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Getting Started: Toward a Low Carbon U.S. Economy

Jennifer Layke, deputy director of WRI’s Climate, Energy and Pollution Program, sets an agenda for Congress, and answers concerns about potential effects on the economy.


Q: In this tough economic climate, is the timing right to introduce a price on carbon?
This is precisely the right time, because of the opportunities it will create---new jobs in clean energy industries, a stronger economic recovery, and U.S. leadership in the global marketplace for low carbon technologies. Public sector investments in economic recovery must also be used to leverage private investments in order to create sustainable, long term growth as the U.S. transitions to a low carbon economy. Making investments today using economic recovery policies will make the introduction of a cap-and-trade program around 2012 both cheaper and more effective.

Q: The U.S. is the world's largest producer of CO2, the main greenhouse gas. What policies are needed to reduce U.S. emissions?
Three things must be put in motion by Congress and the incoming administration. First, the U.S. begins to craft a long term energy strategy that will decarbonize our infrastructure, electricity sector and transportation systems. Second, we must put a price on carbon and enact a federal cap and trade program. Such programs are being successfully designed and piloted by the states, and can provide both a guaranteed environmental (i.e. emissions reduction) outcome and flexibility for regulated companies in deploying low carbon technologies. Third, the U.S. must help the world reach a global climate change agreement that will allow our businesses to compete in new global markets that solve the world’s energy and climate challenges.

Q: How soon must Congress act?
The stimulus package provides the starting point for immediate action, including policies to promote energy efficiency in buildings, modernize the nation’s electric grid, stimulate low carbon sources of electricity and encourage cleaner transportation systems. From a climate standpoint, there are three other key legislative priorities for the coming year---the reauthorization of the Transportation Bill, the passage of a clean electricity standard, and the introduction of a greenhouse gas cap and trade bill. All three must be closely aligned in content and direction to reduce U.S. greenhouse gas emissions while promoting our economic recovery.

Q: Is business ready and able to move in this direction?
WRI has been working with big business on climate change agendas since 1997, during which time their capacity to deal with this issue has rapidly scaled. Companies that ten years ago were only beginning to measure their emissions are now implementing voluntary GHG reduction targets and building business plans to compete in a low carbon economy. However, the market that business is waiting for will not emerge without federal policies that create a new, level playing field. The U.S. Climate Action Partnership of over 30 major companies and  environmental groups---of which WRI is a founding member---was formed to provide policymakers with corporate support and input as they craft an economically efficient and environmentally sound cap-and-trade program (see below). Business and environmental groups want action and leadership from Congress on this issue, and they want it now.

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With technical and policy advice from WRI, three mandatory regional carbon trading markets are being established to limit states' greenhouse gas emissions, spur energy innovation and create green jobs. Twenty-three U.S. states are taking part, covering over half the U.S. population. Seven more states are formal observers. In September 2008, the Northeast and Mid-Atlantic Regional Greenhouse Gas Initiative (RGGI) began formal carbon trading. The Western Climate Initiative and the Midwestern Greenhouse Gas Reduction Accord are in development and will be operational by 2012.

Business and Environmentalists Agree On Climate Blueprint

January 15, 2009 saw the launch of a new set of recommendations from the US Climate Action Partnership (USCAP) a coalition of 26 major corporations and five leading non-profit environmental organizations. WRI, as a co-founder of USCAP, called for rapid enactment of U.S. climate legislation and for U.S. leadership in the international United Nations climate negotiations.

USCAP's Blueprint for Legislative Action provides decision makers in the Administration and Congress with an integrated framework for legislation that can achieve an environmentally-effective, economically-sustainable and fair climate protection program.

Cap-and-Trade Centerpiece

USCAP believes this legislation should establish a mandatory, national economy-wide climate protection program that includes strong emission reduction targets. 

USCAP advocates for a federal cap-and-trade program, coupled with cost containment measures and complementary policies. These policies include measures that would promote a federal technology research development and deployment program; create a CO2 emissions standard for new coal-based power, and require Congress to fund initial deployment of carbon capture and storage technology and to clarify CCS regulatory requirements.  Other complementary policies would support transforming the transportation sector and promoting building and energy efficiency. USCAP’s International Principles are designed to help Congress and the Administration reengage the international community’s efforts to address global climate change.

For more on USCAP’s blueprint and membership, see www.us-cap.org/blueprint.

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