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A Technology Strategy for Global Warming—Meeting Summary—April 2, 1999

April 2, 1999
Council on Foreign Relations

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[Note: A transcript of this meeting is unavailable. The discussion is summarized below.]

Overview

On Friday, April 2, 1999 the first session of the study group, "A Technology Strategy for Global Warming" convened with the primary objective of serving as an exploratory opportunity to provide comments, suggestions, and feedback regarding the draft first chapter of a book David Victor, the study group director, is undertaking. This meeting, like the following study group sessions, is not meant to reach a consensus, but rather, serve as a debate arena for multiple points of view, and in discussing and placing technology in a practical economic context.

An informal overview of David Victor’s book was provided, in which the book’s perspectives were laid out as follows:

The project, technology strategy for global warming, is built upon two premises. First, global warming is a long-term problem which is best addressed with long-term solutions. Second, current conventional wisdom will not solve the global warming problem because it focuses on short-term emission targets. This logic relies upon a system of international emissions trading, which may reduce the problem of predicting future emissions for individual countries, but raises the very difficult problems of distributing credits, monitoring, and enforcement. Thus, the current approach, exemplified in the Kyoto Protocol, is off-track.

If the solution is through a long-term technology strategy, then the question which must be addressed is what can be done to invest directly in new technologies and innovation, development, and diffusion of new technologies so that in the future the US and the world can achieve low emission pathways. While many studies address the technological aspect of this equation, none has focused in detail on how low-emission futures could actually be accomplished. The proposed technology strategy would consist of three elements: 1) a price on the emissions (e.g., a carbon tax); 2) programs to invest in basic and applied research in a wide range of energy related technologies; and 3) demonstration programs to carry technologies from the laboratory to the marketplace and additional incentives to promote diffusion of new technologies. As a result, the project is faced with the classic technology questions of how one accomplishes this without creating an industrial policy, creating corporate welfare, or picking winners too early? To answer those questions, the book examines case studies, mainly in the U.S., of past efforts to intervene in energy technology markets; the studies will look at successes and failures, and see what lessons can be learned for the design of a technology strategy for the United States.

The first comment following this overview reminded the group that whatever decision is made, and governments eventually adopt, should be based on sound science and take into account the political, economic, legal, and cultural impact of which a technology strategy will entail.

Relevance beyond climate control

Several individuals noted that while global climate change is a primary motivation for reducing harmful emissions and increasing energy efficiency, these efforts also have other important consequences which the book, it was suggested, should include. For example, society’s standard of living may be increased via greater energy efficiency. Many of the same measures needed to address global warming are also important for control of local pollution control (e.g., smog). A move away from fossil fuels, especially oil, could promote energy independence. These synergies might help to build political support for a longer-term and less tangible technology strategy.

Market context and incentives and the international process

Many individuals urged a greater discussion of the effort to shape innovation within the context of economic forces. For example, on the production side, companies have an interest to maximize efficiency for lower energy costs to increase profits. Consumption likewise has a powerful influence, as exhibited by the introduction of unleaded fuel in Singapore. Here, a participant noted, after Caltex became the first company to provide unleaded gasoline in the country, its market share jumped 15%. As a result, its industry competitors quickly offered this fuel as well, and unleaded fuel became the norm without government intervention. Globalization, the opening of markets in developing countries, the influence of international organizations, and differences in government regulations/standards across markets also influence research and develop levels; several participants suggested that these topics were areas worthy of investigation.

Impediments which may block political support for a technology strategy were also discussed. Equity and fairness, both within the United States and the international community, were identified as high hurdles and divided into two classes: first, ownership and rent, and second, cultural and historical issues, particularly in developing countries. It was suggested that how well these issues are addressed could be one method to test the success of the project. Another participant added that fairness should be addressed in the book, but only to dismiss the term since there is no common definition internationally—or in the United States—on what is fairness. A lack of harmonization in international standards was cited as another strong obstacle in that it greatly increases both the difficulty and cost of private research and development spanning multiple countries.

As the discussion turned from the traditional economic system to a long-term emission trading system, one attendee warned of the danger of allocating permits on the basis of "grandfathering." Specifically, the participant expressed concerns of a system that may lead to a transfer of money and undue rewards to individual countries simply for the status of its economy in the base year. Nor would it be possible to satisfy the interests of the developing countries, where emissions are growing rapidly, with a grandfathered allocation. Auctioning emission credits, which has experienced some success in the United States, was provided as a possible alternative.

Case Studies

One individual suggested that the linkage between United States and international policy initiatives be discussed more in-depth. Specifically, it was suggested that this coorelation be exhibited through case studies. The group as a whole recommended examination of the following case studies for both this purpose and as general recommendations:

  • Energy Policy Act

  • Introduction of Alternative Fueled Vehicles Act

  • Oxygenated fuels mandate Joint Implementation and Clean Development Mechanisms

  • Auto Emission standards: United Kingdom v. Germany

  • Non-energy case studies. For example, why was agricultural research (termed a "smashing success") so successful and what can be learned from this? How have been efforts such as this organized so as to avoid being taken over by pork barrel politics?

  • Success of public interest groups—anti-nuclear group in particular.

    Public Opinion

    One participant noted the importance and power of public opinion and special interest groups to influence government spending.

    This results in less popular projects becoming "captive" to more popular projects. For example, during the last 10-15 years government medical research (boosted by popular support and a successful medical special interest groups) consistently outpaced military research. Therefore, a participant raised the issue of how the energy infrastructure can avoid becoming "captive" like military research. Other participants discussed ways to mobilize and channel public concern so as to promote a technology strategy.

    Should the book focus more on the technology strategy of the United States or the international community?

    Since the target is US policy, the book should have a domestic US focus—in particular, congressional staffers and executive branch—with an international component rather than an international focus.

    Another viewpoint held that where the technology will be developed—in developing or mature economies—should determine if the book’s focus should be international or domestic. Continuing, another individual noted that one hurdle that may need to be overcome is the general opposition of the United States to technology transfers, particularly when such transfers may have military/security implications.

    Another suggestion stated that the book should focus on the United States because the US is a major carbon based emitter, is where the critical international decisions are made, and is the principal developer of new technologies.

    General Comments and Suggestions

    If the book is about climate change, rather than carbon intensity energy, then "sinks" should be addressed.

    One participant noted that "demonstration projects" could include demonstration of geoengineering schemes and that, without an explicit technology strategy, such schemes might not receive adequate attention; a full portfolio of responses to the climate threat must include such schemes.

    It was noted that rather than focus on specific energy outputs a technology strategy should focus on providing the "scientific infrastructure," (e.g., the human resources and researchers) that will best allow the society to development of long-term solutions. Focusing on the foundation will aid the redirection of efforts after some particular lines of research come up empty.

    In pursuing this, efforts should be broadly defined, such as physics, materiels sciences, or genetics, etc. Another participant noted that how funding is organized—the degree of formality—can also make an important impact.

    One participant was unclear if the book aims to avoid the carbon tax issue, to gain information so that once the tax is implemented it may be done so more effectively, or to get information so that it may be used more wisely.

    It was suggested that a chapter discuss the difficulties associated with the carbon tax approach, the tax’s shortcomings, and why the optimal emission trading system cannot be implemented be included in the book.