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Environmental Stories to Watch in 2010

WRI President Jonathan Lash previews the key environmental issues to watch in 2010.

On January 7th, over 40 journalists gathered at the National Press club for WRI President Jonathan Lash's annual "Stories to Watch" presentation. The briefing previewed key environmental issues that will likely emerge throughout 2010. Our resources from the event, including audio and video, are below.

[vimeo 8599243]

This year the issues included:

  • An update on enforcement of the newly revised Lacey Act covering illegal logging.

  • New approaches to combat nutrient pollution in the Chesapeake Bay watershed, including possibilities for a nutrient trading system.

  • COP-15 Copenhagen: The way forward after the international climate negotiations and the global power shift taking place.

With the EPA pushing forward, with states acting aggressively to enforce the Clean Air Act, and with the Senate faced with having to act on a climate bill, this spring will be an interesting and decisive time.

Jonathan Lash
January 7th, 2010

  • China's environmental targets and adoption of the country's 12th Five Year Plan this spring.

  • Forests: International plans to potentially reforest degraded areas, in addition to protecting existing forests, bring new opportunities for large deforested nations like China and India.

  • US Climate Policy: Can Senators Kerry, Lieberman and Graham fashion a sixty vote climate bill? How will coal-dependent states and the possibility of EPA action influence the process?

  • Action in the States: States are proposing to move ahead on low carbon fuel standards and increasingly applying provisions the Clean Air Act.

Powerpoint Presentation

[slideshare id=2859545&doc=stories-to-watch-2010-100108065407-phpapp01&stripped_title=environmental-stories-to-watch-2010]

Complete Transcript

JONATHAN LASH: Welcome to everyone. This has become sort of an institution for us, a tradition to start the year talking about issues to watch. This is not a morning for intrepid predictions. We don’t try to tell you what is going to happen. We try to talk about some of the things that are worth watching, where the story’s likely to emerge, whatever the outcome.

It also is not an opportunity for us to talk about what should happen. This is Washington, and we’re a mission-driven organization. So I won’t try to pretend that everything I say is free of spin. Spin is the city’s leading business in communication. But we do try to give you a sense of where we see some of the larger issues are going to play out, and what are some of the key hooks that you might watch for in the next twelve months.

This is not just the product of my own analysis; the WRI staff has become involved in this exercise. So it reflects the judgments of a number of my colleagues, several of whom are here with us this morning.

I want to start with two updates on stories that we’ve talked about in previous years. Last year, I talked about watching for the beginning of enforcement of the newly revised Lacey Act. Congressman Lacey was a Republican from Iowa who was one of Theodore Roosevelt’s closest allies in the Congress in the great days of the conservation President. And one of the pieces of legislation that he sponsored was a law that enabled Federal agents to prosecute those who took animals in violation of state laws. Because there was a raging trade in illegally taken game animals.

And that statute had been in place, used occasionally by Federal Fish & Wildlife agents for nearly a century, when in 2008, Congress revised it, extending it to cover trees and to cover trees taken illegally in the country of origin. And we said, watch for prosecution under this statute of the first case of wood being brought into The United States in violation of this statute, and talked a little bit about the very interesting network of citizen enforcement, some of our analytical expertise, and the Justice Department.

And a few months ago, Federal agents, armed with a search warrant, raided the premises of a very surprising first case, Gibson Guitar, a company that has prided itself in trying to use good wood supplies, seizing evidence of tropical hardwoods illegally harvested in Madagascar. I would suggest continuing to watch this space. I have every reason to believe there’s more in the pipeline coming.

And the Lacey Act is going to have an impact because a few prosecutions have an enormous influence up the supply chain. And supply chain issues are becoming important issues in a variety of areas, ranging from carbon to wood supplies to other materials. This is a real indicator of the potential for enforcement of a standard at the end of the supply chain, to bring changes right up through the supply chain. Because the suppliers of wood are now subject to extremely stringent reporting requirements. And this prosecution is raising real questions about how they comply.

A second story we’ve talked about several times in previous years, one that I’m sort of obsessed with because I love the Chesapeake Bay, is the question of whether there is going to be innovative action in our watershed to protect the Chesapeake Bay, one of the great estuaries in the world, from the rapid buildup of nutrients, which is undermining the health of the Bay. And we’ve suggested that there was a real potential for demonstration of a new approach in the Chesapeake for nearly forty years. As long as the Federal government has been actively enforcing the Clean Water Act, there’s been an informal three-class system. Industrial discharges were subject to strict regulation. Municipal discharges were helped with Federal funds to abate pollution. And non-point sources like agriculture or suburban development were not regulated.

Senator Cardin has introduced a piece of legislation that would actually take a different approach, that looks at the whole system and how to both most effectively and most fairly and cheaply reduce the flow of nutrients into the Bay, which are about 46% agriculture, about one-third municipal sewage and runoff, the rest from industry and a variety of other sources. What’s interesting about this is the triple-win opportunity. Those of you who can see the screen, you can see that the two bars on the left-hand side of the screen are the costs of abatement for municipalities — very, very expensive for municipalities to make the kind of infrastructure investments required to reduce nutrient uptake in the Bay.

And over to the right are a whole set of very cheap land use practices that offer enormous potential for abatement. This is a classic situation to set up a trading system. If the sources on the left can very cheaply get larger reductions than they would by investing in infrastructure by paying the sources on the right, the sources on the right gain. They gain a source of income. The Bay gains. Pollution is reduced. And the sources on the left gain because they have a much cheaper opportunity for reductions.

This bill is likely to begin to move in this Congress. Senator Cardin has taken this as a very high priority, and has the support of the Bay delegation. It will be interesting to see what happens in the next few months in environment and public works.

Obviously the big story is the climate story and what happened in Copenhagen a few weeks ago. I’ve been astonished watching the global spin after the Copenhagen meeting. What happened there is perceived completely differently in Europe than it is here, and entirely differently in India than it is in Europe. So if you track the flow of blogs and columns that are coming across on this, the assessment ranges from catastrophe to success.

My sense of the story is that there were actually two Copenhagen meetings. There was a formal treaty negotiation that has been going on, essentially since The United States framework convention on climate change was ratified by 190-some nations back in the early 1990s, and culminated in Copenhagen. And there was a very brief 12-hour head of state negotiation that took place at the end of the Copenhagen meeting.

The first negotiation, the formal one, failed. The second one, well, I'll talk about that a little more in a moment. But I want to give you some background to understand what was happening there. Every discussion of international climate change negotiations over the past decade has taken place in the context of the Kyoto protocol and the assumptions created by the Kyoto protocol that industrialized nations had obligations to reduce pollution, developing countries did not unless paid to do so; that decisions about how to proceed on pollution reduction would be taken in five-year increments, the so-called commitment periods (the second commitment period was what was under discussion at Copenhagen); and that the international agreement would provide an elaborate legal structure of compliance within which reduction commitments would be carried out.

And certainly over the last two years, there have been very strong assertions that that frame would continue to be the frame for the discussion. You remember coming out of Bali two years ago. The United States had been shouted down. Developing countries continued to insist that they had no obligation to make commitments.

But in the last six months, some very unexpected commitments emerged from leading developing countries — Brazil, Mexico, Indonesia, South Africa, China, and finally India. All announced explicit, concrete, quantitative commitments to control emissions, many of them in terms of emissions intensity, not absolute levels. But that was an extraordinary change from the form of the conversation before, and led to very significant optimism going into Copenhagen, an optimism that did not play out as the negotiations went forward for the first ten days. Those of you who were there know how sour the mood became by the second week. It was sour outside where Danish police were battling protestors. And it was sour inside where negotiators were not only failing to reach agreement, they were pulling back from agreements that seemed to have been there.

And on the second to last day, heads of state began to arrive. By the final Friday of the negotiations, the major countries were represented. And an absolutely unprecedented negotiation began among a group of heads of state, who were not sitting back and letting the negotiators take the lead, but who were trying to resolve the issues themselves. That negotiation, too, appeared to fail. There was no break in the deadlock.

And then a meeting occurred which everyone who’s followed Copenhagen has seen stories about, in which President Obama joined a meeting of Wen Jiabao, Lula, Jacob Zuma, and Manmohan Singh. And that group did break the political deadlock and reached an agreement, which broke through the failed expectations in terms of funding and reduction commitments, and the conflict between the U.S. and key developing countries over verification.

The agreement included a two degree target, a significant step beyond what had ever been in the Kyoto protocol, but excluded the implementation of that target through fifty percent reduction in global emissions, and 85% reduction in industrialized countries’ emissions. It included commitments by all of the major sources of emissions, North and South, remarkable. But when you add all those up, they’re not nearly enough to achieve the two degree target, a real tension there.

It included provisions for verification of implementation of those commitments. Countries have to report, provide background information, and respond to questions. It reflected progress that had been made on a set of key issues, ranging from reduced deforestation to technology to adaptation funding, but did not provide a legal basis for locking those into place.

It provided a guarantee of $10 billion dollars a year in funding for those purposes, rising to $100 billion dollars a year by 2020, but did not provide explicit information as to the source of those funds or the means by which those funds would be committed.

If you hoped that Copenhagen would result in a legally binding agreement that would assure that we’d meet the goal of not having global warming exceed two degrees, it was a failure. If you believed that the only way forward was to find some way to include The United States and developing countries in the Kyoto architecture, this was certainly a failure. But it does offer some very interesting possibilities and some indications of significant changes, first of all, in terms of who led this process.

This is the G8 meeting in 2008. These are the guys who, over the course of the decades since the Second World War, have basically run the world. They’ve gathered periodically to address major questions. This is where decisions could be made.

These are the men who reached the agreement in Copenhagen. This is a new world order. This is more than half of the world’s population. This is more than half of the emissions. But it isn’t the old alliance reflected in G8 meetings, an extraordinary and powerful change, and I think indicative of something much larger going on here.

These were the leaders who were able finally to break through the disagreement. And they represent all of the major developing countries over whose emissions a lot of the tension had arisen.

And so it was a heads of state agreement, not an environment ministers or negotiators agreement. That, so far as I know, is a first. This was an agreement that included everyone in roughly symmetrical kinds of commitments. That’s absolutely a first. This is an agreement that provides for verification of compliance. I’d be happy to talk more about this later, whether this verification process is real. That’s certainly a first. This is an agreement that is built around the idea of a two degree target. We certainly would have liked to see something stronger than that, and the fifty percent included, and so forth.

But the inclusion of a target in an international agreement is absolutely a first. And this is an agreement which became the Copenhagen declaration through a process that broke through the dysfunction that had led to a stalemate 24 hours earlier. This agreement was taken to a larger group of heads of state, and then to the conference floor. And because they could not get the necessary unanimous agreement on the conference floor, the supporters of this agreed that the conference would take note of a declaration which would be joined by those who were willing, breaking through fifteen years of dysfunction in the U.N. negotiating process.

Okay, lots is left uncertain here. This is not a legally binding agreement. We don’t even know if everybody will stick to it. We’ll get very strong indications over the next four weeks. China has convened a meeting of the so-called basic countries — India, China, Brazil, and South Africa, President Obama’s negotiating partners — to discuss this agreement. And what comes out of that a couple of weeks from now will be an important indicator. Countries are beginning to declare whether they will or will not participate. That’s an important indicator.

Most importantly, on January 31st, all countries are due to submit their commitments to complete an annex to this declaration. If those commitments flow in, it’s a very strong indicator that this agreement’s real, that the heads of state meant what they said, they’re willing to continue on to implementation. If they don’t, it will be a signal that it’s beginning to disintegrate.

It’s completely unclear who owns this agreement, who staffs it, what the process is, who decides how you vote, who can convene meetings. And that’s all going to be resolved over the next six months. Will this process be included as a track in the upcoming scheduled negotiating session in the Spring in Bonn? Or is this a separate process? Will the U.S. convene a meeting of the major economies forum, which are the largest emitters, as a way to drive this forward or not? All of those things are likely to emerge in the next two months, and will set the course for whether this is the platform for global action to address climate, or a failed political exercise that was just designed to avoid having Copenhagen be a complete failure.

So one important question, which I'll deal with in a minute, is how’s the U.S. going to proceed? But obviously everyone’s also going to be watching China. Here are some indicators that you can look for from China.

Actually a week ago, China announced a change in its utility law that now requires Chinese utilities to purchase renewable energy that is being produced and offered on the grid. This has been a problem where they were rapidly growing their renewable capacity, but utilities weren’t purchasing the power. China has a history of phasing out inefficient, old power plants and building new, more efficient ones. If that continues, it’s a sign they’re going to try to implement their carbon intensity commitment. If that does not continue, it’s a sign that they’ve pushed this commitment second. But the most important, by far the most important will be the adoption of the twelfth five-year plan in the Spring. If the twelfth five-year plan includes continued strong improvement in energy efficiency, commitments to pollution reduction, and carbon commitments, it’s an irrefutable sign that the Chinese are taking this commitment seriously. I think it will.

One other issue I wanted to touch on coming out of Copenhagen is forests. So I’ve talked often to you about the long history of global deforestation, the forces that are driving that, and some of the potential opportunities for reducing deforestation. This is just a fairly detailed map that gives you a sense of the fifty percent loss of forest and what’s happened to those formerly forested lands.

A big issue for discussion in Copenhagen was what kind of program to reduce deforestation and degradation would be adopted as part of the climate scheme. That is, could Northern countries and companies in those countries pay for reduced deforestation and get an offset, a credit that they could use to meet their obligations, something strongly supported by those companies in the U.S. who have been advocates for climate action? Generally, this has been seen as a question of reduced deforestation which has meant that it has been focused on a relatively small area of the world — the Amazon, a piece of Indonesia, the Congo Basin.

In Copenhagen, a plus was clearly added which extends this regime also to cover reforestation, that is, the other fifty percent of the land that was once forest. And this option is really quite interesting. First of all, the problems of tracking it are less than the problems of dealing with avoided deforestation. Second of all, it brings large deforested nations into the game — China, India, South Africa — key players who couldn’t play in the avoided deforestation game. And because it is a forestation, it restores water flows, provides jobs, improves ecosystems.

We have a very interesting project going on in Indonesia where original forest is being cut to build palm plantations to supply palm oil for biodiesel and other uses, where we’re trying to shift that onto degraded lands. Think if you can make degraded lands an opportunity for, not only reduced emissions but carbon absorption, it becomes a very significant opportunity. This emerged from a meeting in London just before the Copenhagen meeting, that issued the London challenge. There’s a REDD+ institution agreed to in the Copenhagen declaration. We are likely to see this year the rapid emergence of some deals under this set of provisions. There was one just a few days ago involving kiri trees and a company called ECO2 Forests and CarbonX. I think we’ll see more of this as the opportunity of reforestation becomes more real.

For a decade, the real problem here has been the fact that the U.S. was not addressing climate change. We still face that issue and the question of how we’re going to meet our reduction commitments. The President, at the end of the Copenhagen meeting, talked about fourteen to seventeen percent reductions. The U.S. was walking a tightrope in its negotiating position in Copenhagen because it did not want to offer any commitment that would offend the Senate and leave members of the Senate feeling that the Administration had gotten ahead of the Senate’s right to define the extent to which we would make reductions.

At the same time, it needed to get an agreement in which China in particular and other countries agreed to verifications. So we weren’t offering much and we were asking for quite a lot. That was a difficult tightrope which the President seems to have walked fairly successfully. But now it puts the spotlight back on us. Can this troika — Senator Graham, Senator Lieberman, and Senator Kerry — fashion a sixty-vote climate and energy bill? They’ve talked about generally how they’re going to do it. Senator Graham says, “We have to make this a security, an energy, a competitiveness bill.” He’s talked about very strong nuclear provisions, opening up offshore leasing. That is taking two hot button issues and giving Republicans in the Senate big victories on those two hot button issues.

There are obviously obstacles. Healthcare still isn’t done. Financial regulation is high on the agenda. Security has suddenly leapt back onto the agenda. But I think reports of the demise of climate legislation have been greatly exaggerated. And I want to talk about why a little bit, and then tell you some things to watch for.

I actually showed you this map last year, but it’s still the key. The key is coal. The states colored in are the state represented by Democratic senators who have said, “Yes, we think energy and climate change are important, but we are very reluctant to vote for a bill that looks like the bill the House passed.” And the states with a ‘C’ are those in which more than sixty percent of their energy comes from coal.

This problem is still very much a problem about how we address the concerns of states that are supplied with electricity by coal, concerns in terms of cost, concerns in terms of old industry, and concerns in terms of workers in the coal industry. Of course jobs are also an issue, a major concern for every senator. But I’d just point out from this map that states colored in are those with above average unemployment. And you can’t really extract a trend that states with higher unemployment have senators who are opposed to action, because California is included, Rhode Island is included. Those senators are certain to support strong legislation.

This is really about bearing the costs, offsetting the costs of changing our energy supply system. So here are some things to watch for. The first is the question, whether the troika produces a more fleshed out draft bill. They put out a concept paper before Copenhagen. Can they figure out what they need to put in to get sixty votes and put it into legislative form?

The second question is whether Senator Baucus holds a markup of that legislation in the finance committee. That’s the next stop for legislation. Senator Baucus has said he intends to take it up, but he has had other priorities. He’s certainly not going to focus on it if it appears to be going nowhere. So if he has a markup, it’s a strong sign that legislation is still alive. A third issue which all of you are aware of, and is coming up much more quickly is the vote on Senator Murkowski’s amendment. Part of the agreement on healthcare was that she would have the right to offer an amendment which blocked EPA’s implementation of its endangerment finding that has prevented EPA from moving to regulate greenhouse gases under the Supreme Court decision saying that greenhouse gases are a pollutant under the Clean Air Act.

The vote on the Murkowski bill is not going to be a surrogate for a vote on a climate bill, since there are a lot of senators who are very uncomfortable with EPA action on climate who may still support a climate bill that would also limit what EPA would do. But it is a very serious challenge to the nation’s ability to go forward if there isn’t legislation.

Indeed, it will be a busy Spring for EPA. They are locked into the issuance of regulations implementing the agreement on transportation, on auto economy standards, but then immediately to proceed with proposals on stationary sources. It would be a good time to brush up on your knowledge of what NSPSD and BACT mean. I’m not going to run a tutorial here, but the regulatory process is beginning to grind forward. It will have a huge impact on industrial planning. EPA is simply following what the Supreme Court required them to do after making the endangerment finding. And much of that is scheduled to come out during March.

And the states, who some people thought would back off as the politics of this issue got more difficult, are actually proposing to continue to move ahead. The northeast states are going to adopt a low carbon fuel standard this Spring. California, which agreed to bring its standard in-line with the national standard through 2016, is intending to adopt a stricter standard for 2017 and beyond. The three regional cap and trade programs in the northwest and the West Coast, the Midwest are beginning to coordinate their actions. And states who are facing permitting decisions as the implementers of the Clean Air Act are becoming increasingly aggressive and creative about how they apply Clean Air Act provisions-- There was recently a permit for a new coal plant in Kentucky that was held up to examine whether best available control technology wasn’t the use of natural gas instead of coal.

This is all going to happen in the Spring as well. So I actually think March, April is going to be an interesting and decisive time, with EPA pushing forward, with the states acting aggressively, and the Senate reaching the point where they have to fish or cut bait on moving a bill.

Oh, and one other thing — about seven percent of U.S. emissions comes from the Federal government. That’s a rough estimate. And two days ago, all Federal agencies were due to submit their plans for reducing their own emissions under an executive order that the President adopted ninety days ago. These are supposed to be fairly aggressive reduction targets that reflect the Federal agencies’ ability to achieve the kind of reductions being asked of the rest of the economy. They’re sitting over there at CEQ. I can’t get them to tell me what they’ve got yet. Why don’t you go try? It’s an important indicator, right? They’re doing the whole thing, about how much can they do, both about direct emissions and indirect emissions from their use of energy.

One last point about old arrangements changing — I talked about the G8 being displaced by the C5. During the course of the economic crisis, long discussions about the right of major developing countries to have greater representation in the world bank system, the IMF, the World Bank, came to a head as meetings were convened on how to deal with the economic crisis. And China, India, Brazil, and others demanded a greater share if they were going to support strong action.

The resulting agreement, which produced a one trillion dollar top-up for the International Monetary Fund, is going to give those countries who were not part of the original club that created the World Bank and the IMF at a meeting in Bretton Woods, New Hampshire in 1944, will give them 47% voting rights. And that is likely to rise to over fifty soon. Just as those institutions are becoming important in a series of issues about resource use, it means that the resource producers are likely to have a much greater voice in investment flows. Just as the World Bank system is playing a larger role on implementation of climate decisions, developing countries are demanding a much greater say, something that more reflects the C5 than the G8 in the decision making process.

Historically environmentalists have tried to use these international institutions to impose environmental standards on developing countries as the price of getting concessional financing. Very interesting to see how that plays out as those countries now have majority or close to majority voting rights.

So watch for this to begin to play out at the Spring meetings of the World Bank. The power arrangements are going to change completely. And, by the way, the U.S. will no longer have the capacity to control who gets named President of the World Bank. With that, I’d be delighted to take comments or questions.

QUESTION: You mentioned the domestic situation. The Copenhagen Accord, I suspect that if you were for cap and trade legislation, you’d still be for it. If you’re against it, you’d still be against it, whatever came out of Copenhagen. But there is this group in the middle, presumably, who will have the deciding votes. How do you think what came out of Copenhagen will impact that group as far as their ultimate decisions?

JONATHAN LASH: I think that the U.S. delegation went to Copenhagen with one rule in mind, first of all, do no harm. They didn’t want to do anything that turned possible yes votes into no votes. They certainly achieved that. Second of all, they knew that they had to provide some answer to those who were concerned that China would not do anything, and if it promised to, we could never verify it. There had to be a verification system.

The verification system that is proposed in the declaration that China agreed to is unprecedented. You need to understand that this is different than weapons of mass destruction. People tend to think about verification as Hans Blix with a column of blue painted SUVs racing across the Iraqi desert looking for the smoking gun. But what we’re talking about here is the way an entire economy works.

So the data that’s needed is not specific data about particular facilities, but broad-scale data about the performance of an entire economy, tax information, energy production information, energy consumption information, policies and whether they’re being implemented. Countries are required to provide that backup information and to answer questions about that information. That, combined with the fact that we already have an enormous presence on the ground in China, a number of Federal agencies, a number of academic institutions, provides real reassurance. And at least some of the senators who have been concerned have said, this is a step in the right direction. Does that turn into votes? Hard to tell yet.

QUESTION: We saw Ag Secretary Vilsack order his staff working with EPA to rework the models for forestation conversion in the U.S. Is that an indication that we will see other steps by EPA, by USDA to avoid a showdown with Senate Democrats and do things to sweeten the pot or to lessen the threat to their state economies?

JONATHAN LASH: So the short answer is, I hope so. This was a very tough issue at the end of the House debate over climate legislation when the agriculture committee demanded a set of concessions, making it more likely that money for offsets would flow into the agriculture industry. And that issue has continued to be very difficult in the Senate. I thought it was very encouraging that Secretary Vilsack and Administrator Jackson are collaborating on this, and that they are focusing, by the way, on the same reforestation opportunity as a major place to produce offsets.

Any legislation that passes in the U.S. will create a demand for billions of tons of carbon offsets. And most analysts think that it will be difficult to meet all of that demand domestically, and some of it will have to be met internationally.

QUESTION: That’s a perfect lead to my question. I wonder what the impact of Brazil’s pledge, which it codified in legislation this week, the pledge of Indonesia and others on the availability to U.S. regulated entities under a U.S. carbon constraint, to obtain international offsets. Do these developing country pledges translate into more domestic reductions in the U.S.?

JONATHAN LASH: So the question is, if you were planning to pay Brazil to slow deforestation and to take credit for that in order not to have to make reductions in your emissions from burning coal in the U.S., are you now prohibited from doing that? Because if Brazil was going to reduce deforestation as part of its own commitment, that would be double counting. The answer is, we haven’t done the analysis yet. It is certainly an important question. It is potentially, at least a significant driver of price. But no one knows exactly how it’ll play out.

QUESTION: You had talked about the Murkowski amendment. Can I ask your opinion? Do you think a positive vote on that amendment might give confidence to maybe the gang of sixteen or others to want to pursue a climate bill, since EPA won’t be touching it?

JONATHAN LASH: The Waxman-Markey bill already had restrictions on EPA jurisdiction. The tradeoff was, we’ll have strong national legislation that regulates carbon, but we will not have EPA moving forward separately, except in certain specific areas that weren’t covered by the Waxman-Markey cap. So I doubt that that will be the tradeoff, that success on Murkowski will mean that, more likely to have a successful vote. I think probably the dynamic would be the other way.

This vote, this amendment by Senator Murkowski can be filibustered, and therefore requires sixty votes to move ahead. There’s also discussion of a challenge under the provisions that allow Congress to challenge regulations. And that would only require 51 votes. That would be later in the year.

QUESTION: Back to Copenhagen and the agreement, the heads of state agreement versus the protocol agreement — what’s the way forward? How do you expect this agreement -- You mentioned a little bit, but how is the process for a global treaty to move -- do you expect to move forward? And how would this agreement that came out at the last 24 hours of it, would be perhaps folded into it?

JONATHAN LASH: I’m going to respond to that briefly, and then ask my colleague, Rob Bradley, who runs our international climate program, if he wants to add anything.

I can’t make predictions. But it seems likely that there will be an effort to convene the major emitters in some way, and to flesh out what the declaration means and to discuss how to move it forward. But there are pieces of it that really need to be implemented through actions of the conference of parties to the convention. In fact, there are specific references from the declaration back to the conference of parties. So some of it is going to have to feed back into that UNFCCC process.

The extent to which they can figure out a way to maintain both the momentum of the declaration and the integration with the UNFCCC process will do a lot to determine how fast this moves. Rob, do you want to add anything?

ROB BRADLEY, Director of International Climate Policy, WRI: Thanks Jonathan. Good morning everybody. As with everything associated with Copenhagen right now, all answers are variations on the theme of, don’t really know. The thing to look out for this year is a mess. But a mess is not necessarily a bad thing in this context. So Jonathan already referred to the fact that China is going to be convening the large emerging economies around this set of questions. The Bolivians are trying to bring together an alternative conference. The Europeans are talking about convening something, either at ministerial level or heads of state level. It’s not yet clear. So there’s going to be a lot of follow-up on this specific second track that Jonathan referred to, which is the heads of state level activity.

The very striking thing in Copenhagen and the thing that’s going to have to be resolved is that there was quite a disconnect between what happened at the head of state level and what happened in the more formal process. Now the more formal process doesn’t have an end date. It will carry on. There will be another meeting at a technical level in late May/early June in Bonn. There will be another meeting of the conference of parties in Mexico in December. But that process will be struggling with the question of, how does it actually absorb the sort of directives that it gets through the Copenhagen Accord?

And that’s going to be a big area that certainly we’re going to be wrestling with over the coming year, and certainly something to watch through the first six months.

JONATHAN LASH: Can any of you think of an example where heads of state stepped in and spent twelve hours negotiating? I can’t think of any. I mean, it sounds like something out of the 19th Century, you know, where a few heads of state could get together and stop a war. But that genuinely happened here. And the negotiators are not actually entirely pleased with it. So there is going to be this tension between the negotiation establishment and the commitment of heads of state. That’s why we have no idea how it’ll play out.

QUESTION: I had a question about the new world order, but specifically the four countries — Brazil, China, South Africa, and India — that now have their own acronym. And I was hoping you could talk a little bit about this block of countries, what you saw happening in Copenhagen as they developed into a block, and, you know, the dynamics between them, where you see it going, what you think might happen at this meeting that you mentioned going forward, and kind of where they could take the climate talks.

Separately, if you don’t mind, I’ve been hearing a lot since we came back from Copenhagen about the plans that the G20 made last year to phase our fossil fuel subsidies. Can you talk about where that might be going this year?

JONATHAN LASH: I don't think that countries enter into agreements except because they think it is in their national interest to enter into the agreement. I don't think that South Africa, China, India, or Brazil entered into the Copenhagen declaration for any reason other than concluding that it was in their long-term interest to have such an agreement in place.

They have long been driven by and continue to believe that global warming is largely the fault of the north. I could have put up a chart showing historic emissions. And if you look at historic emissions, it’s clearly the industrialization of the north over a two hundred year period that’s created the problem. They continue to point out that a poor peasant in any of their countries is responsible for a tiny fraction of the emissions than an American or a European is responsible for. I mean, some of that is rhetorical. But some of that is real. They genuinely believe the equities run in their favor, and continue to insist it’s written into the declaration that their first obligation is the eradication of poverty.

But I think this agreement reflects a conclusion that the future of the eradication of poverty is low carbon development, and that the engagement of the West in the process of low carbon development and in reducing emissions is going to better serve those interests than not mitigating climate change.

If that’s so, it’s reason to be very hopeful about the future of the declaration. And I would add, we don’t have experience with agreements negotiated personally by heads of state sitting around the table together. So none of us know quite how-- How certain? How committed are they? When they went back home and their ministers were not pleased with what had been agreed to, how does that play out? We just don’t know, but we’ll see in the next four weeks.

I don't know the answer to your G20 question. Colleagues? Anybody have a guess on whether the G20 phases out all fossil fuels? Athena?

ATHENA BALLESTEROS, Senior Associate, WRI: Well, the brief answer is that the G20 has asked the World Bank to organize a working group into the subsidies issue, regarding about $350 billion dollars worth of global fossil fuel subsidies. A huge percentage of that hopefully could be shifted for climate change adaptation and mitigation. The working group is going to report ...(inaudible) in Spring in 2010.

JONATHAN LASH: That was Athena Ronquillo Ballesteros who works on global finance and institutional issues for us, and was actually a member of the Philippine delegation at Copenhagen.

QUESTION: I’m just curious about green jobs, but not insulation, in terms of new technologies. It seems like you have in former industrial states a lot of interest with senators in particular that would like to see-- that don’t necessarily support cap and trade because of the impact, but are really pushing hard for industrial-- new industry, new clean energy type technologies, batteries, whatever the case may be. Is that enough to make any difference in terms of the over the long view of CO2 reductions and-- or-- without cap and trade? I’m just wondering how long this could go on with cap and trade, and if you have the new technologies anyway, what kind of impact they might have.

JONATHAN LASH: So I'll respond, can we do it without cap and trade or some limit on CO2. We have one guest here who could actually answer the question about green jobs better than I could. And I’m looking at him. It’s a little unfair to pick on him. Do you want to answer that piece, or-- ? Okay. I'll introduce him in a moment.

I have not seen any analysis that suggests that we can make reductions on the scale necessary or anything close to the scale necessary through only positive energy incentives. So great — have an RPS program. That would be a terrific step. Very good to have strong Federal investment in alternative technologies. It will certainly generate jobs. There’s a debate going on now about the balance between jobs displaced and jobs created. But there’s a lot of analysis saying it’ll create jobs.

But it doesn’t get the kind of deep reductions that we have to achieve over the next forty years. What is good about the cap and trade bills has nothing to do with the ‘trade’ part, that has to do with the ‘cap’ part, is it doesn’t just give you one single endpoint. It gives you a roadmap to forty years of reductions, which tells you something about where you should invest. And energy alone, an energy program alone won’t do that.

One of our guests today is Chad Holliday, the outgoing chairman of DuPont, and a longtime ally on U.S. CAP who’s been actually eloquent on this subject. And I just wanted to give him a chance to comment.

CHARLES HOLLIDAY: Thank you, Jonathan. First, I agree totally with Jonathan’s answer about, the cap and trade is needed to really get initiative going. I think we’ve seen enough examples of, it will let the resources flow to the right places. I think the biggest issue on green jobs without that in place is every country has the same objective of, create those green jobs for themselves. And so it will be the countries that find creative ways to use Federal funding, universities working together with businesses that can get the lead. Because I think clearly in the next three or four years, the countries that get the lead will have the best chance of creating those truly green jobs in the future.

QUESTION: I really wanted to follow up on the question about the sort of change in the world order from the G8 to the C5, because specifically who we didn’t see at the table in that picture is Europe or any European representative when they had sort of taken a leadership position, Gordon Brown and Sarkozy in their last few months especially.

JONATHAN LASH: Very, very noticeable. We’ll suggest a couple of possible explanations. They certainly were immediately included afterwards. One part of the problem is that Europe wasn’t the problem. Europe had been clear for months that it was very eager for the strongest possible agreement. And the blockage was the disagreement between the U.S./China/India. And so those were the key parties who had to resolve the issue. I think a second problem that Europe faces is, you still don’t have a strong presidency. And so there wasn’t a single leader who could play that role. It was Gordon Brown and President Sarkozy and Chancellor Merkel. So there wasn’t a single focus for Europe to be represented. And I think that led to Europe not being as unified and forceful a participant as it might have been.

QUESTION: Can they come back in?

JONATHAN LASH: I think not only can they, but I think they have to come back in. And because they are still the most aggressive party, it’s very likely that in making all these decisions about, how does the process work and who owns the process, and how do you fill in the blanks, Europe is going to take a leadership role.

QUESTION: There’s a lot of proposals on the Hill right now to do just an energy bill or something short of a complete economy-wide cap and trade legislation. How successful will the administration have been do you think if something passes that isn’t economy-wide cap and trade? And would that be sufficient in your mind to transition to the next stage of the economy?

JONATHAN LASH: Okay, so I’m shifting to spin here, because you’re asking my opinion. Right? I think passing an energy only bill would be a failure. I just don’t think it sends the right signal to the economy. We haven’t answered the question about, how are we going to make the reductions necessary to achieve the goal set in the declaration that we signed.

There are so many alternative configurations of how you would work a cap and trade bill to satisfy some of the concerns that I don’t really want to answer that question because I’d be speculating. But it’s very clear that troika is going to search around for that formulation that could attract sixty votes. We just went through this on healthcare, right? They have to invent something that attracts the right number. And it’s likely that it has to attract five or six Republicans.

QUESTION: My question is, if you can, you put your spin hat on again, expectations for Blanche Lincoln, for example. She seems to be under a lot of pressure to vote against cap and trade obviously. She is behind in the polls. Is she going to follow Byron Dorgan’s lead and perhaps announce that she’s not going to run again, which frees her up to vote her conscience? And then two, what is your expectation for Ken Salazar? Will he remain as Secretary in the Interior? Or could he possibly quit and run for governor, as he seems to be under a lot of pressure there to do so?

JONATHAN LASH: You’re way out of my expertise. Let’s see… I hope that Senator Lincoln finds a bill that she thinks it is worth marking up in the ag committee, that provides sufficient benefits for that constituency, that she sees it as a big plus. I have absolutely no knowledge of what Secretary Salazar is likely to do. He’s got a great job.

QUESTION: I had a follow up to the question about the necessity for cap and trade. The question I had is that, is it critical for Congress to pass a cap and trade bill, not energy only, or some other cap and dividend bill, but cap and trade specifically in order to ease these international talks? And I’m specifically thinking of the carbon offset situation, where that’s a main way to funnel funds to developing countries. And without cap and trade, you know, it’s essentially checks to developing countries with nothing in return.

JONATHAN LASH: The most important signal is a signal that the U.S. is taking action to make the reductions that we’re committed to making. The declaration doesn’t specify the source of the funding. So I don't think it is absolutely essential for international purposes that it be a cap and trade bill that looks just like Waxman-Markey.

The problem that members of Congress encounter when they say they want to find a simpler approach is to find a simpler approach that meets the needs of the myriad set of interests who have concern about the legislation. Well, if you want to deal with coal in the Midwest, and you’re going to have a hundred percent auction, how exactly are you going to do that?

And if there’s deep concern about potentially trade and competition affected industries, how will you protect them legally? And if there’s an enormous concern about rising natural gas prices, how will you address that?

And it turns out, once you start trying to answer all those questions, you get sort of driven back toward cap and trade, because complicated and wart-covered as it is, it provides ways to deal with all those problems. I think that’s why it’s still alive.

QUESTION: Do you think your organization and others in support of an economy-wide cap and trade could see yourselves supporting something like a cap and dividend bill that envisions a bit of a smaller government role? I know that happened on the energy side with some environmental groups about nuclear energy and oil and gas drilling. Some of them are, like, “Well, we want to build paths. And we may have to concede a little bit.” Do you think that could happen with cap and trade?

JONATHAN LASH: I’m a member of U.S. CAP and we have a very specific position in favor of economy-wide cap and trade. We’ve done a lot of work to create a balanced compromise on dealing with some of those interests that I was just talking about. Ultimately what the country needs is a roadmap and a price on carbon. We need to know that we’re going to start on reductions and continue for decades. And we need to impose a restriction on carbon that raises the price of burning high carbon fuels.

So if that issue comes up at some point in the future, I mean, obviously there’s a legitimate consideration about finding a way to send those two signals if the bill you’re describing really did that. And, you know, I don't come to the nuclear question reluctantly. I think we need to put all low carbon options on the table. I think it’s a healthy thing that this legislation is driving a discussion that’s been stuck for 25 years, and that the nuclear industry ought to be in the position of competing on, level playing field with the high price for carbon.

QUESTION: It seems like a lot of the answers to our questions really depend on technology. I’m thinking of carbon sequestration, solar energy, clean cars. Aren’t we a long way away from that? And what kind of investment do we need?

JONATHAN LASH: Well, I guess my answer to the first half of your question is, no, I don't think we’re a long way away. I think the technologies exist. But the second half of your question is a key question — what kind of investment is needed to bring them to the point where they provide alternatives?

So there is some cost associated with an RPS position that rapidly accelerates the use of renewables. But we’ve seen what some of the European countries are able to do by making those investments. There are lots of models out there of much heavier use of renewables to supply electricity. China is going gangbusters building electric cars. It’s not that we can’t build electric cars. These technologies are there. We have to decide that we want to adopt the policies and pay the price to get them adopted rapidly.

So we’re about fifteen minutes past the promised time when we would wrap up. Thank you all for joining us. My colleagues and I will hang around here for the next half hour or so if anybody wants to talk further. Thanks a lot.

[applause]

END

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