Climate Policy in the United States

Good afternoon. Thank you for the opportunity to discuss the climate change policy of the United States.

Climate change is an issue of great importance and concern to the United States. Despite our different perspectives on the Kyoto Protocol, we work closely together with many of the nations of the world as well as the European Commission (EC) and many of the European Union (EU) Member States -- both bilaterally and in multilateral fora -- to address the challenges of global climate change.

There is a widespread impression that the United States is not taking climate change seriously and has been acting “unilaterally” in its approach because of its rejection of the Kyoto Protocol. This is not the case, and I welcome the opportunity to set the record straight. In fact, the U.S. is actively engaged, both domestically and internationally, and is leading a number of new multilateral climate change initiatives that I will discuss later.

The U.S. climate change policy, as articulated by President Bush, reaffirms the U.S. commitment to the United Nations Framework Convention on Climate Change and its ultimate objective -- to stabilize atmospheric greenhouse gas (GHG) concentrations at a level that will prevent dangerous human interference with the climate. We are also committed to the mutual goals of sustainable development and economic growth, as articulated in the Delhi Declaration.

The policy recognizes the need to take near-term actions, while maintaining economic growth that will improve the world’s standard of living. It is grounded in the reality that addressing the issue of climate change will require the sustained effort by all nations over many generations. And it will require the development and deployment of new transformational technologies during this century -- technologies that will allow us to produce and use energy with little or no net emissions of GHGs, and technologies that will allow the use of abundant fossil fuels.

President Bush’s climate change policy has three basic components designed to address both the near-term and long-term aspects of climate change: (1) slowing the growth of GHG emissions; (2) laying important groundwork for both current and future action through major investments in science, technology, and institutions; and (3) international cooperation with other nations to develop an efficient and effective global response.

The first component involves a series of actions aimed at slowing the growth of our GHG emissions. The President set a national goal of reducing U.S. GHG intensity (GHG emissions per dollar of GDP) by 18 percent over the next 10 years -- a nearly 30% improvement over business-as-usual (BAU). Meeting this commitment will achieve 100 million metric tons of carbon-equivalent emissions reductions from BAU estimates in 2012 alone and more than 500 million metric tons through 2012 -- an amount equivalent to taking 70 million cars off the road.

The U.S. has in place more than 60 federal (and many more State) programs -- some mandatory, some incentive-based, and some voluntary -- that will help to slow the growth in U.S. GHG emissions over the next decade and beyond.

Federal mandates include Corporate Average Fuel Economy (CAFE), appliance and Clean Air Act standards and regulations. In addition, a number of States have enacted renewable portfolio standards requiring that a certain proportion of electricity generated within the State be supplied by renewable energy sources, as well as restrictions on carbon dioxide emissions from power plants.

We are implementing numerous U.S. Department of Energy (DOE) and U.S. Environmental Protection Agency (EPA) voluntary programs to help consumers and corporations to make great strides in reducing their GHG emissions.

One example is the ENERGY STAR® program, which was first established by EPA in 1992 for energy-efficient computers, and now encompasses more than 35 product categories for the home and workplace, new homes, and superior energy management within organizations. In 2002, with the help of the ENERGY STAR program, Americans prevented GHG emissions equivalent to those from 14 million vehicles and avoided using the power that would have been produced by 50 300-megawatt power plants, while saving more than $7 billion. By 2012, the program is expected to avoid about 50 million metric tons of carbon-equivalent GHG emissions per year and to reduce energy bills by about $15 billion annually.

A second example is the DOE Climate VISION program. This Presidential initiative, launched in February 2003, is designed to reduce the growth of GHG emissions in energy-intensive industrial sectors by working with industry trade associations to accelerate the transition to practices, technologies, and processes that are cleaner, more efficient, and capable of capturing or sequestering GHGs. Participants in the program account for between 40 and 45 percent of U.S. GHG emissions.

The EPA’s Climate Leaders program is another voluntary program with similar goals for individual companies and other entities. There are more than 50 participants in Climate Leaders, many of which are Fortune 500 corporations.

The U.S. is employing near-term incentives for carbon sequestration to increase the amount of carbon stored by America’s farms and forests. Under the 2002 Farm Bill, the U.S. will invest up to $47 billion in the next decade for conservation measures on its farms and forest lands -- including measures that will enhance the natural storage of carbon. The U.S. Department of Agriculture estimates that actions taken to date will sequester over 12 million metric tons annually by 2012.

President Bush’s Fiscal Year 2005 budget, which seeks nearly $5 billion for climate change science and technology programs, also supports the near-term objective. The 2005 budget also proposes nearly $5 billion in tax incentives over the next five years and $7.3 billion over the next 10 years to encourage purchases of hybrid and fuel cell vehicles, to promote residential solar energy and combined heat and power systems, and to reward investments in wind, solar, biomass and nuclear energy production.

The second component of U.S. climate change policy focuses on laying the groundwork for both current and future action -- investments in science, technology, and institutions. We need better science to promote better decision-making; better technology to slow GHG emissions growth; and better institutions to enable us to pursue the lowest-cost emissions reduction opportunities, whatever they may be, whenever they arise over time, and wherever they occur both within and across nations. As just noted above, President Bush’s Fiscal Year 2005 budget seeks nearly $5 billion for climate change science and technology programs.

The third component is international cooperation, which recognizes the importance of working with other nations to develop an effective and efficient global response to the complex and long-term challenge of climate change. Any effective international response to climate change requires developing-country participation, which includes both near-term efforts to slow the growth in emissions and longer-term efforts to build capacity for future cooperation.

Since 2001, the U.S. has established 13 formal bilateral climate change relationships, including Canada, Japan, European Union (EU), Italy, Australia, New Zealand, and Russia among the developed countries; as well as Central American Countries (Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama), China, India, Republic of Korea, Mexico, and South Africa among the developing countries. Together with the United States, these countries account for more than 70% of global GHG emissions.

While each of these bilateral relationships is unique, there is a common interest in advancing climate change science and technology.

One of the greatest barriers to advancing climate change science is the lack of necessary environmental data -- especially in developing countries -- required to understand the Earth system. To address this major deficiency, the United States hosted the Earth Observation Summit in Washington last summer that was attended by over 50 nations and international organizations. The goal of the Summit and follow-on activities is to design and implement over the next 10 years a new international, integrated, sustained, and comprehensive Earth observation system that will greatly advance our understanding of climate change, help in the formulation of sound, science-based environmental policies, and allow us to measure progress and assess the effectiveness of our policies. The ad hoc Group on Earth Observations (GEO), which was established at the Summit is co-chaired by the European Commission (EC) and includes in its membership fourteen EU Member States (Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and the United Kingdom (UK)). GEO held its fourth meeting last month in Tokyo, and the second Summit was also held in Tokyo on April 25. We expect that the implementation plan will be approved at the third Summit, which is to be held here in Brussels in February 2005.

With regard to technology, there is a growing realization that existing energy technologies, even with substantial improvements, cannot meet the growing global demand for energy while delivering the emissions reductions necessary to stabilize atmospheric GHG concentrations. We need to develop and deploy globally “transformational” technologies -- that is, revolutionary changes in the technology of energy production, distribution, storage, conversion, and use. Some examples include carbon sequestration, hydrogen, and advanced nuclear technologies. The U.S. is not only pursuing these domestically, but is also leading three major multilateral international technology efforts and participating in a fourth.

Carbon sequestration involves removing carbon dioxide from fossil fuel combustion emissions streams and permanently storing it in deep underground formations, such as depleted oil and gas reservoirs, unmineable coal seams, and deep saline aquifers. It is a top priority for the United States because of our large coal reserves and the fact that fossil fuels will continue for the foreseeable future to be the world’s most reliable and lowest-cost energy resources. The International Energy Agency projects a 50 percent increase in worldwide coal use for electricity generation over the next quarter century, most of it in developing countries such as China and India, which have large coal reserves. The United States is currently working with private sector partners on 65 carbon sequestration projects around the country, and we have increased our carbon sequestration budget by nearly 120% since 2001 (from $18.3 million in Fiscal Year 2001 to $40.3 million in Fiscal Year 2004).

International cooperation in carbon sequestration research is also a key aspect of our approach. The Carbon Sequestration Leadership Forum, a Bush Administration initiative, is a multilateral effort to advance technologies that capture and store carbon emissions. The Forum was inaugurated formally at a ministerial meeting in June, during which 13 coal producing and consuming nations and the EC signed an international charter establishing a framework for cooperative research and development. The Forum’s partners, who also include Germany, Italy, and the United Kingdom (UK), will also be invited to participate in our $1 billion FutureGen project -- an initiative to design and construct the first emission-free coal-fired power plant. FutureGen will be one of the boldest steps our nation takes toward a pollution-free energy future. It will be a living prototype, testing the latest technologies to generate electricity, produce hydrogen, and sequester GHG emissions from coal. We expect that FutureGen will help lead to the development of clean fossil fuel power plants all across the world and will allow this abundant and economical fuel source to continue producing energy without its traditional environmental side-effects.

Looking beyond traditional energy sources, last year President Bush announced his groundbreaking plan to change our nation’s energy future to one that utilizes the most abundant element in the universe -- hydrogen. Hydrogen represents one of the most attractive options to meet both our energy and environmental goals. It has a high energy content, it produces no pollution when used to create energy in fuel cells, and it can be produced from a number of different sources, including renewable resources, fossil fuels, and nuclear energy. Over the next 5years, the United States has pledged $1.7 billion to fund the ambitious FreedomCAR and Hydrogen Fuel Initiative to develop emission-free automotive operating systems that run on hydrogen.

Last year, US Secretary of Energy Abraham called for the establishment of an International Partnership for the Hydrogen Economy to coordinate multinational research and development programs to accelerate the transition to a global hydrogen economy. That partnership was launched in November 2003 with 15 international partners, including the EC, France, Germany, Italy, and the UK. The public-private collaborations envisioned under the Partnership will address the technological, financial, and institutional barriers to hydrogen and develop internationally recognized technology standards to speed market penetration of new hydrogen-based technologies.

We also recognize nuclear energy as a clean energy choice, both in the near- and longer-term. Under the U.S.-led Generation IV program, ten nations and EURATOM, including France and the UK, are working on new fission reactor designs that will be safer, more economical and secure, and able to produce new products, such as hydrogen.

Also last year, President Bush announced that the United States would rejoin the International Thermonuclear Experimental Reactor (ITER) project, an ambitious international effort being undertaken by the EU and four other countries (China, Japan, the Republic of Korea, and the Russian Federation), to develop nuclear fusion as a future energy source. Although the technical hurdles of fusion energy are high, we feel the promise of this technology is simply too great to ignore.

Taken together, these multilateral research and technology initiatives, if successful, add up to what can only be described as a long-term revolution in our energy systems. Not only will these technologies put us on a long-term path to stabilizing atmospheric GHG concentrations, they will also ensure secure, reliable, affordable, and clean energy to power economic growth and development across the globe.

In summary, I want to emphasize that the United States takes the issue of climate change very seriously and remains committed to the U.N. Framework Convention on Climate Change and to the mutual goals of sustainable development and economic growth, as articulated in the Delhi Declaration.. We have an ambitious near-term goal to reduce the growth of our GHG emissions. We are investing billions of dollars to address climate change -- both in the near-term and long-term. And we are also fully engaged internationally, and are leading major bilateral and multilateral climate change initiatives -- many of which involve as well the EC, EURATOM and many Member States of the EU. While we may differ in our approaches to addressing climate change, we must keep in mind that we are all working toward the same goal. And the U.S. will continue to cooperate with all nations in this important effort.

Thank you for your attention, and I welcome your questions and comments.