is critical to get the engine pulling in the right direction on climate change."

USCAP's message clearly resonated with Senator John Warner, a Virginia Republican who could prove to be a key swing vote when Boxer's committee acts on legislation.

"A group like this, you've got my attention," Warner told the panel.

Senator Barbara Boxer, a California Democrat and chair of the environment committee, said the USCAP recommendations, released last month, marked a "turning point" in the U.S. debate over controlling greenhouse gas emissions.

Boxer

Senator Barbara Boxer of California (Photo courtesy U.S. Senate)
"The companies and groups before us today also make clear that by acting now, we can help, not hurt our economy," she said.

But Senator James Inhofe, a Republican from the oil-producing state of Oklahoma, called the group "climate profiteers," motivated by self-interest.

"More and more companies that wish to profit on backs of consumers are coming out of the woodwork to endorse climate proposals in hopes of forcing customers to buy their products or to penalize their competitors," Inhofe said.

The companies involved in USCAP, such as DuPont and BP, have invested heavily in renewable energy technologies, Inhofe said, and would benefit from regulations that make conventional energy less attractive.

"These companies will gain market share against their competitors while the economy flattens and jobs are sent to China," said Inhofe.

Boxer bristled at Inhofe's comments.

"It is quite unfair to cast dispersion on people who actually might have come to the decision that there is a need for corporate responsibility," the committee chair said.

The members of USCAP said mandatory restrictions on greenhouse gas emissions, such as a cap and trade plan, will ensure emission reductions while generating a price signal that will spark market incentives for greater energy efficiency and cleaner technologies.

"There needs to be a price for greenhouse gas emissions," said Jonathan Lash, president of the World Resources Institute.

The growing consensus that the United States must cut emissions of global warming pollutants is creating uncertainty in the marketplace, the coalition contends, as companies brace for some kind of regulation.

stacks

The sun's rays highlight emissions from a paper mill in Alabama. (Photo courtesy Steven Haigh)
Chad Holliday, chairman and CEO of Dupont, said Congress must lay down "the rules of the road."

"The uncertainty of what regulations will do are holding companies back," Holliday said. "When you lay down the [rules] our universities, our companies, our national labs and our individual citizens will lead the world in finding solutions."

Stern, during his remarks before the Energy Committee, said climate change is "the biggest market failure the world has ever seen."

"People should pay in the prices they face for the costs of their actions - in this case costs to the climate," he said. "Pricing carbon directly through either tax or carbon trading or implicitly through regulation is fundamental to a policy response."

Stern called for a mix of policies, including carbon taxes and emissions trading, but acknowledged that the latter is more politically feasible - even though it is a far more complex undertaking.

If the lawmakers do pursue a cap and trade plan, Stern said, they should be "ambitious" with the targets and set up the system so that it can link with other similar plans underway in other parts of the world.

Two economists appearing with Stern lamented the political difficulties associated with a carbon tax.

"It would be nice if taxes weren't so taboo," said Gary Yohe, an economics professor at Wesleyan University.

A tax would set a real price for carbon and revenues could be used to pay for research, carbon sequestration and adaptation measures, added Henry Jacoby, co-director of the Massachusetts Institute for Technology's Joint Program on the Science and Policy of Global Change.

"That would be worth some consideration," Jacoby told the committee.

The issue of cap and trade versus a tax also was briefly discussed at the Environment Committee hearing.

"From a theoretical standpoint, a carbon tax is the purest and most efficient way to get at that question," PG&E's Darbee said. "We understand that a lot of leaders right now aren't inclined to implement a significant tax on the economy and therefore we felt a cap and trade program would approximate the effect of a carbon tax."

Inhofe

Senator James Inhofe of Oklahoma (Photo courtesy EPW)
Inhofe said that the cap and trade program was, in effect, "the largest tax increase in American history," arguing that energy companies and other businesses would simply pass costs down to consumers.

The Oklahoma Republican also reiterated his belief that there is no scientific consensus that human activity is driving climate change, despite the findings of the latest assessment by the United Nations Intergovernmental Panel on Climate Change, IPCC.

The IPCC report by more than 600 scientists, released earlier this month, concluded that global warming is real and expressed with a confidence level of more than 90 percent that human activity is the major factor in current climate change.

The IPCC report was endorsed by 113 governments, including the United States.

Inhofe, who could prove a roadblock to climate legislation, said the "science is not settled."

"I am told that the rush to do something about global warming has gained momentum," Inhofe said. "But the not so hidden secret is that more and more serious scientists and political leaders are voicing their discontent with both the hype and the symbolic approaches that masquerade as solutions that are designed more to line the pockets of its promoters than to accomplish anything.

Boxer responded that Inhofe is increasingly a lone voice.

"There is no debate any more," Boxer said. "The science is clear. There are always people who when there is a breakthrough in science who continue to say not true. There are still people who say HIV doesn't cause AIDS, there are still people who say there is no tie between smoking and cancer. We know there will always be some naysayers."

There was no debate about the science of climate change during the Energy Committee hearing, rather there was concern - raised by Domenici - that it may be too late to do anything reverse course.

The IPCC report said the global climate is likely to warm by 3.5 to 8 degrees Fahrenheit if current trends continue. Preventing such an increase would likely require the world to cut greenhouse gas emissions more than 50 percent from today's levels by 2050.

Domenici

Senator Pete Domenici of New Mexico (Photo courtesy Office of the Senator)
A reduction of such magnitude "almost defies doing," Domenici said, adding that perhaps a body should be formed to identify how society deals with such change.

"An adaptation policy is in order," Domenici said. "States and others ought to be looking at what they might do."

Stern acknowledged that "even with strong action - we are going to have to adapt."

But he urged lawmakers to embrace a strategy that includes both mitigation and adaptation, and urged them to support greater investment in low-carbon technologies, policies to limit deforestation and to encourage greater energy efficiency.

"Now is the time to act - urgently, strongly and internationally," Stern told the committee. "Strong leadership from the United States is of the utmost importance in this endeavor."