The Future of U.S. Climate Policy

In June 2009, the House of Representatives approved legislation that would establish a cap-and-trade program to reduce U.S. greenhouse-gas emissions. The bill now awaits action by the Senate. Meanwhile, a controversial program (NYT) for trading in used vehicles for new cars with higher fuel efficiency standards has been extended by Congress. Eileen Claussen, president of the Pew Center on Global Climate Change, says Congress might pass U.S. climate legislation in 2010, after it finishes dealing with health care reform. In the interim, the Obama administration is "moving forward in a very deliberate way under the Clean Air Act because in fact they have to. They don’t actually have much of a choice." She stresses the importance of U.S. domestic policy for making progress on global climate talks, set for December 2009 in Copenhagen. "Everything globally is dependent upon [U.S. domestic legislation] before all the other pieces can fall into place, which might take a considerable amount of time. But until you at least get this, it’s not clear that you can get any of the other pieces."

The cash for clunkers program has been billed as partly an environmental plan and partly an economic stimulus. In your opinion how does this program rate as climate policy?

One of the important parts of the climate policy is to deal with transportation. The cash for clunkers program moves vehicles in the right direction. This particular legislation doesn’t move them, I think, as far as they need to be moved or as far as they will be moved when the rulemaking is done [i.e. when new national fuel efficiency standards are set] and there are specific standards for automobiles. But you do have to trade in a vehicle with poor mileage for one with better mileage. The statistics on the first phase of this program, the one that would have just run out, had an average trade-in mileage of just under sixteen miles per gallon, and the cars that people then bought [had an average of] twenty-five miles per gallon, which is actually a 61 percent improvement. That will cut down on greenhouse-gas emissions from vehicles within the transportation sector. It’s a big first step for the climate.

In any future kind of iteration of the program, are there specific recommendations that you would make for modifying it to be more beneficial in terms of climate policy?

The bigger the gap between the car you bring in and the car you go away with, the better it is in terms of climate. Here the requirement, I think, was four miles per gallon but it turns out that people actually traded in [for] cars that were considerably more efficient than that. The more you can move that up to make sure that you only get more efficient vehicles, the better it is for the climate. It isn’t clear to me that they’re actually going to do that. They’re just going to put more money into the existing program, which still makes a significant difference.

The administration has been spending a lot of political capital on health care reform, something that a lot of Americans consider a priority. With climate change, there was a Pew poll late last year that found that nearly 40 percent of those polled didn’t think that climate change should be a policy priority. What does this mean for the U.S. Congress and climate policy? Will Congress be able to pass legislation, or will the Obama administration need to resort to using the Environmental Protection Agency or the Clean Air Act to make progress on greenhouse-gas reduction?

Health care is much more difficult than the administration thought it would be. I don’t think they thought it would be easy, but it looks like it’s going to be very very difficult to pass something. Then the administration would be in the position of asking Congress to take on another difficult, controversial issue, which can also [be] relatively partisan in how Congress looks at it. There’s no question that everyone in the administration would prefer a legislated solution to moving forward with the Clean Air Act, but they also don’t have that much choice. They’re going to have to move forward with the Clean Air Act in the absence of legislation. So, I don’t think it’s the first choice. They’re going to try to push Congress pretty hard after health care is done to pass something. There’s a fair chance that you might get something passed in 2010. But they’re moving forward in a very deliberate way under the Clean Air Act because in fact they have to. They don’t actually have much of a choice.

How does that timing of potentially moving climate legislation forward in 2010 mix with the UN climate meeting in Copenhagen in December 2009?

If I were the administration, I would want much more certainty than just having a bill through the House before I negotiated a target. And the odds of the Senate actually passing something and having a conference before Copenhagen are very small. I just don’t think that’s going to happen. But it’s important to understand that there are a whole set of issues that have to be resolved in Copenhagen and it isn’t entirely clear that any of them could be resolved. There is of course the issue of what the developed countries agree to in terms of an absolute reduction [in greenhouse-gas emissions]. But there is also the issue of what the major developing countries would agree to, which I think is not going to be targets. There would have to be some fairly robust policy, and I’m not sure that we’re that close to figuring out what these kinds of policies might be. And then there’s a third issue which has to be resolved in Copenhagen and that is what kind of money the developed countries are going to put on the table to help developing countries move to a less carbon-intensive economy. This is not an easy year for any of the developed countries to come forward with significant sums of money, certainly not in the range that the developing countries are now asking for.

So, yes, what the United States is willing to do is crucial to a deal, but so is the resolution of all of these other issues. I myself think that the best we can get from Copenhagen given the complexities and where countries are is a framework, and then try to spend 2010 filling in the details. Hopefully by then we will have a better idea in the United States of the kinds of details that we ourselves can fill in.

How important do you think the United States is in that Copenhagen process? If what you felt to be the best-case scenario for U.S. climate policy unfolded in the next year, how much effect will that have on global climate talks?

The United States is crucial. There cannot be and there will not be another global agreement without the United States. I mean there just won’t. We are too big a contributor to the problem and we’re a big economy. I don’t think any other country would agree to anything unless the United States was a full participant. We have to work very hard to see if we can pass legislation in the United States, which means working very hard on the Senate to see if you can find a piece of legislation and sixty votes that are a good step for the climate. I don’t think it’s impossible to do that, but we have to work very hard on it, to figure out what the compromises are and whether you can do it. If health care is really difficult, there’s a question of whether the Senate wants to take up something else that is really difficult after they do that, assuming that they actually come to a conclusion on that.

But [U.S. climate change legislation] would be the highest priority. Everything globally is dependent upon that step before all the other pieces can fall into place, which might take a considerable amount of time. But until you at least get this, it’s not clear that you can get any of the other pieces. To me the most important thing is getting a domestic policy in place.

Can you outline three or four things that are critical components of any kind of U.S. legislation on climate policy?

Obviously we need to have targets that are ambitious but achievable. The House bill did have targets that are ambitious but achievable. Once you have that which is environmentally the most important thing you can have, you have to work very hard to find ways to make sure that the costs are manageable. That can be done through a variety of different means. One issue is how you allocate allowances, assuming it’s a cap-and-trade [program] which it probably will be, how you allocate so that people do not experience sharp increases in electricity prices or in gasoline prices, so that companies do not have electricity increases that they can’t deal with. You can do that through allocation; you can do it through a cost-containment mechanism; you can do it through the use of offsets. You probably need to do it through some kind of combination of all of those. And all of those, by the way, are controversial.

A final issue--you have to tie U.S. domestic action to the international picture, and there the House bill included some trade measures which the Obama administration has said they do not support, and actually we at the Pew Center do not either. There’s now been a letter sent by a group of moderate Democrats in the Senate saying that they must have something like that [trade measures] because of the possible competitiveness impact from countries that don’t have significant climate change programs. How you work that out and how you find a compromise there that can still get you sixty votes is extremely hard.

If something like that does go through in the Senate, what effect do you think that will have on global climate talks?

It depends on exactly what it looks like, but if for example it is somewhat automatic, which it is in the House bill, that’s going to have a very negative effect internationally. If, on the other hand, the president has a fair amount of discretion, that would be helpful. If the trigger for the trade measures is [climate] programs that are similar to what we do, that’s a huge problem because the developing countries, and this is [who] the measures would be directed toward, need to do something that is significant, but it’s not going to be the same as what we do. So if the test is the same, or equivalent to, or something like that, that’s a huge problem as well. Clearly those are the two things that are most important if you’re going to have [trade measures]. We don’t like them, but if you’re going to have them, [it’s important] to make sure that they’re not automatic and that they’re not triggered by something which developing countries would find impossible to meet.