U.S. Priorities on Climate Change Policy Following the Kyoto Protocol
RFF Scholar's Testimony Highlights Shifts in Thinking, Changes in Direction
(WASHINGTON, D.C., September 20, 2005) -- The climate change debate has changed significantly since early negotiations around the Kyoto Protocol, said Richard Morgenstern, senior fellow at Resources for the Future, in Testimony on Senate Amendment 866 before the Senate Committee on Energy and Natural Resources.
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Morgenstern addressed the recently adopted Senate resolution calling for a "national program of mandatory, market-based limits and incentives on greenhouse gases" that will not harm the U.S. economy and will encourage other nations and trading partners to take parallel action. Drawing on recent proposals by the National Commission on Energy Policy, as well as options set forth by members of Congress, Morgenstern illustrated the varied directions and new considerations the climate change debate has taken in recent years and laid out key considerations for U.S. policymakers on the issue. He presented an altered landscape of the debate, which he said now focuses on long-term technology innovation, short-term inexpensive emissions reductions, and protection of domestic economic interests while encouraging international action.
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Testimony on Senate Amendment 866
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"New technologies are clearly needed to address the climate change issue," he said. "Government has an important role to play in spurring the development and diffusion of these technologies." He also noted that while industry tends to drive innovation, policymakers must provide incentives to make the pursuit of such innovation worth the investment.
"There is no market value associated with emission reductions," Morgenstern stated, outlining why climate change technologies are not currently attractive to investors. "The prospect of future value - which is driven by policy outcomes - is highly uncertain." He finds that market-based policies are likely to be most attractive to innovators, as they put a value on reducing emissions at present, while also encouraging firms to develop and implement new technologies in the future.
During his testimony, Morgenstern touched on two other key points in the climate change debate. In light of concerns over mandatory cap-and-trade emissions programs, he encouraged a "safety valve?" or price cap approach to provide protection against true cost uncertainty. Such measures would keep the economy secure while maintaining emissions control. "The safety valve approach," he pointed out, "guarantees that emissions will not exceed the target as long as the price of the tradable permits does not rise above the trigger price."
He also addressed how developing countries might fit into emissions control agreements. "This is clearly a critical need for long-term success of any effort to address climate change," he said. However, "so far, no proposal has made much headway in this area." He applauded the Senate's approach in its recent resolution, which suggested linking climate change controls to other issues of international concern.
"If one believes, as I do, that the key to international cooperation on climate change is linkage on a broad range of issues, including global trade, development aid, and technology transfer," he stated, "then such a procedure would potentially provide Congress an opportunity to influence the actions of both developing and developed nations as climate policies evolve over the next few years," while limiting impacts on the U.S. economy.
Morgenstern said these changes in thinking following the design of the Kyoto Protocol pave the way for the future of climate change policy in the United States - and that all factors must be considered to create a truly effective policy system. "The debate has now shifted," he concluded, "to motivating both the public and private sectors to pursue technology innovation over the long term and capturing the low-hanging fruit of cheap emission reductions, all the while protecting the economy from unwarranted burdens."
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Richard Morgenstern is available for interviews on this subject. Resources for the Future, an independent and nonpartisan Washington, D.C., think-tank, seeks to improve environmental and natural resource policymaking worldwide through objective social science research of the highest caliber.
