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     Climate Change Choices



THE NEXT STEPS

Kathleen McGinty
Chair of the White House Council on Environmental Quality

(Excerpts of remarks made February 4, 1998, before the U.S. House of Representatives Science Committee.)

Our efforts following up on Kyoto are directed at achieving further progress in obtaining meaningful participation by developing countries and in implementing the president's plan to harness market forces at home and abroad to enhance energy efficiency, environmental quality, and economic prosperity.

THE KYOTO PROTOCOL

Although the agreement reached in Kyoto will not reverse the build-up of greenhouse gases in the atmosphere, it will begin slowing the rate of increase. Equally important, it puts in place a solid foundation upon which the global marketplace can increasingly be engaged in reducing greenhouse gas emissions. The agreement draws heavily from the proposals advanced by the United States.

In October of last year, President Clinton outlined a number of elements critical to achieving an effective agreement. He underscored that any agreement had to contain: 1) realistic medium-term, legally binding targets for developed countries; 2) flexible, market-based implementation mechanisms; and 3) measures to secure the meaningful participation of key developing countries.

I am pleased to report that we fully achieved our first two objectives, and through the innovative Clean Development Mechanism made a down payment on the third. Next steps must include further work on operational details of international emissions trading, compliance mechanisms, and developing country participation.

The president has made it clear that he does not intend to send the Kyoto Protocol to the Senate for ratification until we have achieved meaningful participation by key developing countries.

NEXT STEPS -- INTERNATIONAL ACTIVITY

While the Kyoto agreement secures major elements that the United States sought to ensure such as flexible, market-based mechanisms for addressing concerns about global warming, future negotiations will still need to address several important issues. The parties now move forward with working group meetings scheduled for June and the next meeting of the parties to the climate convention scheduled for November in Buenos Aires. Issues that will be addressed at that and subsequent meetings include the following:

  • guidelines for implementing the international emissions trading provisions included in the protocol;

  • guidelines for implementing the Clean Development Mechanism;

  • further refinement of how to treat sinks (such as forests that capture and sequester greenhouse gases);

  • participation of developing countries; and

  • additional provisions related to compliance and enforcement.

NEXT STEPS -- DOMESTIC ACTIONS

In his State of the Union message, the president described his proposed tax cut and technology initiative aimed at jump-starting efforts to enhance our nation's energy efficiency and economic competitiveness. This program was laid out in detail in the president's budget.

It targeted $6,300 million over the next five years to provide incentives for our industry, businesses, and consumers to make and purchase more energy efficient products. It challenges the innovative abilities of the private sector and helps ensure that those firms that succeed in developing energy saving products will have a substantial market in which to sell those products.

For consumers, it provides a double bonus. First, it helps reduce the initial costs of purchasing energy saving products. Second, throughout the lifetime of the product, consumers will benefit from reduced energy costs.

The president's 1999 budget includes $3,600 million over five years in tax credits aimed at encouraging broader use of existing energy saving technologies and spurring further innovations. It also includes $2,700 million in new research and development investments to ensure that innovative greenhouse gas reducing products continue to flow through the pipeline and into the marketplace in the coming years.

Examples of specific provisions contained in the president's budget include the following:

  • Tax credits for highly fuel efficient vehicles: This credit would be $4,000 for each vehicle that gets three times the base fuel economy for its class beginning in 2003. A credit of $3,000 would be available beginning in 2000 for vehicles that get double the base fuel economy for its class. These credits would be available to jump start these markets and would be phased out over time.

  • Tax credits for energy efficient equipment: These credits (all of which are subject to caps) would include a 20 percent credit for purchasing certain types of highly efficient building equipment, a 15 percent credit for the purchase of solar rooftop systems, and a 10 percent credit for the purchase of highly efficient combined heat and power systems.

  • Research and development support: Additional resources are provided for key areas of renewable energy and for carbon sequestration. Activities related to the Partnership for a New Generation of Vehicles include expanded research in fuel cells, batteries, and ultra-clean combustion engines. Two new partnerships are proposed for heavy trucks and light trucks, including sport-utility vehicles.

These budget proposals implement one of the key commitments made by the president in his October 22nd speech at the National Geographic Society. In that speech the president also pledged that the federal government, as the largest user of energy, would take the lead in enhancing our efforts at improving energy efficiency; that we would work closely with the private sector in developing voluntary programs to reduce emissions; that we would grant early credit for reductions that occur prior to a binding target; and that we would help shape utility restructuring in ways that contribute to reductions in greenhouse gas reductions. We are working today to make all of these commitments real.

Beyond the president's budget proposals, a number of encouraging developments have taken place in both the public and private sectors in the short time since Kyoto. Let me briefly mention four of them.

  1. Fuel Efficient Vehicles: At the recent automobile show in Detroit, General Motors (GM) announced four passenger hybrid electric and fuel cell vehicles that can achieve fuel efficiencies of up to 80 miles per gallon. The production prototypes could be available as early as 2001. Ford also unveiled a prototype of a mid-size high efficiency sedan that achieves 63 miles per gallon using an advanced diesel engine. Ford also plans to develop hybrid electric and fuel cell versions of this prototype. Chrysler unveiled its full-size experimental hybrid electric vehicle with a projected 70-miles-per-gallon fuel economy.

    These technological advances were made possible through the efforts of the Partnership for a New Generation of Vehicles between the administration, U.S. auto companies, and their suppliers.

  2. Compressed Air Challenge: Air compressors represent about 3 percent of total industrial electricity use and one percent of total U.S. electricity consumption. In mid-January, the Department of Energy (DOE) and major equipment manufacturers announced a new agreement aimed at significantly enhancing efficiency in this sector.

    Under the agreement, changes in equipment and operating practices are anticipated to reduce energy use in this category by 10 percent by 2010 at a cost savings of $150 million per year while reducing greenhouse gases by 700,000 metric tons of carbon.

  3. BP (British Petroleum) Solar Opening: BP Solar has opened its first manufacturing plant in the United States. Located outside San Francisco, the vice president flipped a switch to start the plant. This facility will produce a new generation of thin film photovoltaic cells. The BP Solar plant, together with DOE's recently announced Million Solar Roof Initiative (a plan to put one million solar panels on rooftops by 2010), planned plant expansions, and openings by other solar cell manufacturers, as well as the president's budget request for enhanced funding for renewable technologies, demonstrate that efforts to increase market penetration based on harnessing the sun's energy are now making significant advances. In fact, the vice president was able to announce that the private partners in the Million Solar Roofs Initiative have already announced plans for well over half the solar panels needed to get to our goal -- a full 10 years early.

  4. VCR/TV Energy Star Program: TV and VCRs represent one of the fastest growing sources of electricity demand. Consumers spend over $1,000 million annually to power VCRs and TVs that are switched off. In early January the vice president announced a pathbreaking partnership between the Environmental Protection Agency and the major manufacturers of these electronic goods.

The program is quite ambitious with a goal of achieving up to a 70-percent-reduction in energy use when the equipment is turned off without sacrificing product quality, utility, or increasing costs. The average household could cut its energy bills by 30 percent or $400 per year by switching to the full line of Energy Star products.

These examples further underscore the potential for energy and cost saving opportunities to reduce our emissions of greenhouse gases. In sum, the Kyoto Protocol represents a significant diplomatic achievement for the United States and a key contribution to the critical effort to safeguard our children from the effects of potentially severe climatic disruption. At the same time, this effort is a work in progress.

Much remains to be done if we are fully to seize the environmental and economic benefits of action on this pressing issue.


Global Issues
USIA Electronic Journal, Vol. 3, No. 1, April 1998