Tuesday, December 4, 2007

Claussen: US cap-and-trade system 'by mid 2009' and Enron makes a Cameo Appearance

The Pew Center is a founding Member of USCAP. Eileen Claussen has lobbied relentlessly for cap-and-trade for over a decade, starting even before she invited Enron to join Pew's Business Executive Leadership Council.*
Here's the infamous Enron memo from John Palmisano, Dec. 12, 1997, on his activities in Kyoto.

...If implemented, this agreement will do more to promote Enron's business than will almost any other regulatory initiative...

In addition, a carbon emissions trading system will be developed. While the trading system will be implemented by 2008, I am sure that reductions will begin to trade within 1-2 years.

Palmisano thought those two points were so important, he put them in the second paragraph of the three page memo.

From EurActiv, Dec. 4, 2007:
...Assuming there is going to be a more favourable position after 2009, what would be some of the best options for a global climate change framework?

Let me say something about what is happening in the US, which helps answer this question.
There has been an enormous amount of activity at the state level. There are now three groups of states working on cap-and-trade systems:
one in the Northeastern/Mid-Atlantic, one in the West and one that was recently
announced in the Midwest. They will eventually get a large proportion of US emissions working on cap-and-trade systems. The US Climate Action Partnership
(USCAP – which is 27 large companies and 6 NGOs) has also been very clear in calling for a national cap-and-trade system, with, for the US, a pretty ambitious target.
State activity and a push by business has led to some sort of activity in Congress, which certainly will not have an outcome by Bali, other than that a bill will likely get through the Senate Environment and Public Works Committee: the cap-and-trade bill. There is some chance that we could get a bill in 2008 through Congress, if not, I think it's inevitable by 2009 or 2010.
So the US will probably have a cap-and-trade system passed through legislation by mid-2009.

So would you say that the cap-and-trade system the EU has started to put in place will gradually be bolstered and linked up the US initiative?
Yes, and Australia is working on one as well.
So I think you are going to see
virtually all developed countries with some sort of a cap-and-trade system.
Do you see that as the main option for a global framework on climate change or do you see other possibilities beyond carbon markets?
I think that is going to be the main option for developed countries.
But I do not think even the major economies in the developing world are anywhere close to accepting that kind of a system for themselves. One of the challenges is to find a flexible enough framework so that they can have binding commitments of a different sort but that show a clear direction and that are also globally binding.
How could the two then work together?
I do think there need to be commitments, but it is just very naïve to assume that developing countries will do the same thing as we will. For one thing, I know very few countries in the developing world that have a good enough data set to be able to set a realistic target. I do not think that there is any chance you would get an absolute target agreed from China, India or any of the major developing countries.
But I do think that they are doing something and that they might agree to making some of their own internal commitments globally binding. For example, China has an energy intensity target, a renewables requirement plus standards for vehicles. I think you can take some combination of what they are already working on and they could offer those as binding commitments – of a different sort but nevertheless which point them in a direction that is consistent with trying to achieve the kind of reductions we need by 2050.

So this would be a kind of sectoral approach?

Yes it could be sectoral, and I think that's fine, because I do not think they are able or ready to do the other. What is important is that they get on a cleaner path and I think there are ways for them to do that.What I think is important is – and this is where we differ from the Bush administration, which says China is doing fine – that China has to be able to agree to something globally, to an international commitment, because they are much more likely to keep it if they want to do it.
I think the US would have a very hard time ratifying something without binding commitments from countries like China or India.
The 'Clean Development Mechanism' is seen as a good way to complement a carbon trading system between developing countries because of the transfer of clean technologies to developing countries. Do you think it is a good system?

I think it has to be changed. It could be more programmatic and more centralised so that it is not just project-by-project. But I am not sure this is enough. I think incentives are helpful here and maybe even necessary but they in themselves are not enough. I do think that some of the major emitting countries in the developing world have to agree to some form of commitment to reduce emissions. Not in an absolute sense, because there is no way this is going to happen in the short term either, but some kind of a cleaner path with some real commitments in there....

*Here's Eileen bragging about the revenues of BELC.
USCAP does the same thing.

The Pew Center's Business Environmental Leadership Council now includes 21 companies with combined annual revenues of more than $550 billion. Working together, these companies developed a joint statement asserting that in the new millennium-quote-"one of our most important challenges at home and abroad will be addressing global climate change as we work to sustain a growing global economy." "One of our most important challenges." That is an enormously powerful statement coming from these companies, which include such household names as American Electric Power, Boeing, BP Amoco, Lockheed Martin, Shell International, Toyota, Enron, United Technologies and Whirlpool. And, in making this statement, these companies announced publicly that they:

Accepted that there was enough known about the science of global climate change to warrant action;

Would establish their own emission reduction targets--and meet them;
Viewed the Kyoto Treaty as a first although incomplete step to addressing the issue internationally; and

Believed that addressing climate change can be compatible with sustained economic growth in the United States. http://www.pewclimate.org/media/transcript_germany4.cfm