Topic: trade

Sustainable Procurement of Wood and Paper-Based Products: Version 3

Sarah Parsons — Sun, 09 Dec 2012 21:03:53 -0500

Find out more at http://www.SustainableForestProducts.org.

Version 3 of this guide incorporates the most up-to-date developments on the legality of forest products, new technological developments to control wood and paper supply chains and increase their transparency, and an expanded chapter on the social implications of forest products.

Decisions regarding the purchase and use of wood and paper-based products can have far-reaching, long-term impacts on the forests where they are harvested and the people and industries that depend on those forests for their livelihoods and raw materials.

This joint WRI/WBCSD publication provides information about 10 key issues procurement managers might address as they develop and implement their procurement policies:

Origin: Where do the products come from?
Information accuracy: Is information about the products credible?
Legality: Have the products been legally produced?
Sustainability: Have forests been sustainably managed?
Special forests: Have special forests been protected?
Climate change: Have climate issues been addressed?
Environmental protection: Have appropriate environmental controls been applied?
Recycled fiber: Has recycled fiber been used appropriately?
Other resources: Have other resources been used appropriately?
Local communities and indigenous peoples: Have the needs of local communities or indigenous peoples been addressed?

The guide also characterizes a selection of helpful tools and explains the maze of terminology around sustainable forest products.

Technology Transfer

Kevin Lustig — Mon, 13 Jun 2011 16:02:40 -0400

Technology transfer refers to the manner in which technologies that reduce greenhouse gas emissions and aid climate adaptation efforts are developed and shared across borders. Developing countries will need more than financial investment to address climate change; they will need new technology for reducing emissions, such as wind and solar power, and adaptation. Technology transfer also requires collaboration and the sharing of knowledge and skills to ensure that emerging economies have the capacity to follow best practices and use the technology to greatest effect.

Technology transfer is key to reaching a global agreement on efforts to fight climate change because it will facilitate emissions reductions and adapting to a changing climate. WRI works with decision makers in both developed and developing countries to ensure that the benefits of innovative clean technology are available around the globe.

Low-Carbon Development in Emerging Economies

Kevin Lustig — Mon, 13 Jun 2011 15:25:58 -0400

Today’s major emerging economies — countries such as Brazil, China, India, Indonesia, and South Africa — face the challenge of increasing economic development while also overcoming serious barriers to energy access and reducing greenhouse gas (GHG) emissions. These countries recognize the need for a shift to low-carbon climate-resilient development, but seek solutions that do not compromise growth.

It is possible to meet this challenge while addressing climate change. WRI’s vision is that these countries make a clear link between low-carbon growth and long-term prosperity, and support policies and incentives that advance national development priorities while significantly reducing GHGs. If successful, these countries would redefine the conventional growth paradigm, and offer innovative solutions that set the world firmly on a low-carbon and climate-resilient path.

Use the links below to explore WRI’s work on emerging economies:

WRI’s work by country:

(Click on a highlighted country for publications and other resources)

U.S.-China Climate and Energy: Cooperation or Competition?

Michael Oko — Wed, 29 Sep 2010 15:09:48 -0400

Leading US-China Experts Discuss Tianjin and US-China Climate and Energy Issues.

The international climate meetings in Tianjin on October 4-9 will be a key moment for US-China relations on climate and energy. Today ChinaFAQs experts held a press call to discuss how the countries are cooperating on climate and energy issues, and the risks and benefits involved.

“The first thing to note is the political significance of China hosting an important UN climate change negotiating session. It shows the importance China puts on the issue of climate change, but also its commitment to the United Nations,” said Jennifer Morgan, Director of WRI’s Climate and Energy Program.

A recording of the entire call is available below.

Download (MP3, 34.8 Mb)

Download the Recording (MP3, 34.8 Mb)
Read about the conversation in TIME’s Ecocentric Blog.

The call featured:

Jennifer Morgan, Director, Climate and Energy Program, World Resources Institute
Kenneth Lieberthal, Director, John L. Thornton China Center, and Senior Fellow, Foreign Policy, Global Economy and Development, Brookings Institute
Deborah Seligsohn, Principal Advisor, China Climate and Energy Program, World Resources Institute (Beijing)
Joanna Lewis, Assistant Professor of Science, Technology and International Affairs (STIA), Georgetown University

ChinaFAQs, a project convened by WRI, provides insight into critical questions about Chinese policy and action on energy and climate change. ChinaFAQs is a portal to policy-relevant data and analysis informed by a network of leading U.S. research institutions, business groups, and civil society.

Green Jobs and Competitive Industry: The Net Benefits of Climate Legislation

James Bradbury — Fri, 11 Jun 2010 00:00:00 -0400

The United States is falling behind in the clean energy revolution. A comprehensive climate and energy bill can get us back on track.

Policymakers have many questions relating to the economic opportunities and costs of climate legislation like the American Power Act, proposed last month by Senators Kerry and Lieberman. What are the concrete economic benefits of a climate bill? Where would new “green” jobs be created? What would the bill mean for the competitiveness of U.S industry? How can domestic legislation contain “emissions leakage,” which could occur if industries relocate to countries with weaker greenhouse gas regulations and as a result, simply shift global emissions instead of reducing them?

Three years ago, WRI and the Peterson Institute for International Economics (PIIE) formed a research partnership to help answer these questions. To continue the discussion, they convened a roundtable of key players – including congressional staffers, administration officials, and representatives of industry, organized labor, think tanks and NGOs – on May 7th.

The takeaways from this event were clear: the United States is falling behind in the clean energy revolution. Workshop participants agreed that the country needs a price on greenhouse gas emissions and that a bill must combine environmental protection with support for vulnerable industries. Without comprehensive climate policy, the country stands to lose green jobs and long-term competitive advantages that would come from increased energy efficiency and a strong domestic market for clean energy technologies. The piece below reflects the discussion at the workshop, much of which centered on what a transition to a low carbon economy would look like.

The Path to Clean Energy, Good Jobs, Economic Growth

Any analysis of the economic impacts of climate and energy legislation must consider the opportunities for job and competitiveness gains for the economy overall. Under a climate bill, job growth would occur primarily in the energy efficiency and renewable energy sectors, but there are additional benefits that would touch almost all Americans. Analysis (PDF) by the American Council for an Energy-Efficient Economy of the House-passed Waxman-Markey bill found cost savings from economy-wide energy efficiency would lead to an average net energy spending reduction of $354 per household and an increase of nearly 425,000 jobs by 2030.

Renewable energy technologies also have the potential to create good jobs in the U.S., but American industry currently lacks the incentives to invest in these areas. Recent WRI and Peterson Institute working papers found that both the wind and solar industries have grown in recent years in countries where there is predictable, long-term policy support. A Center for American Progress report (PDF, 666 Kb) also found that China, Germany and Spain have been able to take the lead in clean energy through a comprehensive policy approach.

While government support is a main driver of renewable energy deployment, “Buy American” provisions for clean energy projects are not always beneficial for domestic job growth. For example, leading wind industry executives have pointed out that requiring all locally manufactured components could lead to slower growth of local clean technology industries and fewer US jobs.

According to recent research by WRI and PIIE, even without local content requirements, the majority of jobs in these industries are created locally and not easily moved overseas. This phenomenon is most prevalent in the wind industry because its infrastructure is difficult to transport, encouraging the creation of regional production hubs. For example, state policies that require electric utilities to develop renewable electricity sources have attracted international turbine manufacturers and other suppliers to locate facilities in Colorado and Pennsylvania to serve the growing U.S. wind market. And while the solar industry has a more globalized value chain, most jobs along this chain are in system design, planning, installation and operations – activities that inherently happen close to the installation site.

The Waxman-Markey bill and pending Senate legislation include several provisions based on what states like Colorado and Pennsylvania have done to attract investment in the clean energy sector. American job growth in this area depends on a thriving clean technology industry. Climate legislation can achieve this by creating local market demand through setting national standards for new buildings and appliances, providing financing for R&D and strengthening the infrastructure necessary for a clean energy revolution. Most importantly, a cap-and-trade system for domestic emissions like that in Waxman-Markey and Kerry-Lieberman will put in place a long-term price signal on the cost of carbon pollution. This will give U.S. industry the incentive to heavily invest in clean energy, realize economies of scale and efficiency gains, and create thousands of new “green” jobs.

Easing the Transition to a Low Carbon Economy

The first step towards addressing concerns about the competitiveness of energy-intensive industries and the risk of emissions leakage question is understanding the scale of the problem. In 2008 WRI and PIIE published Leveling the Carbon Playing Field, a report that assessed which sectors of the economy would be at a significant international competitive disadvantage under a cap-and-trade system and how that could lead to declining market share, industry relocation and leakage. The report demonstrated that negative impacts are limited to a discrete set of energy intensive industries that are also heavily traded internationally (like producers of steel, glass, basic chemicals, pulp and paper), known as emissions-intensive, trade-exposed (EITE) industries. These industries account for 3 percent of the country’s economic output and less than 2 percent of nationwide employment.

Because competitiveness and leakage concerns are limited to a small, specific set of sectors, targeted measures to ease the burden on these sectors can effectively address the problem. For example, these vulnerable EITE sectors could receive a rebate in the form of free emission allowances to offset the cost increase. This strategy to reduce the threat of leakage was included in the Waxman-Markey legislation that the House passed in June, 2009 and garnered support from several industrial manufacturers, organized labor and environmental NGOs. The Kerry-Lieberman proposal and the European Union’s cap-and-trade system take the same approach.

The U.S. Interagency Report (PDF), released by the Obama Administration in December 2009, found that the House rebate provisions would effectively encourage industry to become more efficient while ensuring that eligible EITE industrial sectors would face no significant risk of emissions leakage. Furthermore, allowance provisions would likely be sufficient to eliminate leakage risks for at least the first 10 years of the program, and potentially well past 2030. Kerry-Lieberman sets aside even more allowances to provide rebates for the same purpose.

Trade Measures to Maintain Competitiveness and Reduce Leakage?

Another method of addressing leakage, proposed in both Waxman-Markey and Kerry-Lieberman, is to levy a duty at the border on EITE imports from countries that lack comparable emissions reductions requirements. Though it has been divisive among policymakers and industry, labor union representatives have championed a border tax (PDF, 64 Kb) as necessary to protect against the loss of domestic jobs. As a result, such measures are seen by those involved in crafting U.S. climate legislation as part of the price of passage, though not necessarily as the optimal solution.

A multilateral, harmonized solution to competitiveness and leakage would be preferable to unilaterally imposed trade measures. Ideally, negotiations would lead to an international agreement on specified levels of emissions reductions for each country and provisions to explicitly minimize leakage. In the lead-up to last year’s climate conference in Copenhagen, all major economies announced significant commitments to reduce emissions. This illustrates that attention has shifted toward national governments developing their own climate action plans, making analysis sector by sector and country by country necessary until an international agreement is struck.

Pending federal legislation includes border measures as a fall-back option after 2020, in case no multilateral agreements are in place as transitional allowance rebates phase down. Still, policymakers face the difficult challenge of designing policy that effectively prevents emissions leakage and protects US jobs without being overtly protectionist, and targets certain countries without being discriminatory. Ultimately, many observers (PDF) caution against border taxes – because they are perceived as unfair by developing countries, have created conflict in the ongoing international climate talks and are also potentially illegal under WTO rules.

What Next?

While supporters of a climate and energy bill argue that it would create American jobs and benefit the overall economy, detractors cite competitiveness and leakage concerns as a reason not to implement domestic legislation. In fact, government and independent studies indicate that well-crafted, targeted policy can address both the potential risks and gains from legislation. Both Waxman-Markey and Kerry-Lieberman contain provisions to mitigate the negative impacts to a discrete set of actors while fostering job creation, efficiency gains and long-term certainty. The sooner Congress passes comprehensive climate policy, the sooner U.S. industry and government can begin building the road to a cleaner environment and stronger economy.

Funding for the workshop and the WRI/Peterson Institute research partnership was generously provided by the Doris Duke Charitable Foundation.

Toward a Sunny Future? Global Integration in the Solar PV Industry

Maggie Barron — Fri, 21 May 2010 09:37:58 -0400

Abstract

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential.

In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following:

Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process.
Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance.
Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducing non-tariff barriers and harmonizing industry standards—would create a positive policy environment for further global integration.

About the Authors

Jacob Funk Kirkegaard is a research fellow at the Peterson Institute for International Economics. Thilo Hanemann is research director at the Rhodium Group. Lutz Weischer is a research analyst with the World Resources Institute’s Climate and Energy Program. Matt Miller is a consultant in the solar industry with manufacturing and development experience.

It Should Be A Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

Maggie Barron — Tue, 08 Dec 2009 12:27:14 -0500

The political debate concerning climate change and global trade and investment flows has increasingly taken on a defensive posture in the United States and other developed countries. The spotlight has been on the competitiveness of energy-intensive industries and potential border adjustment mechanisms to prevent carbon leakage, as well as on the need to grow and protect industries that will gain from a low-carbon future and create millions of new “green jobs” at home.

This paper analyzes the global wind power industry in light of the latter debate and shows that global integration—broadly defined as increasing cross-border trade and investment flows —can make a strong positive contribution in the form of green technology cost reductions and innovation while still creating predominantly local jobs. As such, national trade and investment policies that promote increased global integration of the wind industry are a powerful ally in the fight against climate change.

Our analysis starts with a brief summary of current and future global demand for wind turbines and the role of government support in this demand picture. Next, we show how the wind energy sector is developing into a truly global industry characterized by high levels of growth and competition and how this process is increasingly driven by cross-border investment rather than trade. Then we map out the globalization potential of different components in the value chain and analyze existing barriers to further global integration. Finally, we discuss the distributional consequences of greater globalization and especially the outlook for green job creation along the wind value chain, before we conclude with a set of policy recommendations.

Our principal findings are:

Local demand creation draws in local production. Demand for wind energy through long-term government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind more competitive and increase the overall demand for turbines and equipment.
Cross-border investment rather than trade is the dominant mode of global integration. Standard international trade in wind energy equipment is relatively small and declining. Instead, foreign direct investment (FDI) flows dominate the global integration of the wind sector, and the cost structure of the wind industry favors the emergence of regional production hubs in markets of sufficient size.
Abolishing trade tariffs will have limited effects on the wind industry. Principal barriers to global integration are not at-the-border tariffs but rather several nontariff trade barriers and formal and informal barriers that distort firms’ investment decisions.
Intellectual property rights (IPRs) are currently not restricting firms’ access to wind power equipment markets. Intellectual property plays only a very limited role in the cost structures of the wind industry, and technology is widely available for licensing. IPRs therefore cannot be considered a major impediment for market participation for firms from both developed and developing countries.
A highly globalized wind industry will create jobs locally. Wind energy is a generally more labor-intensive source of electricity supply compared with fossil fuel generation. Due to its specific characteristics, a globalized wind industry will still create lasting and highly localized employment opportunities.

Trade Measures and Climate Change: Searching for Common Ground on an Uneven Playing Field

Tim Herzog — Tue, 08 Dec 2009 09:41:51 -0500

As the United States and other developed countries have enacted or are in the process of developing legislation to cap greenhouse gas emissions post-2012, their policymakers are under increasing pressure from domestic constituencies to include trade measures as part of climate policy. This Working Paper analyzes relevant measures in emerging U.S. domestic climate policies, describes the objectives of these measures, assesses how they might be imposed, and discusses their implications for both a future climate agreement and the international trading system. It also touches on proposals to use trade measures in the European Union and other developed countries.

We find that:

Proposed trade measures are driven by multiple objectives. Trade measures have been included in draft climate legislation in the U.S. and have been considered by the EU in an effort to achieve several policy objectives: to protect domestic industry from potential competitive disadvantages that might arise from unequal carbon prices (“competitiveness”); to provide temporary assistance to energy intensive, trade exposed industries in transition towards a low-carbon economy (“transition assistance”); to prevent greenhouse gas intensive production from moving to countries with less stringent limits on carbon emissions, undermining the environmental effectiveness of domestic climate policy (“leakage”); and to create incentives for other countries to adopt climate policies and join a future climate agreement (“free-riding”).
Protecting domestic industry is not a legitimate use of a trade measure. The United Nations Framework Convention on Climate Change (UNFCCC) and World Trade Organization (WTO) agreements share a set of common principles that discourage the use of unilateral trade measures that are arbitrary, unjustifiable, or disguised restrictions on trade. Neither the UNFCCC nor the WTO authorizes the use of trade measures for the specific purpose of protecting domestic industry from competition.
Properly designed trade measures are not prohibited under the WTO or the UNFCCC. It may be possible to design trade measures that are sufficiently targeted and equitably applied to prevent emissions leakage to contribute to the UNFCCC’s objective without violating WTO rules. While the UNFCCC Conference of the Parties (COP) has not formally considered whether using trade measures to prevent emissions leakage or to penalize non-Parties would be consistent with the UNFCCC, some developing country Parties are calling on the COP to prohibit the use of unilateral trade measures (by developed country parties) to promote climate change objectives.
Draft U.S. climate policy includes the use of trade measures. The most procedurally advanced proposal for U.S. climate change legislation, the American Clean Energy and Security Act (ACESA), was passed by the U.S. House of Representatives in June 2009. ACESA is intended, in part, to help “reach an internationally binding agreement in which all major greenhouse gas-emitting countries contribute equitably to the reduction of global greenhouse gas emissions.”3 Yet, ACESA would, in certain circumstances, authorize the U.S. government to use trade measures against products from another Party to a post-2012 international climate agreement, even if that Party was in full compliance with its commitments under that agreement, if the U.S. determines that the Party’s commitment in that agreement was not “at least as stringent as” that of the U.S.4 In other words, ACESA would permit the U.S. to make its own determination of whether another country’s efforts to reduce its emissions were “equitable” as compared to U.S. efforts. This determination could override burden sharing as agreed internationally and principles key to UNFCCC, including the principle of common but differentiated responsibilities and respective capabilities of developed and developing countries.
A number of developing countries have come forward with significant actions that may entail costs for their domestic industries. In recent months, a number of developing countries have announced significant new climate policies that would contribute to a global deal and a global response to climate change. As indicated, they have also proposed that the UNFCCC parties agree to prohibit developed country parties from using unilateral trade measures to advance climate policy. It is not clear whether these developing countries contemplate the use of such trade measures themselves.
The risk of a WTO dispute arising over climate related trade measures is high, but could be lowered or guided by UNFCCC decisions or processes. If climate-related trade measures were implemented, by either a developed or a developing country, a trade dispute could arise and a WTO dispute settlement panel could be asked to choose between a result that required a country to dismantle a central part of its climate legislation, and a result that allowed the trade measure to stand but that redefined UNFCCC standards for fair and effective climate policy.

Since it is unlikely that the U.S. or the EU would agree to an outright prohibition on the use of trade measures, or that China or India would agree to rules that explicitly authorized such measures, the UNFCCC COP should articulate a set of principles and procedures to limit the use of any trade measures to avoid, or help resolve, any disputes that might arise under the WTO or elsewhere.

Green and Mean: Can the U.S. Economy Be Both Climate Friendly and Competitive?

Tim Herzog — Tue, 10 Mar 2009 16:21:31 -0400

TESTIMONY OF MR. ROB BRADLEY DIRECTOR, INTERNATIONAL CLIMATE POLICY INITIATIVE WORLD RESOURCES INSTITUTE

HEARING BEFORE THE COMMISSION ON SECURITY AND COOPERATION IN EUROPE: “GREEN AND MEAN: CAN THE U.S. ECONOMY BE BOTH CLIMATE FRIENDLY AND COMPETITIVE?”

Thank you for the opportunity to contribute to the deliberations of this Commission. My name is Rob Bradley, and I am Director of the International Climate Policy Initiative at the World Resources Institute. The World Resources Institute is a non-profit, non-partisan environmental think tank that goes beyond research to provide practical solutions to the world’s most urgent environment and development challenges. We work in partnership with scientists, businesses, governments, and non-governmental organizations in more than fifty countries to provide information, tools and analysis to address problems like climate change, the degradation of ecosystems and their capacity to provide for human well-being.

I am very pleased to be here to speak to what I consider the most pressing environmental issues faced by the world – and to what I consider a major opportunity for the United States to assume a role of international leadership. In this testimony, I would like to make three points, each of which I will expand on below:

First, that the time is very ripe for the U.S. to reengage internationally on the issue of climate change and take up a leadership role. Further, that the engagement between the U.S. and major developing countries will be a critical factor for success.

Second, that the world has changed dramatically from the days of the Kyoto Protocol. Major developing countries are ready to take significant action on limiting emissions and the Bali Action Plan provides a solid foundation for a new international climate agreement that meets key U.S. interests.

Third, that the role of the green economy and of economic opportunities will play an important role in shaping international engagement.

There is no time to lose

Let me begin by commenting on the urgency of the challenge. The science is compelling. Engaging major developing countries is critical to success. Finally, conditions are right for a major re-engagement by the US.

The science is compelling

The Earth is warming, primarily due to human activities. The cheap, plentiful fossil fuels that have enabled huge increases in human productivity and great improvements in human well being over the past 200 years together with significant deforestation have been the most important causes of global warming. The buildup of carbon dioxide and other greenhouse gases (GHGs) is accelerating, and unless we act very soon to control emissions during our children’s lifetimes warming will rise to very dangerous levels.

In February 2007, the Intergovernmental Panel on Climate Change (IPCC - the official science process sanctioned by the world’s governments and participated in by the United States) released its latest report on climate change science. The report states that it is “unequivocal” that Earth’s climate is warming, and confirms that the current atmospheric concentration of carbon dioxide and methane, two important greenhouse gases (GHGs), “exceeds by far the natural range over the last 650,000 years.” Further, the IPCC concludes that it is now “very likely” (greater than 90% probability) that greenhouse gas emissions from human activities have caused “most of the observed increase in globally averaged temperatures since the mid-20th century.”

In the two years since this alarming conclusion, further compelling evidence of the impacts of warming have been seen. Indeed, the impacts of warming have become increasingly evident to non-scientific observers. Sea ice in the Arctic is shrinking, and Greenland’s massive ice sheet is melting – far faster than predicted. Glaciers are rapidly shrinking from the Rockies to the Alps. WRI annually reviews the latest in climate science. This review confirms that our climate system is changing. Jonathan Lash, WRI’s president, provided several examples in his January 15, 2009 written testimony before the U.S. House of Representatives Committee on Energy and Commerce Committee. These include:

According to the National Snow and Ice Data Center (NSIDC), levels of Arctic sea ice from June through September 2007 were at a record low of 4.13 million km2. In 2008, while there was some modest recovery, the world still saw the second lowest recorded ice extent since record-keeping began in 1979. Still more worrisome, the extensive losses during the past two summers have led scientists to speculate that the Arctic Ocean may be ice-free in the summertime much sooner than anticipated. Furthermore, in October 2008, scientists reported that the thickness of winter sea ice plummeted after the 2007 minimum, showing that the ice pack is not only shrinking but is decreasing in overall volume.

The British Columbia Ministry of Forests and Range, in their 2007 report on the mountain pine beetle outbreak, shows that in 2007, the impacted area had increased to 13 million hectares (from 4.2 million hectares in 2003). Mountain pine beetles prefer mature lodgepole pines and while they typically die off with cold snaps, warmer temperatures in the region have allowed them to persist. They cut off the nutrient and water supply of the trees by burrowing in trees’ bark. The Ministry finds that 40% of merchantable pine volume – 12% of total merchantable volume on the timber harvesting land base in British Columbia – has been impacted from 1999 to 2006. They project that if the pine beetle outbreak continues at the same pace, it will kill off 78% of the pine volume – 23% of total merchantable volume on the province’s timber harvesting land base – by 2015.

These and countless other observations make it clear that much of what we thought we knew a few years ago about the pace of climate change has been superseded. All of the trends are proceeding more quickly than we anticipated. Rising temperatures and the consequent impacts are all taking place faster than the models predicted. While of course we cannot yet know with complete certainty what will occur 20 (much less 50) years from now, according to our best current work, everything is trending to the high end. And the consequences we are observing today are the product of a mere 0.8 degrees centigrade of warming. Even very aggressive action will only barely forestall two degrees centigrade of warming. The science is telling us we have to act with extraordinary urgency – and that our action must be more than the modest marginal efforts made to date – it must fundamentally change the course of our energy infrastructure, it must address land use and forestry, and it must build a regime that can have global effect, not merely address U.S. emissions.

The importance of developing countries

The importance of such a global effort is illustrated by Figure 1. China is of particular importance in terms of emissions, having superseded the United States as the world’s largest emitter (though it remains at barely a quarter of US emissions per person). Almost 80% of current global emissions are produced by fifteen countries (counting the European Union as a single country). Of these, nine are developing economies and two (Russia and Ukraine) are postcommunist countries still wrestling with economic transition. Without a viable means of engaging these countries in the effort to cut emissions we cannot avoid catastrophic climate change.

The UNFCCC action on climate change to date

The need for global action has been recognized for at least two decades, and was the basis for the 1992 United Nations Framework Convention on Climate Change (UNFCCC), to which the U.S. is a Party. The UNFCCC commits all countries to the fight against climate change on the basis of “common but differentiated responsibilities.” This puts the responsibility on the richest and most polluting countries to lead, and to provide support to the less capable, but for all to participate.

While the UNFCCC commands wide support as an articulation of the climate challenge and a global response, it did not set specific goals for individual countries to deliver emission cuts. For that reason the Kyoto Protocol was agreed in 1997, including binding emissions targets for industrialized and post-communist countries.

The Kyoto Protocol has had a significant impact, in particular in moving the European Union to adopt climate policies, including a cap-and-trade system. It has generated an international market for carbon offsets, and has given a major signal to business in many countries that a world of constrained emissions is coming.

However, Congress raised several concerns with the Kyoto Protocol structure, and the treaty was not ratified by the United States. The concerns included:

Concerns about economic impacts. At the time targets were set, few countries had a clear understanding of what meeting those targets would mean in economic terms. Congress feared that Kyoto would cause undue damage to the U.S. economy.
Lack of developing country commitments. Congress similarly insisted that major developing countries such as China and India should have commitments to limit emissions.

These objections were most famously expressed in the Byrd-Hagel resolution of 1997. Although this Resolution was adopted before the Kyoto Protocol was agreed, there has been a wide perception that the Protocol did not meet Byrd-Hagel’s provisions. The Protocol was never submitted to the Senate for ratification. In fact, diplomatic leadership by the Clinton Administration may have overreached Congressional support for legislative action domestically.

A new opportunity

The Kyoto Protocol sets targets until 2012. The United Nations, including the U.S., have agreed to a timetable (the so-called “Bali Action Plan”) for negotiating the post-2012 climate arrangements, with the deadline of a meeting to be held in Copenhagen, Denmark, in December 2009. This Fifteenth Conference of the Parties to the UNFCCC (COP15) aims to bring together the countries within and outside the Kyoto Protocol in a more inclusive agreement, although it is not yet clear exactly what form that agreement will take.

What is clear, however, is that the negotiating mandate provided by the Bali Action Plan provides for a radically different agreement from the Kyoto Protocol. In particular, it provides for mitigation actions from both developed and developing countries. This is a major departure from earlier models of climate action internationally, and it reflects real changes in the world outside the negotiations. In the next section I will discuss those changes and what they mean for an international climate agreement.

The transformation in developing country action

For many years, developing countries have been clear in their view that they expect a lead from rich countries before they take action on emissions. There are sound reasons for this stance. They are far poorer than developed countries; they have played a far smaller role in creating the climate problem; and their emissions per person remain in the main much lower than those of developed countries (see Figure 3). 1.4 billion people in the development world live on less than $1.25 a day. Some 2.5 billion people rely on fuelwood, charcoal and animal dung to cook. This is over 80 percent of the population of Sub-Saharan Africa and over half of the populations of India and China.

However, in the last 2-3 years there has been a flood of developing country plans for addressing climate change. Most major developing countries have now brought forward climate plans. I want to highlight some interesting examples:

Brazil announced it would reduce its deforestation rate over 50 percent from recent levels by 2017, avoiding an estimated 4.8 billion tons of CO2 emissions. Deforestation accounts for about two thirds of Brazilian GHG emissions.

China set a target of reducing national energy intensity (energy use per unit GDP) by 20% in the five years to 2010. It has already reduced in each of the past three years: by 1.6% in 2006, 3.7% in 2007, and 4.3% in 2008. Thus China looks likely to be approximately on target to meet its goal. Together, the industrial and building efficiency programs supporting this goal are expected to yield 550 million metric tons CO2 in GHG savings. Addition savings are expected from measures in the transport sector. China also has ambitious non-fossil plans, including wind, hydro, nuclear and biomass, all of which are expected to save 640 million metric tons CO2 by 2010.

Mexico pledged to halve its greenhouse gas emissions by 2050, employing a “cap-and-trade” policy like the one recently considered by the U.S. Congress.

South Africa has presented a detailed plan to peak its national emissions by 2020.

Motivations

Why are developing countries taking these actions? As in the United States, there are a number of drivers that interact.

First, they are increasingly aware of the risks that climate change presents to their development. China’s National Climate Change Programme goes into considerable detail on the risks to its coasts, fresh water supply, agricultural output and other critical concerns. There can be little doubt that even in the midst of pressing development concerns climate change is viewed as an important challenge. However, it is important to recognize the limits of this thinking. Although, to differing degrees, these countries are taking action, they all still look to the United States to lead, given its wealth and historical emissions.

Second, climate concerns align in many instances with broader worries about energy. With the greater energy intensity of their economies, high energy prices have been even more onerous of developing economies than on the U.S. energy security, costs, and pollution are top-level political concerns. Just as here, policy makers are looking for ways to intelligently tackle all these issues.

Third, many countries see opportunity in the new energy technology landscape that is emerging. Countries such as China and India do not see their future in old technologies and businesses. They are keen to position themselves as leaders in the clean energy revolution. Indian wind energy companies, Chinese solar manufacturers, and Brazilian biofuels companies are all among the world’s leaders.

It is important to keep these motivations in mind. Any international agreement depends on the signatories choosing to carry out the provisions of the agreement. An alignment of national and international interests provides at least some prospect of genuine participation, and the Bali Action Plan provides a new way to take advantage of this growing alignment. There is a broad interest in seeing the climate agreement succeed, suggesting that countries will take their international commitments seriously.

However, significant questions do remain. Many of these countries have a very mixed record of implementing the goals in their national plans. Reliable data are hard to obtain even on such broad indicators as energy use or economic growth. There are important initiatives in all these countries to implement GHG monitoring, but today very large uncertainties remain in a lot of the emissions data. Furthermore, standards of enforcement, governance and transparency are very variable. It will certainly not be enough for countries to take each others’ plans at face value.

How the Bali Action Plan includes developing country action

This is where the international negotiations are important. Creating robust reporting and verification structures can help build trust among countries that bold commitments are really being turned into action. The opportunity provided by the Bali Action Plan (BAP) structure is to align international commitments with national development goals and to create reporting programs that also align with the countries’ own abilities to collect and disseminate information. The BAP calls for

“enhanced national/international action on mitigation of climate change, including consideration of:

(i) “Measurable, reportable and verifiable nationally appropriate mitigation commitments or actions, including quantified emission limitation and reduction objectives, by all developed country Parties, while ensuring the comparability of efforts among them, taking into account differences in their national circumstances; (ii) “Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner.”

The phrase “measurable, reportable, and verifiable” (MRV) was critical to the agreement of the BAP, and how MRV is reflected in the post-2012 agreement will have significant implications for the effectiveness of that agreement for stakeholders in both developing as well as developed countries.

OCSE members – a particular challenge

The former communist members of the OCSE have received considerably less attention in the formation of international climate policy than major emerging economies such as China and India. Some have joined the European Union, and are part of the coordinated approach that the E.U. is taking to climate policy. Others, most notably Russia, have taken their own negotiating stances.

Engaging Russia in particular has been a challenging undertaking in the international negotiations. The Kyoto Protocol set a target for Russia that allocated far more emission rights than it was expected to need, and allowing the sale of these rights to industrialized countries through international emission trading. This amounted therefore to a financial inducement to Russia to join the Protocol, with the idea that once inside it would accept more binding emission limits in future. In practice, neither the finance nor the willingness to take more binding targets has emerged. At a time of tensions over Georgia, gas supplies and other issues, European countries have little appetite for financial transfers to Russia under the Protocol. And Russian policy makers have shown no interest in more substantive action on cutting emissions.

Unlike countries such as China and India, Russia has both a cold climate and a vast fossil fuel export industry. It is not clear that climate change is widely seen as an important challenge for Russia. Accordingly, Russia will be a tough negotiating partner in shaping a future climate agreement.

This is a particularly stark example of a general point: that the economic as well as the environmental case for climate action will need to be made.

The case for a positive trade agenda

To date, debates about climate and trade have tended to focus on potential conflicts, particularly on policy responses to leakage concerns. However, there are significant opportunities to harness complementarities between the climate and trade. A successful approach to the climate challenge will mean deploying new technologies at a global scale at an unprecedented rate, and it is unlikely that this can be achieved without harnessing global trade and capital flows.

However, harnessing this positive link will demand solutions that work for all countries. Future deals to limit greenhouse gas emissions, through the UNFCCC negotiations, and to open markets, under the Doha Round, will depend upon complex reciprocal bargains, the outcomes of which will have to be widely perceived as both fair and effective. This raises important questions. Could the removal of trade barriers affecting the flow of environmental goods and services significantly reduce the economic cost of emissions abatement, not just in the United States, but world-wide? Could prospects of growing “green collar” jobs resulting from climate, energy and fiscal policy ease the acceptance of stricter targets? What broader benefits accrue by more rapid uptake and dissemination of clean energy technology? Finally, where do these benefits from mitigation activity occur? Given that these will often be on different actors than those paying the cost of mitigation, how should distributional effects be handled? Carefully considered responses to these questions will maximize the potential synergies between the climate and trade arenas.

Stimulus – Demonstrating leadership through green growth

The U.S. response to the recent financial crisis exemplifies America’s opportunity to demonstrate economic growth through environmental investment. In the U.S.,both Congressional leaders and President Obama have directed government spending in a way that not only generates near term economic activity and employment but also addresses long-term policy goals. Energy and environmental objectives like reducing carbon-dioxide emissions and dependence on foreign oil are chief among these, lending considerable traction to the notion of a “green” stimulus package . As a result, more than 10 percent (over $100 billion) of the total cost of the “American Recovery and Reinvestment Act” passed in February was directed towards climatefriendly and environmental objectives.

While environmental objectives were a significant driver for these investments, their final passage was the result of widespread recognition of their unique economic benefits. Well-tailored green components of a recovery effort can create jobs and stimulate the economy while achieving significant energy cost savings for businesses, consumers, and the government. Recovery policies similar to those passed in the U.S. will reduce demand for fossil fuels. The resulting drop in cost and consumption of energy has the potential to save Americans an average of $450 million per year for every $1 billion invested. In addition, by returning money to households through lower energy bills, green components of a recovery package combine the employment benefits of tax cuts with the construction and manufacturing jobs created through infrastructure investment. On average, green recovery programs create 30,000 jobs for every $1 billion in government spending (Figure 4).

Internationally, more and more policymakers are hoping to direct government spending in a way that not only generates short-term economic growth and employment, but also addresses long-term policy goals that have been sidelined by the current crisis. Energy and environmental objectives are chief among these and the notion of “green” stimulus has gained considerable traction in capitals around the world. South Korea has shown considerable leadership by dedicating over 80 percent of their stimulus spending measures to energy conservation, low-carbon transit and green jobs initiatives. Although final spending levels are still uncertain, China has also indicated a desire to direct hundreds of billions of dollars of its $586 billion stimulus effort towards projects that would reduce GHG emissions. As more and more nations attempt to incorporate energy and environmental objectives into their responses to the financial crisis, there may also emerge an opportunity for global cooperation to maximize the environmental and economic impact of spending.

At the G-20 meeting last November, the world’s leading economies agreed to combat global recession with coordinated fiscal stimulus. Growing attention to the economic potential of environmental investments has lead to widespread calls for the G20’s April meeting to endorse a global “Green New Deal.” Given the scale of the challenges ahead—a green recovery provides an opportunity for the U.S. to demonstrate the economic case for immediate action to address climate change.

Relating stimulus action to international finance

Although both developed and developing countries are called on to take mitigation action under the Bali Action Plan, the Plan promises developing countries support for their actions. Furthermore, that support also needs to be “measurable, reportable and verifiable.”

Financial support is the most obviously measurable of these, and contributions from the U.S. and other developed countries will be essential to a successful deal. Perhaps the most important priority in this regard is adaptation. With climate impacts already being felt, and with the poorest countries and communities likely to be hit hardest, there is a real need for such support. But support will also be needed in developing countries to mitigate emissions, and to implement the measuring, reporting and verification systems needed to enshrine these actions in an agreement.

In this context the international economic crisis is a major challenge to the negotiations. Appetite in developed country capitals for providing international finance is drying up. On the other hand, it is hard to see how a climate deal can be reached without significant resources on the table. Creative thinking will be needed to leverage the sources of finance that still work in a recession, and stimulus spending is perhaps the most important of these.

There is a wide range of assessments about the scale of resources required for mitigation and adaptation globally. Within the context of the UNFCCC negotiations, there are high expectations on the part of the developing countries for support and finance for mitigation and adaptation from Annex I countries. This expectation is based on the principle of “common but differentiated responsibilities” from the 1992 Framework Convention. Non-Annex I countries feel that Annex I parties should be responsible for a greater portion of the solution to climate change, given that their historical contribution to the problem outweighs the contribution by Non-Annex I countries. Responsibility for the solution would take the form of financial support for developing country mitigation and adaptation.

Figure 5 shows the needs and expectations for global mitigation, based on the UNFCCC’s 2007 assessment of the level of funding required for global mitigation, and on the G77 and China’s proposal on finance submitted to the UNFCCC, which calls for Annex I countries to commit to funding equal to 0.5-1% of their GDP to cover mitigation and adaptation. The figure compares some of the existing and proposed sources of mitigation funding, including existing clean technology funds, the UNFCCC’s Clean Development Mechanism (CDM), Official Development Assistance (ODA), and global investment figures, against these expectations and needs. Clearly, the existing financial flows for climate change mitigation are inadequate relative to the scale of the challenge. However, ODA and foreign direct investment (FDI) are both adequate in terms of scale, which indicates that the necessary finance for mitigation is available but must be steered toward climate-friendly investments.

The figure also shows an indication of possible U.S. contribution to developing country mitigation, based on provisions in recent legislative proposals. The figure includes the 2030 values for allowances allocated to international mitigation and adaptation efforts from the 2008 Boxer-Lieberman-Warner Climate Security Act (S.3036) and from Representative Markey’s 2008 bill, Investing in Climate Action and Protection Act (H.R.6186). These bills reserved a portion of allowances to fund international forestry, international technology deployment, and international adaptation. This illustrates the size of the gap between the needs and expectations of the developing world for finance from Annex I countries versus what the U.S. has offered to date.

However, it is not clear at this stage what level of finance will be needed in the near term to ensure a successful climate deal.

Although finance is likely to be important, some countries, notably China, put as much or more emphasis on technology cooperation. In many cases this is not a question of funding, but of combined efforts in R&D (with a sharing of the resulting intellectual property) or joint support of demonstration projects. These efforts need not all be pursued within a multilateral agreement, but their presence will help create a more constructive deal.

While stimulus policies are aimed first and foremost at domestic economic activity, as noted earlier there are significant areas of common ground. Given the importance of finance in securing a deal, and the difficulty of finding resources in the present climate, the U.S. should actively explore options for coordinating technology development and deployment actions with developing countries through stimulus actions.

Conclusions

The U.S. is seeking a new leadership role on climate change, both through adopting national climate policy and by engaging internationally. These two aims are linked: domestic policy will give the U.S. credibility abroad, and participation by other major emitters will help the U.S. undertake ambitious action itself.

The moment is ripe for international engagement. Other major emitters, including all the largest developing economies, have presented national climate change plans, targets or policies. Some have gone much further than others in implementing these, but all have made a major leap from the era of Kyoto.

The international agreement to be negotiated under the Bali Action Plan offers scope to include actions by developing and developed countries that are measurable, reportable and verifiable. This, combined with the national plans being brought forward by developing countries, should answer Congress’ major criticism of Kyoto.

In response to the economic crisis both developed and developing countries are bringing forward significant stimulus spending, and in many cases this has a major climate and energy dimension. All these countries hope to create new industries and jobs in clean energy. By engaging internationally on a positive trade agenda the U.S. can help ensure the participation of major developing countries in climate action while creating jobs for American workers, as well as in other countries.

Competitiveness, Leakage and Comparability: Disciplining The Use of Trade Measures Under a Post-2012 Climate Agreement

admin — Mon, 01 Dec 2008 00:00:00 -0500

As the United States, the European Union and other Annex I Parties prepare legislation to cap greenhouse gas emissions post-2012, their policymakers are under increasing pressure from domestic constituencies to include trade measures as part of domestic climate policy. This paper analyzes the trade measures contained in draft domestic climate policies emerging from the U.S. and the EU, describes the objectives of these measures, assesses how they might be imposed and discusses their implications for both a future climate agreement and the international trading system.

We find that:

Trade measures have been included in draft climate legislation in the U.S. and considered in the EU in an effort to achieve several policy objectives: to protect domestic industry from competition (“competitiveness”), to prevent greenhouse gas polluting industries from moving overseas (“leakage”) and to punish non-parties to a future climate agreement (“free-riding”).
Neither the United Nations Framework Convention on Climate Change (UNFCCC) nor the World Trade Organization (WTO) authorizes the use of trade measures as a means of protecting domestic industry from competition. The UNFCCC and WTO share a set of common principles that discourage the use of unilateral trade measures that are arbitrary, unjustifiable or disguised restrictions on trade.
It may be possible to design trade measures that are sufficiently targeted and equitably applied to prevent emissions leakage in a way that would be consistent with WTO principles. But the UNFCCC has yet to consider whether preventing emissions leakage justifies the use of trade measures.
Leading U.S. proposals are intended, in part, to encourage broader participation in multilateral climate negotiations. Yet as currently designed a developing country Party to a post-2012 international climate agreement that was in full compliance with its commitments under that agreement, could still face trade measures if the U.S. determined that the Party’s climate policies were not “comparable” to its own.
If such trade measures were implemented, a trade dispute would likely arise, and a WTO dispute settlement panel could be forced to choose between a result that either required the U.S. or EU to dismantle a central part of their climate legislation, and one that allowed the trade measure to stand, but in doing so undermined the UNFCCC’s legitimacy as the global standard-setting body for climate policy.

This paper suggests that it would be both reasonable and appropriate for the UNFCCC Conference of the Parties (COP) to articulate a set of principles applicable to any trade measures used to advance the Convention’s objective, in order to avoid and help resolve any disputes that might arise under the WTO or elsewhere.

Bottom Line on International Trade

Payson Schwin — Fri, 29 Aug 2008 16:14:32 -0400

How will climate policy impact American trade competitiveness?

Over the coming decade, countries around the world will adopt a variety of climate policies to impose costs for greenhouse gas (GHG) emissions. Since these policies will vary in form and stringency, the costs they impose on manufacturers will not be uniform across all nations.

Although a global patchwork of climate policies could disadvantage specific American industries, policy leadership would provide the U.S. economy with an early signal for rising fossil fuel costs and supply constraints, potentially improving future competitiveness of domestic industries. A global, carbon-constrained future will demand a shift to low-carbon energy technologies and business models. Past experience in renewable energy and efficient vehicle technologies has seen companies profit from strong regulatory environments at home to build competitive advantage abroad. Uncertain domestic policy will not serve companies well in the medium to long term, as other countries will build markets for low-carbon products and services. Such concerns have led many major companies to call for strong mandatory U.S. climate policy.

Nevertheless, specific industries in countries likely to experience relatively higher compliance costs are concerned that they will be placed at a disadvantage to competitors in countries with relatively lower compliance costs. They argue that aggressive climate policy could contribute significantly to factors that lead to the “offshoring” of jobs and relocation of industry to countries with lower standards and production costs.

Could the relocation of industries lead to a global rise in emissions?

If global supply chains shift manufacturing from countries with stringent policies to lower cost countries, global emissions would rise through a process commonly referred to as emissions “leakage.” While U.S. climate policy would reduce domestic emissions, the net environmental effectiveness of the policy may be undermined if emission sources simply migrate to countries without absolute caps. In order to prevent this, environmentalists have frequently supported the international harmonization of environmental standards and enforcement to minimize differences in compliance costs across nations.

Which industries will be most sensitive to differentiated international approaches to climate policy?

The degree to which a particular industry is adversely impacted by higher relative costs of compliance with climate policy depends on three variables:

Energy intensity of production: The impact of rising energy prices on a given industry is determined, in part, by how significant energy is as a share of total production costs. For relatively energy-intensive industries like steel and cement, energy purchases account for between 10 and 20 percent of total costs. In contrast, energy accounts for less than 1 percent of total costs for transportation equipment and electronics manufacturing.
Potential for efficiency improvements or fuel switching: An industry’s ability to improve GHG efficiency of production through technological improvements or fuel switching determines the extent to which increased energy prices translate into higher overall production costs.
Availability of substitutes: The availability of substitutes—either the same good from a foreign producer or a different but interchangeable good from any producer—minimizes a firm’s ability to pass along costs to consumers and makes it more sensitive to increased production costs.

In general, these metrics indicate that the most adversely impacted sectors include paper, chemicals, nonferrous and ferrous metals, and nonmetallic mineral products (e.g. glass and cement).

What could the economic impacts be?

Most economic analysis indicates that, in the absence of mechanisms to address relative differences in compliance costs (see page 2), vulnerable industries would face some pressure to relocate to nations with less stringent climate policies. Resources for the Future, an independent research organization, is undertaking an effort to quantify the impact of U.S. climate policy on output from these industries through modeling and econometric analysis. Two initial studies, using different approaches, find that imposing a $10 per ton charge for CO2 in the United States (but not in other countries) would result in a 0.5 to 6 percent decline in domestic output from these industries.

What policies could help harmonize compliance costs across nations?

The principal policy options currently under consideration to promote the international harmonization of compliance costs for carbon-intensive industries can be divided into three types:

Cost containment mechanisms aim to reduce the pressure on carbon-intensive industries by limiting the cost of complying with climate legislation. The most direct methods proposed have sought to use allowance allocations (see Issue 1 of WRI’s Bottom Line series) to reimburse exposed sectors for the costs of complying with the legislation. Although such policies could shield industries from newfound competitiveness concerns, they must be carefully structured to maintain incentives for emissions mitigation and avoid overcompensation.
Trade measures do not limit costs on domestic producers, but instead apply similar costs to competing companies in other countries through the treatment of imports. Although this policy mechanism found support in the 110th Congress, potentially significant flaws have been overlooked. For example, border price adjustments of imports would negatively impact downstream manufacturers such as the automobile industry by increasing costs of raw materials. Furthermore, these policies would do little to protect important export markets, since adjustments would only apply to the U.S. market. Finally, trade measures may damage important international negotiations to create a multilateral agreement to address climate change (see Additional References).
Coordinated international actions seek to reduce the pressure on carbon-intensive industries by encouraging major trading partners to impose similar costs on their companies directly. Although widely seen by environmentalists and economists as an optimal mechanism for addressing competitiveness concerns, perfect coordination is unlikely in the immediate future, so some other mechanism may be necessary for a transitional period.

Additional References

WRI’s U.S. Climate Policy Resources
WRI/Peterson Institute: Leveling the Carbon Playing Field: International Competition and US Climate Policy Design
WRI/Peterson Institute: Policy Options for Addressing Competitiveness Concerns (forthcoming)
Carbon Trust: EU ETS Impacts on Profitability and Trade: A Sector by Sector Analysis
Resources for the Future: Competitiveness Impacts of Carbon Dioxide Pricing Policies on Manufacturing

Acknowledgements

WRI would like to thank our many internal and external reviewers for providing feedback on drafts of various issues in The Bottom Line series. WRI also wishes to thank the following foundations that support our climate and business engagement activities and help make this series possible:

Emily Hall Tremaine Foundation
Richard and Rhoda Goldman Fund
Robertson Foundation
UK Global Opportunities Fund
WestWind Foundation

Per Capita CO2 Emissions, Current and Projected

Tim Herzog — Fri, 23 May 2008 00:00:00 -0400

Note: an updated version of this chart is available here.

U.S. Industry Exposure to Climate Costs Based On Energy Intensity and Imports

Britt Childs Staley — Thu, 15 May 2008 15:24:14 -0400

Note: the size of the bubbles indicates the total CO₂ emissions from the industry in 2002.

Sources: US Department of Commerce, Bureau of Economic Analysis, Industry Economic Accounts, 2007; US Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey 2002.

Leveling The Carbon Playing Field: International Competition and U.S. Climate Policy Design

Tim Herzog — Tue, 13 May 2008 20:07:08 -0400

As political momentum surrounding climate change builds in the US, policymakers are taking a fresh look at national climate policy and American involvement in multilateral climate negotiations. And as in years past, the potential economic impact of any US effort to reduce greenhouse gas emissions stands as a central question in the Washington policy debate. Of particular concern is the effect climate policy would have on carbon-intensive US manufacturing. Many of these industries are already under pressure from foreign competition, particularly large emerging economies like China, India and Brazil that are not bound to reduce emissions under the current international climate framework. As the Congress takes up domestic climate legislation and the Administration reengages in multilateral climate negotiations policymakers are looking for ways to avoid putting US industry at a competitive disadvantage vis-à-vis countries without similar climate policy, lest a decline in industrial emissions at home is simply replaced by increases in emissions abroad.

While this would be best achieved through harmonized international climate policy, the differences between countries in level of economic development, obligations stemming from historic emissions and responsibilities arising from future emissions, mean harmonization is still a long way off. The question then, in the design of domestic US climate policy today, is how to level the playing field for carbon-intensive industries during a period of transition, where trading partners are moving at different speeds and adopting a variety of policies to reduce emissions…and how to do so in a way that doesn’t threaten the prospects of broader international agreement down the road. This book, a collaboration between the Peterson Institute for International Economics and the World Resources Institute, tackles these issues through an assessment of the economics and trade flows of key carbon-intensive industries. They evaluate a wide range of policy options, including those that would impose carbon costs on foreign-produced goods at the border (currently included in draft US legislation and under consideration in the EU) in terms of their effectiveness in reducing emissions and addressing competitiveness issues and their impact on health of multilateral trade and climate negotiations.