Legislation Needed - Before It's Too Late
By Vicki Arroyo Cochran
Director of Policy Analysis
Pew Center on Global Climate Change
Article written for the Washington Post Special Section on Climate Change
October 25, 1999
Two core principles of the companies that comprise the Pew Center's 21-member Business Environmental Leadership Council include: "We accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences," and "Businesses can and should take concrete steps now in the U.S. and abroad to assess opportunities for emission reductions, establish and meet emission reduction objectives, and invest in new, more efficient products, practices and technologies."
However, in our current climate policy vacuum, responsible businesses are sent mixed messages. While the science demands immediate action, the lack of a clear policy framework makes it risky for firms to act.
Voluntary "early action" legislation would encourage businesses and other entities to reduce their contributions to climate change at the earliest possible time. Legislation is needed because while two international agreements related to climate change have been negotiated, neither has yet resulted in binding international or domestic restrictions on greenhouse gas emissions.
In 1992, the Framework Convention on Climate Change was negotiated in Rio in response to growing concern about the future of the earth's climate. As of September 1999, 180 countries have agreed to take action to mitigate climate change with the goal of stabilizing greenhouse gas concentrations at levels that would prevent dangerous human interference with our climate system. The U.S. and other developed countries agreed to reduce their emissions to 1990 levels by the year 2000. Most countries, including the U.S., will miss this target. In recognition of the Convention's limited effectiveness, the Kyoto Protocol to the Convention was negotiated in 1997. Emissions reduction targets ranging from 8% below- to 10% above- 1990 levels of six greenhouse gases were negotiated for 39 developed countries. The U.S. agreed to a target of 7% below 1990 levels.
The details of the Protocol's mechanisms and compliance regime have yet to be negotiated, and U.S. ratification is not moving forward. In the meantime, unprecedented amounts of long-lived greenhouse gases continue to build in our atmosphere. Every day lost creates an even greater hurdle in achieving the necessary reductions. And yet, in spite of increasing confidence in the science, those who identify opportunities to reduce their greenhouse gas emissions through changes in their production processes, energy consumption, or products (e.g., refrigerators, cars, or air conditioners) are currently unsure whether future government actions will recognize these reductions. Should their responsibility be triggered in the future - i.e., when a protocol is eventually ratified or a domestic program implemented - entities that act early could be left with fewer (and more costly) options to reduce. This creates the wrong incentive from an environmental standpoint. It also inhibits our ability to phase in potentially costly carbon reduction policy and to develop technologies needed to address the problem.
Early action legislation addresses this disincentive for action. The concept is simple: provide credit towards a future domestic regime to those entities acting now to reduce their emissions. Such legislation would stimulate action by rewarding those who act first and create incentives to curb emissions at the earliest opportunity.
Yet while the principle is sound, crafting sound and viable legislation has proven to be a challenge. Issues that need to be addressed in the design of such a program include: What should be the "baseline" year against which emission reductions are compared? Should reductions be measured by efficiency improvements (rate per unit of output) to allow flexibility for increases in production or market share or should only actual tons reduced be credited (because this is what the environment sees and is consistent with our Kyoto targets)? How to spur the greatest - and most permanent -- reductions rather than reward those most easily accessible? Given the long-lived nature of greenhouse gases, does it even matter which tons are reduced so long as we curb emissions now?
While some of these questions are addressed in the bipartisan early action bills pending in the Senate and House, others are not resolved. Congressional action on the issue appears stalled and crafting a sound compromise remains difficult.
While it would be preferable to create true incentives for early action, in its simplest form such legislation could state that actions taken after a certain baseline year - the date of legislative enactment, for example -- will not be penalized. Such a statute could help protect firms acting now from being punished for taking responsible action.
The more time passes, the less likely it will be for us to achieve the goal of climate stabilization. Some companies are announcing aggressive commitments to reduce their contributions to climate change. Some state and local governments are taking steps to register and promote these actions. But without U.S. government action, we will not have the broad participation and commitment -- either in this country or abroad -- needed to truly address this problem.