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FOIA Number: 2017-1095-F FOIA MARKER This is not a textual record. This is used as an administrative marker by the William J. Clinton Presidential Library Staff. Collection/Record Group: Clinton Presidential Records Subgroup/Office of Origin: Council of Economic Advisers Series/Staff Member: Jeffrey Frankel Subseries: OA/ID Number: 13726 FolderID: Folder Title: GICC [Global Climate Change] Public Outreach Reaction Stack: Row: Section: Shelf: Position: S 20 5 1 1 (202) 785-0507 FAX: (202) 785-0514 !!!!! 06 Michael L. Marvin Executive Director The Business Council 1200 18th Street, NW for Ninth Floor Sustainable Washington DC 20036 Energy [email protected] Exxon Urges Developing Nations to Shun Environmental Curbs Hindering Growth By IAN JOHNSON tion, they would still be affected because Staff Reporter of THE WALL STREET JOURNAL developed countries would have slower BEIJING - The chairman of Exxon economic growth and import less. Mr. Corp., the world's biggest oil company. Raymond said. He called on Asian coun- urged developing countries to avoid envi- tries to fight emission limitations for at ronmental controls that would hinder their least another-20 years until the process of development. Otherwise. he said. they risk climate change is better understood. losing foreign investment. While Mr. Raymond's comments re- Lee R. Raymond's warning to dele- flect the stance of the American Petroleum gates of the 15th World Petroleum Con- Institute, a major U.S. oil-industry lobby- gress was in stark contrast to the views of ing group that he heads, there are dis- some governments and many companies senters in the industry. In a May speech, in the run-up to an international confer- British Petroleum PLC's chief executive ence on global warming in Kyoto. Japan. officer, John Browne. said, "The time to in December. consider policy dimensions of climate Mr. Raymond said developing coun- change is not when the link between tries need "rational" environmental stan- greenhouse gases and climate change is dards. not those based on the premise that conclusively proven, but when the possibil- the world's climate is warming and that ity cannot be discounted and is taken fossil fuels are partly to blame. If the seriously by the society of which we are December meeting results in tougher envi- part. ronmental laws. then energy may be ra- However, Mr. Raymond warned that if tioned. he warned. too much emphasis is put on environmen- Urging developing countries to in- tal rules that cost investors money, oil crease. not curtail, their use of fossil fuels, multinationals can always invest else- Mr. Raymond said nature was to blame for where. "Competition among countries most global warming. Besides. he said, the eager to develop petroleum reserves is at earth's temperature often changes. "The an all-time high," he said, and nations ice ages are a good example, he added. need to offer tax concessions as well as Even if developing countries are ex- "rational environmental standards" to cluded from requirements to curb pollu- lure businesses to invest. THE WALL STREET JOURNAL TUESDAY, OCTOBER 14, 1997 PHOTOCOPY PRESERVATION The Kyoto Protocol: a painful response S While most Americans focus on the estimates. EIA examined six emission re- 11 t here and now-election results; foot- duction scenarios and concluded that as ball scores-longer-term issues bear higher energy costs work their way through the n watching because they ultimately can affect economy, the annual loss in GDP could range y the here and now. One such issue is climate, 1- from $150 billion to $400 billion. That trans- a change. lates to an annual cost of $1,500 to $4,000 V, Mobil is concerned about the potential per family. y as for human activities to affect climate. That's The Administration's Council of Eco- why we support voluntary efforts to reduce nomic Advisors (CEA) estimates the annual emissions. The Kyoto Protocol has been billed GDP penalty at $7 billion-$12 billion, or a cost as a solution. It isn't the right one. It only per household of $70-$110. Why this rosy pic- focuses on emissions in developed countries, ture? Because the CEA is counting on the U.S. will only minimally reduce the amount of green- being able to meet most of its target by relying house gases in the atmosphere and will pro- on a global emissions trading system. Yet, the duce major economic distortions in the U.S. Kyoto Protocol limits emissions trading to the and elsewhere. developed countries. et- Credible private-sector studies have de- While emerging economies probably offer tailed Kyoto's potential economic effects. And opportunities to reduce emissions at lower the ad- now, a U.S. government report provides fur- costs than in the U.S., some nations like China eral ther evidence of what to expect. and India have said they are unwilling to par- ing. Earlier this year, analyses by WEFA, Inc., ticipate in such schemes. nify- und and Standard & Poor's DRI concluded that Just 15 months ago, the U.S. Senate uca- the only way the U.S. could meet the Kyoto- voiced its concerns over ratifying a treaty that alth mandated emissions target is to significantly would cause serious harm to the U.S. econ- hich veen increase energy prices, force conservation omy or that did not include participation by easi- and promote fuel switching-all at consider- developing nations. Those concerns still have able cost. not been satisfied. esn't Schu- WEFA estimates the cost of achieving the This week, negotiators are meeting in idea Kyoto target by 2010 would result in a loss of Buenos Aires to discuss the complex rules to aisle and 2.4 million jobs, a doubling of electricity prices implement the Kyoto Agreement. Emissions and an annual loss in economic output of $300 trading is certain to be on the agenda. Serious Schu- billion-an amount greater than our nation's differences already exist on the percentage of 2 21st expenditures for primary and secondary edu- reductions that should come from domestic using that cation. Ditto DRI's conclusions: job losses of actions rather than trading. The U.S. would can- more than one million, an increase in electricity argue for no restrictions; the European Union be- geo- prices of nearly 40 percent and a decline in wants at least 50 percent of the reductions to GDP of roughly $100 billion. come from domestic steps. I for Now the U.S. Department of Energy's While complex mechanics continue to be lose out. Energy Information Administration (EIA) re- worked, the fatal flaws of the Protocol-man- far ports the mandated emissions cap could dated emissions targets, selective participation S a cost the U.S. far more than the Administration and economic distortions-still persist. the es, 'St li- 10 e, Mobil The energy to make a difference. PHOTOCOPY d PRESERVATION it 1 http://www.mobil.com 1998 Mobil octreach TS J Divk F Mtd. with cor July alum, steel, forest power. cement Agreemt to .e inventory D movitory system le audit of proctices Stakwi of initial teutative streach goal reduct 2010 0 actr dan 10 achieve Aluminum Baul o'Neill have a 'r of PFGThey are vllg to redup STretch goil 0 emissur (O₂ Sreel Jul. 16 Forest Products weyerhanser, Baselalcade, Concrete - DATH - yet 'setter mkt acceptance at blended cemens chemicals Gos sipelines Airlines Electronics 3/8/97 PRE-DECISIONAL DRAFT KEY OUTCOMES OF PUBLIC MEETING Messages We Must Communicate 1. THE ENVIRONMENTAL DRIVER. The best scientific evidence available suggests that global warming is a real environmental problem that requires serious attention. Inaction poses unacceptable risks. 2. THE ECONOMIC PICTURE EMERGES Our economic analysis is complete. It shows that we can afford to adopt a reasonable, market based solution. It confirms that our protocol approach is grounded in solid economics, and it points the way to a domestic policy approach that will achieve environmental gains and a robust economy. Our analysis confirms the following: Inflexible policies are right to be rejected: they are too costly. The global community cannot afford to waste the limited capital available on inefficient control investments. Flexible policies deserve our support: they are the most cost effective. This approach targets the limited capital available to the most good it can do. Rational timing and international offsets offer the best chance for a reasonable transition in greenhouse gas performance of carbon-dependent sectors of our economy -- delivering the fairest and best results for American industry and workers. The entire international community will benefit from emissions trading flexibility as much as the U.S. There is a vast market on the horizon for advanced technologies -- whether efficiency, renewables, natural gas or clean coal technologies. The potential impacts of inaction -- from more storms, health and agriculture impacts -- require a prudent insurance policy in the form of serious action. 3. DOMESTIC POLICY DESIGN PLANS Opportunity. The greenhouse gas reduction market will be hungry for advanced technology, and America intends to take the lead in this new market. We are launching a new domestic policy development effort that will include designing a strategic public-private partnership to research, develop and deploy improved technologiesfor winning in this growth market. Fairness. Our domestic implementation plan will also include an emissions trading program that will strike a fair and efficient balance of responsibility for all those contributing to the rising greenhouse gas emissions problem. It will allow the private sector the flexibility to invest in response strategies that achieve reductions at the least cost. Workers. Our cost effective approach will ensure that the fewest workers are adversely effected -- and we will work with American business and labor unions to construct a workforce and community transition effort to ensure a viable economic future for any American worker losing work from the changes coming under our climate strategy. We will make every effort to connect any job losses with emerging opportunities in manufacturing advanced technologies. Next Steps. Over the next several weeks, we will convene small groups to focus on specific sector interests and concerns. Our initial sectoral analysis is open for consultation, as are our policy design alternatives. In each sector session over the next month, we will consult panels of experts in discussions of potential impacts, mitigation options, research and development alternatives and workforce transition programs. DRAFT - PREDECISIONAL, DO NOT CITE OR QUOTE Mid-June Climate Change Meetings: Analysis of Greenhouse Gas Emissions Reductions Overall Schedule: 1. Press Backgrounders (day before) 2. Pre-briefs (as necessary) 3. Public Meeting/Draft Report Release (Mellon Auditorium, 1 day) 4. Hill Staff Briefings/Draft Reports (House, Senate, 1/2 day each, day after) 5. Sector-Based Meetings (Set up a series over the next month) 6. Other post-briefs (take advantage of key opportunities) DRAFT - PREDECISIONAL, DO NOT CITE OR QUOTE Draft Report for Public Review Table of Contents: 1. Welcome from Katie McGinty and Dan Tarullo (lead author: Steve Seidel) 2. Executive Summary (lead authors: David Gardiner, Alex Cristofaro, Mark Chupka) 3. Scientific Basis for Action (lead author: Jerry Melillo) 4. Economic Analysis of Emissions Scenarios (lead author: Ev Ehrlich) 5. Economic Sector Implications (lead authors: Jeffrey Hunker, Judi Greenwald) 6. Domestic Policy Responses For Consideration (lead authors: Joe Romm, Ed Montgomery, David Gardiner) 7. Next Steps: Process for Consultation (lead author: Dirk Forrister) DRAFT - PREDECISIONAL, DO NOT CITE OR QUOTE Schedule for document clearance: Chapters 1,3, 6, 7 -- 2 days grace for 2,4,5 Draft 1 Due: 5/13 COB Draft 1 Circulated: 5/14 Comments Due: 5/19 COB Final Drafts Circulated: 5/21 COB Final Concurrence Due: 5/23 Week of 5/26: Duplication And Compilation DRAFT - PREDECISIONAL, DO NOT CITE OR QUOTE Public Meeting Schedule: TIME SUBJECT PRESENTERS 9:00 - 9:15 Welcome Katie McGinty/Dan AM Tarullo 9:15 - 9:45 Scientific Basis for Action: Jack Gibbons AM Core scientific understandings Outside science leaders [TBD by Jerry Melillo] Direction of future assessments 9:45 - Introduction Of Economic Analysis Of Ev Ehrlich 10:45 AM Emissions Scenarios: overview of analysis and interaction of the economy to relative price Dale Jorgensen, changes from policy Harvard University William Nordhaus, Yale University 10:45 - Summary of domestic and international baselines Mark Chupka, DOE 11:15 AM through 2010 11:15 - Alternative carbon stabilization policies reviewed David Gardiner, EPA 11:45 AM by the IAT 11:45 AM - LUNCH BREAK 1:10 PM 1:10 PM Major Assumptions: 1:10 - PM Technology in the baseline (The National Energy Andy Kydes, EIA Modeling System) Steve Bernow, Tellus Institute 1:10 - 1:30 Carbon stabilization policies and technology Philip Tseng, DOE PM assumptions in Markal-Macro Stephen DeCanio, University of CA Santa Barbara 1:30 - 1:50 Monetary Policy and Inflation in DRI Ron Early, DOE PM 1:50 . 2:10 Discussion of effects of alternative policy Tracy Terry, EPA DRAFT - PREDECISIONAL, DO NOT CITE OR QUOTE PM options Bill Hohenstein, EPA Larry Goulder, Stanford University Robert Repetto, WRI 2:10 PM Results: 2:10 - 2:30 Domestic macroeconomic and price impacts of Howard Gruenspecht, PM carbon stabilization, and comparison of the three DOE models John Weyent, Stanford Energy Modeling Forum, Stanford University 2:30 - 2:50 International macroeconomic and price impacts Al McGartland, EPA PM of carbon trading and joint implementation Larry Goulder, Stanford University 2:50 - 3:10 Energy Impacts- the.effects of the supply side Ron Early, DOE PM Ray Kopp, RFF 3:10 - 3:30 Industry and regional impacts, and aggregate Tracey Terry, EPA PM impacts on international trade Rich Richels, Energy and Power Research Institute Robert Scott, Economic Policy Institute 3:30 - 3:50 Industry international competitiveness impacts Kerry Smith, Duke PM University 3:50 - 4:10 Economic Sectors, Next Steps For Jeffrey Hunker, DOC PM Analysis 4:10 - 4:30 Lessons Learned From Modeling CEA/Treasury? PM 4:30 - 4:45 BREAK PM 4:45 - 5:30 Introduction Of Policy Options For Assistant Secretaries PM Consideration Joe Romm - Technology DRAFT - PREDECISIONAL, DO NOT CITE OR QUOTE Ed Montgomery - Transition David Gardiner - Trading 5:30 - 5:45 Next steps and process for consultation Dirk Forrister, PM WHCCTF Mar-04-98 09:45P Climate Change Task Force P.01 CC: JAF 54 White House Climate Change Task Force Am 751 Jackson Place. N.W. Washington, DC 20503 RC March 4, 1998 JA MEMORANDUM TO DISTRIBUTION FROM: Dirk Forrister. Chair Dirk Forish SUBJECT: Meeting on Industry Outreach I would like to remind you of the meeting Thursday, March 5, from 3:00 to 4:30 p.m. in the White House Conference Center in the Lincoln Room (724 Jackson Place, NW) for the first meeting of an Assistant Secretaries' Industry Consultation Council. I have attached several documents to help you prepare for the meeting. The draft agenda is as follows: I. Overview of Project Goals and Approach 11. Organizational Structure and Process Industry's Role and Participation Federal Role and Participation 111. Timetable Phase I Sectors IV. Next Steps I hope to see you tomorrow. Please call me before selecting substitutes if you are not able to attend or if you would like to bring additional staff (space is limited). If you have any other questions, you may call me or Lisa McNeilly at (202) 343-1060. Attachments: "Scoping Paper: Industry Consultations" "Addendum A: Industry Plans for Early Reductions" "Addendum B: Questions for Industry" 202 1343-1060 Pax 202 343-1162 Mar-04-98 09:45P Climate Change Task Force P.02 Distribution: David Gardiner EPA 260-0275 David Doniger EPA 260-5155 Mark Mazur DOE 586-9626 Dan Reicher DOE 586-9260 Jeffery Hunker Commerce 482-4636 Melinda Kimble State 647-0217 Rafe Pomerance State 647-0217 Victoria Greenfield State 647-5713 Jon Gruber Treasury 622-2633 Sherri Goodman DOD 703-693-7011 Charlie Rawls USDA 720-5437 Ed Montgomery DOL 219-4902 David Hales USAID 216-3174 John Leiber DOT 366-7127 Jennifer Haverkamp USTR 395-4579 Rosina Bierbaum OSTP 456-6025 Henry Kelly OSTP 456-6023 T.J. Glauthier OMB 395-4639 Cheri Carter OPL 456-6218 David Sandalow CEQ 456-2710 Peter Orzag NEC 456-2223 Bill Antholis NEC 456-5334 Jeff Frankel CEA 395-6947 Marty Spitzer PCSD 408-1655 Total pages: 11 Mar-04-98 09:45P Climate Change Task Force P.03 SCOPING PAPER: INDUSTRY CONSULTATIONS Draft: March 4, 1998 "We must continue to encourage key industry sectors 10 prepare their own greenhouse gas reduction plans. And we must...remove the harriers 10 the most energy efficient usage possible. There are ways the federal government can help industry to achieve meaningful reductions voluntarily, and we will redouble our efforts to do so." President Clinton, October 22, 1997 Background: In his climate change address at the National Geographic Society auditorium on October 22, 1997, President Clinton challenged American industries to develop their own action plans, and he pledged for his Administration to work with state and local governments to remove any barriers to greater energy efficiency. In urging companies to take early action, the President also committed to ensure that firms receive appropriate credit for their achievements. There arc a number of industrial sectors that have expressed interest in working with the Administration on climate change policy, although some are more advanced in their thinking than others. The Task Force convened interagency meetings last fall with three sectors that were prepared to make proposals to the Administration: steel, cement and airlines. Natural gas, renewable and energy efficiency firms continue to want to play a key role. Task Force and agency staff had very productive individual meetings last fall with electric utilities, pulp and paper, natural gas and a couple of petrolcum companies. Although they are still trying to evaluate their posture toward the issue in the wake of the Kyoto agreement, there are progressive companies in each sector that we should engage soon to help influence the evaluations others are making. Since the Kyoto Conference, other key sectoral players have stepped forward to express intcrest in being involved: appliance manufacturers, chemicals and aluminum. Additionally, the Administration has good relations with a set of industry leaders active in the President's Council on Sustainable Development, DOE's Industries of the Future and Climate Challenge programs and EPA's "Green" and Climate Wise partnerships. Besides these groups, there are other important industries that are likcly to be interested in participating as this effort matures. L PROCESS A. In General -- 1. Goals The consultations should maintain a clear focus on enabling industries to 1 Predecisional Draft -- Do Not Quote or Cite Mar-04-98 09:45P Climate Change Task Force P.04 meet the President's challenge of developing early voluntary action plans within nine months. Industries will be encouraged to make commitments as close as possible to the Kyoto target. Also, firms will be the most forthcoming if meetings are designed to -- strategize on removing barriers; assure carly credit; and inform federal climate policy development (e.g. the $6.3 billion incentive package; the emissions trading program design; federal energy use: and the ongoing international negotiations). 2. CEO Vision The consultations will be most successful if those active in the discussions have directions from their CEO's. (The alternative if they do not have CEO cover for what they are doing, they will be conservative.) Prior to sectoral meetings, a senior White House or Cabinet official [or a high-level former CEO] should speak with at least two key CEO's about the talks in order to assure their engagement. 3. Crosscutting There will bc a crosscutting effort to cut across all groups on some overall design questions. This could assure that cach group benefits from lessons of the others. and it could help us achieve a cohcrent overarching policy structure. The issue of credit for early action and perhaps emissions trading will be discussed in separate, expedited inter-agency forum. 4. Agencies From the onset, the effort needs to take advantage of agency expertise and abilities, particularly their strengths to carry out follow-up actions. B. Operational Considerations 1. Background Analyses Documents will be prepared for cach sector compiling background information currently available in the agencies. These papers will be used to inform the Federal teams and provide some basis for discussions with the private sector. 2. Scoping Mtg. Wc should convene a small "scoping group" to plan each consultation. It should contain a fcw select industry Icaders combined with a few federal experts. This group can help strategize about the best way to frame questions, how the effort should be defined for that sector, and how to ensure the best outcomes. 3. Attendance We should be inclusive of as many companies as possible. Pending review of FACA requirements, the meetings would be more constructive if they were "off the record." It might also be uscful to have a follow up mceting to vet any ideas with others involved with the sector (academics. labor leaders and public interest groups). 2 Predecisional Draft Do Not Quote or Cite Mar-04-98 09:46P Climate Change Task Force P.05 On the federal side, we should assemble expert teams from relevant agencies (Energy, EPA, Commerce, Agriculture, Transportation, Defense, Interior, NASA, State, USTR, AID) and White House offices (NEC, CEQ, OSTP, OMB, NSC). We should select a leader for each sectoral team to help focus activities, drive the process and serve as a point of contact. 4. Guidance Sectors will be asked to prepare in advance of the consultations information on industry historical cmissions, future trends, and potential reductions. For example, they could determine what the industry's baseline was in 1990 (or 1995 for those gases), what the scenarios are for 2008 to 2012 and what actions could bring the greatest improvements on those scenarios. It could also be beneficial to review the industrics' competitive situation in the international economy. its business trends (including energy and environment) and its research and development plans. The ultimate goal is to reach agreement on a voluntary reduction plan, either collectively or individually. 4. Industry Kick-Off After the scoping meetings, the next activity will be a kick-off meeting with industry. The wider industry membership and the Federal teams will attend to describe the process to the private sector and to set the timelinc for action. When industry has had time to draft a preliminary commitment, the Federal teams will follow-up, review the plans and respond to agency requests. 5. Follow Up The federal team should ensure that ideas are submitted for expedited consideration in the policy process. Agencies should havc primary responsibility to carry out follow-up activities, pursuant to their proper authorities, under coordination by White House offices. C. Time Line The following time line describes the actions and responsible parties for four major activities: initial preparation, scoping meetings, industry consultations, and agreements and follow-up. 1. Initial Preparations (present - early March) Goal: To prepare the Federal government to effectively engage the private sector. (1) Prepare planning documents that will he used as templates to guide the consultations for all sectors. Finalize template for Sector Analyses; analyses will include sections on sector emissions, options for emissions reductions, current sector activities, and barriers to or opportunities for emissions reductions. WHCCTF: 3/2 3 Predecisional Draft -- Do Not Quote or Cite Mar-04-98 09:46P Climate Change Task Force P.06 Draft Sector Analyses for 1-2 sectors; assignments made for agency leads for remaining sectors Agencies (DOF/EPA): 3/2 Draft questions to be addressed in consultations WHCCTF: 3/2 (2) Establish Federal leadership structure Assemble an Assistant Secretary Council, with representatives of each relevant agency, to give oversight and guidance. WHCCTF/Agencies: late February/early March Establish technical teams from the agencies to be responsible for each sector WHCCTF/Agencies: late February/early March (3) While consultations will occur with the full list of industries categorized in the scoping paper, initial meetings will proceed in a phased manner to immediately address those industries who are already close to making voluntary commitments to reduce emissions. Narrow the list of industries to 6-8 for Phase I of scoping meeting and full consultations; determine broad strategy for remaining sectors on the list WHCCTF/Agencies: early March Preliminary list: steel. airlines, electric utilities. aluminum. pulp & paper and cemeni; possibly buildings. autos, chemicals, fleets. electronics Select a member of the Assistant Secretary Coucil to join each sector group WHCCTF/Agencies: early March Draft Sector Analyscs for 6-8 sectors prepared and approved Agency leads: second week of March (4) Present work to Assistant Sccretaries Council for discussion WHCCTF/Agencies: second week of March 2. Scoping Meetings with Phase I Industry Sectors (March) Goal: To plan industry consultations in conjunction with representatives of each sector. (1) Establish contact with selected sector CEOs through calls and/or meetings with Cabinet members or other senior White House personnel. Timing might vary from sector to sector and could be held before or parallel to scoping meetings. Contact at least two CEOs from each sector to assure their engagement. WHCCTF: varies 4 Predecisional Draft -- Do Not Quole or Cite Mar-04-98 09:47P Climate Change Task Force P.07 (2) Hold a preliminary, scoping meeting with a subgroup of each industry sector leaders to help plan the full industry consultations. It will be important to have appropriate industry people at these meetings who have the ability to at least informally speak for their CEOs and/or industrics. Identify a small number of principal players in each sector from the private sector Agency leads: early March Draft agenda for scoping meeting to include discussions on the structure of the consultations (agenda, questions. etc.), participants, and review of draft sector analyses WHCCTF: early March (3) The scoping meetings could probably be done in two weeks. holding about three each week. WHCCTF/Agency teams: 3/15 - 3/30 (4) Roll-out event to lay out plans (vision, scope, time table) Two parts: POTUS or VPOTUS meeting with CEOs followed by a larger bricfing of DC representatives from key sectors WHCCTF: mid to late March (5) Input from labor and environmental groups is also highly desirable. Teams for these "sectors" will also be assembled, and their efforts will be incorporated into the industry consultations. 3. Industry Consultations (April -- August) Goal: To encourage voluntary emissions reductions commitments from the industry sectors, improve understanding of technology opportunities, and identify and reduce barriers to these reductions. (1) Before the start of the Phase I consultations, the input from the scoping meetings should be incorporated into the Sector Analyscs. Finalize questions for industry and other inputs for consultations WHCCTF/Asst Sec Council: 4/15 Using the other documents, draft an options workbook matching barriers and potential opportunities with existing options available to sectors (inventory of Federal "carrots") WHCCTF/Asst Sec Council: 4/15 (2) The actual industry consultations will involve as broad a participation within each sector as possible. The consultations will require a series of meetings. First, an industry kick-off to present charge to full industry membership. Second, meetings with Federal teams to review commitment plans and plan implementation. Agency teams/WHCCTF: 1st SCI, end April - late May; 2nd sei, July - early Aug. (3) At the earliest appropriate time, the labor and environmental groups will be incorporated into the process. Their exact participation may vary from sector to sector. 5 Predecisional Draft - Do Not Quote or Cite Mar-04-98 09:47P Climate Change Task Force P.08 (4) We will also convene consultations with industries offering technological solutions ina way that informs and cnhances the emission reduction agreements with emitting industries. These may take the formof separatemectings, depending on what works best with a given sector. (5) Industry teams will present draft agreements to the Assistant Secretary Council. Agency leads: end August 4. Agreements and Follow-Up (September -- October) Goal: To ensure agreements are finalized and set into motion. (1) The draft agreements will include responsibilities/activics for both industry and Federal agencies. The industry section will include their commitments on emissions reductions. The Foderal agency section would include the help already availablc to sectors and potential agency actions to address barriers identified. Ideally, endorsements from labor, environments and some relevant state agencies will be solicited. Agency teams: September (2) A roll-out event by senior administration officials with presentations by industry and by agencies. Mid-October (3) Continue work on remaining industrics, beginning a second phase of scoping mcctings and full industry consultations. End of October IL SPECIFIC GROUPS There are specific players in key industries that can provide important inroads into most of the major emissions sectors. I would recommend that we begin consultations with the groups that have already expressed interest (Phase 1). As wc build a track record of success, it will be casier to bring others on board. Phase I Sectors Energy Intensive Industries Seven industries emit 50 percent of the greenhouse gases from the industrial sector (which is a full third of the emissions from end use sectors). Four of these are being considered for inclusion in the first phase of consultations. In addition, the carbon dioxide released during the calcification process means that the cement industry is also included here. 1. Steel 2. Aluminum 3. Pulp and Paper 4. Chemicals 5. Cement 6 Predecisional Draft -- Do No: Quote or Cite Mar-04-98 09:47P Climate Change Task Force P.09 Electric Utilities/Fuels/Buildings Electric utility emissions comprise one-third of U.S. source emissions. The fucls producer and building sectors crosscut all the industry sectors listed, but none of the fuels producers are likely to be addressed during this first phase. 6. Electrics 7. Buildings Transportation The transportation sector represents a final third of U.S. end use emissions. Especially in the case of automobiles. the prescnce of so many individual cinitters will prove extremely challenging. 8. Airlines 9. Automobiles 10. Fleets Future Growth Industries Industry sectors whose emissions arc projected to rise in the future also need to be a part of the consultations. 11. Telecomm/Electronics Phase II Sectors Energy Intensive Industries 12. Glass 13. Foundries 14. Refineries Electric Utilities/Fuels/Buildings 15. Natural Gas 16. Renewables 17. Efficiency 18. Mining Transportation 19. Railroads Other 20. Appliances 21. Vendors 22. Agriculture III. Addendum A: Industry Plans for Early Reductions -- A one-page summary description B: Questions for Industry -- Sample questions to he considered by industry 7 Predecisional Drafi -- Do Not Quote or Cite Mar-04-98 09:48P Climate Change Task Force P.10 ADDENDUM A: INDUSTRY PLANS FOR EARLY REDUCTIONS Draft: March 4, 1998 We must continue to encourage key industry sectors to prepare their own greenhouse gas reduction plans. And we must remove the barriers to the most energy efficient usage possible. There are ways the federal government can help to achieve meaningful reductions voluntarily, and we will redouble our efforts to do so." -- President Clinton, October 22, 1997 GOAL: Develop plans of action to achieve early voluntary reductions in greenhouse gas emissions in key sectors of the economy with the goal of making as much progress as possible toward the targets set in Kyoto. RATIONALE: To the extent that cost-effective reductions in greenhouse gases can be achieved in the near to medium-term through voluntary efforts, the burdens associated with meeting future targets will be reduced and the rate of build-up of greenhouse gases will be slowed. INDUSTRY'S ROLE: To develop a plan for reducing greenhouse gas emissions beyond "business as usual." Building on existing government-industry partnerships. the plan should identify: an emissions reduction goal; the path forward for achieving that goal using cost-effective measures; barriers to achieving reductions that could be removed; incentives that could be created to encourage such reductions: possible changes in federal procurement or practices: options for reducing emissions through trading or sequestration; opportunities for achieving reductions abroad; and a longer-term research and development strategy. FEDERAL GOVERNMENT'S ROLE: To facilitate the development and implementation of industry plans by: emissions; inventorying existing programs and resources with the potential to reduce greenhouse gas where appropriate, provide collaborative support to facilitate a broad based industry dialogue, to contribute technical and analytic assistance, and to provide other assistance in the development of industry plans for early action: working cooperatively, wherever possible. to remove barriers and create new incentives for reducing emissions; and developing guidelines for early credit for qualifying reductions. WHY PARTICIPATE: Participating industries will be able to jump start their search for low cost reductions, benefit from federal support in such efforts, and be poised to help shape and take advantage of credit for early actions. TIMETABLE: Kick-Off Meetings with Initial Sectors March-April Plan Preparation April-August Initial Sector Plans Presented September-November Additional Plans and Implementation November and beyond Mar-04-98 09:48P Climate Change Task Force P.11 ADDENDUM B: QUESTIONS FOR INDUSTRY Draft: March 4, 1998 BACKGROUND Describe the nature of the industrial sector. Include number and size of firms, industrial output and sales. overseas investments and exports. and a general description of the economic forecast for the industry including future sales and any projected changes in structure, technology or market position of the industry. Identify current sources of greenhouse gas emissions. Where possible, include estimates of baseline emissions and of projected future emissions. Also, specifically identify energy use (total and per unit of output). Discuss technological options for greenhouse gas reductions (e.g. energy efficiency or renewable energy). This would include an estimate of relative cost effectiveness of options identified. Options that sequester greenhouse gases may also be included here. Include existing activities, especially those in partnership with government, to reduce emissions of greenhouse gases. Explore ways to include labor and environmental group leaders (or other relevant parties outside the industry) in the process. EMISSIONS REDUCTION GOAL Decribe in detail the emissions reduction goal in relation to the Kyoto baseline, including the time frame for achieving the reduction. Identify which companies within the industry are cooperating to achieve the goal. Identify emissions reductions that would be possible before the first Kyoto budget period if credit for early action was available. Include an action plan showing the actions to be taken by industry and how the goal will be achieved. Identify barriers to achieving reductions and who might remove them. Include potential incentives to encourage reductions that could be created and who might create them. Focus on possible changes in government (Federal, state or local) practices or procurement. Identify long term R&D needs to achieve additional reductions in greenhouse gas emissions for the industry. Identify the impacts on competitiveness, productivity, jobs, further environmental benefits or other auxiliary outcomes from meeting the greenhouse gas emissions reduction goal. September 25. 1997 JLY MEMORANDUM FOR TODD STERN. GENE SPERLING, KATIE MCGINTY. & DAN JAF TARULLO MJ FROM: DIRK FORRISTER RL AM SUBJECT: FRIDAY'S ROOSEVELT ROOM MEETINGS ON CLIMATE CHANGE JA Following the meeting held last week with representatives from electric utilities, two additional meetings with industry representatives have been scheduled for Friday, September 26th. A meeting at 9 am includes a group of industries representing manufacturing firms with generally moderate views on climate change. A second meeting at 3 pm will include chemical companies and representatives from other energy-intensive manufacturing industries. Both meetings will take place in the Roosevelt Room. This memo provides background information on the companies attending these meetings and the issues they are likely to raise. 1. AGENDA The meetings will cover two major topics. plus any other topics you or the participants want to explore in the time available. International Framework: what do they view as the critical elements for the Protocol that would gamer their support? What do they view as "deal breakers" in terms of their ability to support? What type of target/timetable could they support (or at least not oppose)? These firms represent a wide range of positions. Some support only voluntary actions and nothing else. Many support key elements of our current negotiating framework (e.g., emissions trading. joint implementation. multi-year budget period. and greater actions by developing countries.) This group is very concerned that we will compromise or walk away from these issues in order to get a deal in Kyoto. There is some support for a binding target in this group. but only if all the other parts of the framework are achieved. Others that could be convinced to support a reasonable target have been disappointed in the lack of any Administration economic analysis underlying the selection of a target. Most would prefer a longer period for a target to facilitate capital stock tumover. Early Action Incentives: is there some way to advance an early action program as part of the president's policy announcement? Is there some way to reconcile industry's interest in undertaking early action with the uncertainty about domestic policy design? Most of these companies have participated in actions aimed at reducing emissions under the President's Climate Change Action Plan. Many believe that more can be achieved. but they fear that, in the absence of a clear domestic program. further reductions achieved might only make it more difficult to comply with future required targets. These companies also fear that they will be singled out to carry more than their fair share of emissions reductions. Because they are already heavily regulated industries, they view themselves as casy targets for greenhouse gas reductions. particularly if reductions from the auto sector are not achieved for political or other reasons. 2. Participants I. Friday, 9 - 10 am MOTOROLA CORP. Richard Guimond, Corporate Director: leading manufacturer of electronic goods. They generally have a strong environmental. are participating in a voluntary program to reduce greenhouse gases from the chip manufacturing process, and refused to sign the BRT advertisement. They generally favor cost-effective, market-based solutions and have concerns about international competitiveness. They are sensitive to the concerns of their major customers. but want to see a responsible response to deal with the threat of climate change. Rich is a former DOE and EPA official in the hazardous waste field. BALLARD POWER SYSTEMS Scott Weiner, President: leading developer of proton exchange membrane fuel cells. It has formed a strategic alliance with Daimler Benz to commercialize fueLcells for the transport sector and has been participating in PNGV program. It is also working with GPU International to develop fuel cells for stationary electric power applications. with a field trial of a 250 kilowatt power plant scheduled for 1999 and commercial production during 2001. Scott is a former New Jersey environment commissioner and former executive with General Public Utilities. UNITED TECHNOLOGIES Judith Bayer, Director, Environmental Government Affairs: with annual revenues of $23.5 billion. UTC provides a broad range of high-technology products to the aerospace. buildings and automotive industries. Major business lines include: Pratt and Whitney engines, Carrier heating and air conditioning systems. Otis elevators. Sikorsky helicopters and International Fuel Cells. They are members of the International Climate Change Partnership. Because Carrier's products rely heavily on HFCs. they feel strongly that any climate treaty should include all gases in a single basket and not contain specific policies and measures. They are also interested in any federal policies that could spur sales of fuel cells. AMERICAN STANDARD COMPANIES Jim Wolf, Vice President, Government Affairs: the world's largest producer of bathroom and kitchen fixtures. one of the world's largest manufacturers of heating and air conditioning systems, and a major supplier of vehicle braking and control systems. Worldwide sales in 1996 were $9.6 billion. They are a member of both the in International Climate Change Partnership and the Business Council for Sustainable Energy. As a manufacturer of energy efficient equipment, they have been a leading supporter of taking near-term actions to reduce emissions of greenhouse gases. They also support emissions trading and joint implementation, budget periods, and treating all gases within a single basket. They strongly oppose harmonized policies and measures. HONEYWELL CORP. Glen Skovholt, Vice President: Mike Bonsignore attended the CEO meeting with the President and is a supporter of action to address climate change. With sales of $7.3 billion. the company is a world leader in energy efficiency technology. They have been an active participant in Green Lights and Energy Star voluntary programs. While it has a lot to gain from any actions that spur growth in energy efficiency technologies. it is careful in the political debate to avoid offending its major customers in the automobile. oil and utility industries. Honeywell is a member of the Business Council for Sustainable Energy. AT&T Alice Borrelli, Director: While they have not been active on the issue of climate change. AT&T believes that the scientific case for action is strong. They did not sign the Business Roundtable ad calling for more research before taking action. They believe that the electronics and communications sectors could benefit from actions to reduce greenhouse gas emissions. They support efforts to bring the larger developing countries into the process. GENERAL ELECTRIC Larry Boggs, Legislative Counsel: has many business units that would be affected by climate change. GE is a major manufacturer of energy consuming appliances, is the parent company of Employers Reinsurance, and is a major supplier to the automobile and aerospace industries. GE is a member of the International Climate Change Partnership. ALLIED SIGNAL Joseph McQuire, Director, Environmental and Legislative Affairs: is a chemical producer and manufacturer for the automotive, acrospace and utility sectors. Allied has sought to play a moderating influence on this issue among major manufacturing firms. They believe that cumate change must be addressed but support a moderate approach to any agreement including reliance on market mechanisms such as emissions trading. They have been involved in several "green programs" under the Climate Change Action plan where they have technologies capable of reducing greenhouse gas emissions. They are a member of the International Climate Change Partnership. INTEL CORPORATION Tim Mohin, Manager, Government Affairs: the world's largest chipmaker and a leading manufacturer of PC. networking and communication products. Intel has been actively involved in a number of voluntary programs to reduce greenhouse gas emissions. but has not taken an active role on climate policy issues. They manufacture computers under the "Energy Star" label that "sleep" when inactive. substantially reducing energy consumption. They are also participating in an industry research program aimed at reducing or eliminating PFC emissions (a potent greenhouse gas) from the chip manufacturing process. They would like any international agreement to include flexible measures that allow for cost-effective reductions and that require actions by developing countries. BRITISH PETROLEUM Bruce McCrodden, Vice President, External Affairs: The President of BP America and the CEO of BP (John Browne) have been outspoken advocates of actions to reduce greenhouse gas emissions. In a speech this week. John Browne spoke out in support of taxes to reduce greenhouse gas emissions. BP is also expanding its own emissions trading and joint implementation activities. BP chairs the International Climate Change Partnership. INTERNATIONAL CLIMATE CHANGE PARTNERSHIP Kevin Fay, Executive Director: comprised of approximately 35 companies and associations, this group represents a relatively moderate position on climate change. Members include chemical companies. air conditioning and refrigeration manufacturers, aerospace companies, and one oil company (BP). They seek to balance recognition that the science compels some action with the need to take sensible. cost-effective steps that will not prove burdensome to their companies. They generally have been supportive of the proposed U.S. framework, but remain concerned that we will not achieve key elements of our proposal, but will sign an agreement in Kyoto anyway. They are seeking assurances that WC not back down from our proposals. They are interested in the possibility of an expanded voluntary program to achieve nearer-term reductions, but are concerned that any program must insure that investments in reductions are counted toward any future obligations incurred by their firms. BUSINESS COUNCIL FOR SUSTAINABLE ENERGY Michael Marvin, Executive Director: Members include companies that manufacturer energy efficiency equipment and alternative sources of power. They represent those firms that stand to gain markets from any actions that restrict greenhouse gas emissions. As such. they have been active in promoting early action and have strongly supported the U.S. position on emissions trading and joint implementation and realistic binding targets. They have urged actions by 2005 and are very concerned that any target that extends significantly beyond that will not be taken seriously by industry or consumers and will undermine efforts to reduce emissions and advance technology in the near term. II. FRIDAY 3 pm MEETING -- PARTICIPANTS and COMPANY PROFILES Alcoa Marcia Dalrymple. Manager, Government Affairs Headquartered in Pittsburgh, Alcoa is one of the world's leading producer of aluminum and alumina and has sales of $13.1 billion. Whether it will be easy to scale-up trading to deal with carbon emissions remains an open question in their view. Alcoa has been an active participant in two of EPA's voluntary programs: Green Lights (energy efficient lighting) and the Voluntary Aluminum Partnership (reducing chemical emissions from the smelting process). Alcoa has experience in the acid rain emissions trading program; they opted in as a large industry generator. Paul O'Neill, Alcoa's CEO, joined the President and Vice President for the August 4 CEO meeting. He is concerned that policy-making should not get ahead of sound science and he is advocating a focused research effort aimed at resolving uncertainties. They are concerned about competitiveness impacts related to developing country obligations, but don't have a view yet on the details of those obligations. Alcoa wants to work with us to help shape policy on climate change. FMC Corp. Harold S. Russell. VP. Government Affairs Based in Chicago, FMC is a diversified supplier of chemical products, agricultural chemicals, precious metals, defense systems, automobile components, food machinery, petroleum equipment and specialized machinery. With annual sales topping the $3 billion mark, FMC ranks as a Fortune 150 company. International sales to more than 100 countries account for more than one-third of their total annual revenues. Robert Burt, CEO of FMC, chairs the Business Roundtable's Environment Committee and climate change initiative. The Business Roundtable has said that we need a much more extensive policy dialogue before we make final decisions regarding targets and timetables. Burt is unconvinced that we need targets and timetables at all. Burt has taken moderate approaches on other environmental issues like Superfund and TRI and has been willing to take reasonable positions that draw tire from hard-une colleagues. He has taken interest in the potential for voluntary action to play a role in our final domestic policy. Bethlehem Steel Maurice (Mo) Emest Carino Jr., VP. Federal Government Affairs Bethlehem Steel is headquartered in Bethlehem, PA, with major plants in MD, IN, PA, upstate NY, and MS, and a coal mine in West Virginia. In 1996, they achieved sales of almost $4.7 billion. They are the nation's largest producer of plate steel, most of it in the higher value grades required for the more demanding industrial uses. They are also a leading supplier of railroad rails to the rail transportation market and large diameter pipe to the energy market. One of their main economic issues are tremendous heath care and pension liabilities. Since 1978 they have reduced their energy use by 40% and have recently restructured. Bethlehem has also endorsed the CERES Principles. Bethlehem's CEO is the Chair this year of the American Iron and Steel Institute (AISI). His number one climate issue is developing countries because of their steel production. Flexibility is important as well. Regarding targets and timetables, they are concerned about the impact on growth of a carbon cap. In addition, at the meeting with the President, he emphasized the importance of voluntary programs. Credits for early reduction is very important because they have achieved reductions since 1990. At a meeting yesterday, AISI told us that they could achieve a 10% reduction from 1990 levels by 2010 through voluntary programs. DUPONT CORPORATION Tom Jacob. Environmental Manager A major chemical producer (including HFCs) and the parent company to Consolidated Coal. - Dupont is a major contributor to greenhouse gas emissions. DuPontwas a leader in recognizing the scientific case demanded action to phase-out CFCs. In the case of climate change, they believe that John Browne of BP got it right when he said that significant uncertainties remain, but that prudence supports taking some actions now. They are very concerned that this issue is getting highly politicized on both sides and look to the Administration to provide bipartisan science-based leadership. They are also concerned that if actions are taken that all industries should be required to contribute in an equitable manner and fear that the chemical industry may be an easier target that some other sectors (e.g., autos or buildings). They are currently exploring possible ways to structure voluntary programs to achieve meaningful actions while safeguarding investments. ENRON CORP John Palmisano. Director. Regulatory Affairs: Ken Lay attended the CEO meeting with the President and was supportive ot acuon w address climate change. With annual revenues of $13 billion. Enron is a diversified energy company with one of the world's largest natural gas pipelines. an active wholesale electricity brokerage business. major investments in solar and wind technologies, and the recent purchaser of Portland General Electric Utility. Enron has also been an active trader in sulfur dioxide allowance market and strongly supports joint implementation and emissions trading. They believe action in the nearer-term is critical to sending the proper signals to the market place. Enron is a member of the Business Council for Sustainable Energy. John left EPA after helping design the earliest EPA emissions trading programs and established his own trading company which ultimately was purchased by Enron. Georgia-Pacific James E. Bostic, Jr., VP Georgia-Pacific, headquartered in Atlanta with $13 billion in annual revenues, ranks first nationally in the production of structural and other wood panels and second nationally in lumber, owning six million acres of timberland. They own the world's largest building products distribution system. 1996 was a very challenging year for Georgia-Pacific, because of the most dramatic price collapse ever in commodity pulp and paper markets. On climate change, Georgia-Pacific is positioned with some unique opportunities: forest sequestration and producing energy from biomass waste or crops. They are concerned about potential international competitiveness impacts, if energy prices rise dramatically with climate policy, but are interested in working constructively on a reasonable outcome. Weyerhauser Gary D. Risner, Federal Environmental Regulatory Affairs Manager Weyerhauser is one of the largest forest products companies in the world. Weyerhauser operates more than 130 manufacturing facilities and employs 39,700 people in North America. They also have sales offices in Asia and Europe. Their headquarters are in Federal Way, WA. Their main business units are Timberlands (producing wood and wood fiber): Wood Products (producing softwood lumber, plywood and veneer; oriented strand board, composite panels. hardwood lumber and doors, and wholesale building materials): Pulp. Paper, Packaging and Recycling (market pulp. newsprint, bleached paperboard, printing and writing papers, container board and corrugated packaging. and collection and marketing of recyclables. chemicals): Weyerhauser Real Estate. and Weyerhauser Mortgage. Regarding climate change. Weyerhauser supports the American Forest and Paper Association's Global Climate Change Position statement. which says that: --Any new treaty must involve all countries including the developing nations. --Biomass fuels combustion must continue to be considered a net-zero greenhouse gas contribution --Any treaty must recognize the positive effects of active forest management --Carbon storage in forests and wood products must be better recognized --Climate science must be subjected to periodic review by peers and all stakeholders --Treaty participants must assure consistent reporting and enforcement in all countries Weyerhouser also believes that flexible. incentive based approaches can be appropriately utilized to encourage world-wide participation in reducing greenhouse gas emissions. Pushing for mandatory emissions reductions in the short term may not be required and could be potentially damaging to the US economy. A better approach is to continue global scientific studies with ongoing climate change verification while stimulating incentive based technology development to meet long term emissions reduction requirements and time schedules. Holnam Inc. David Rinas. Sr. Vice President Holnam is the largest cement manufacturer in North America. Headquartered in Michigan, Holnam has manufacturing facilities. distribution centers and marketing offices spread throughout the United States. Holnam is a private company, wholly owned by Holderbank Financiere Glaris. which is the world's largest producer of cement and related construction material. Holderbank is headquartered in Switzerland and is publicly traded on stock exchanges in Zurich and London. Holnam has been very proactive on climate change. They claim that we could reduce CO2 emissions from cement production cheaply and easily by increasing the use of cement substitutes. The U.S. is behind the rest of the world in the utilization of substitutes. Holnam wants the federal government to encourage the use of substitutes and overcome the market barriers we are reviewing these proposals at present. Trigen Thomas R. Casten. President and CEO Trigen is recognized internationally as a leader in district energy systems. (District energy applies economies of scale to heating and cooling buildings. A central plant produces chilled water. hot water or steam and pipes it to a number of buildings, thus eliminating the need for individual boilers and chillers.) The company has developed and operates 11 district energy systems in North America that provide economical and environmentally responsible heating and cooling to municipalities. commercial buildings. institutions and industry. Trigen is based in White Plains, NY. Trigen believes that the Administration's first act on the road to Kyoto should be to seize the low- hanging fruit represented by combining production of heat and power. More than two-thirds of the energy produced by burning fossil fuels for electricity is discarded as waste heat. Trigen's own analysis indicates that combining heat and power generation could drop the United States' output of CO2 well below 1990 levels. Owens Corning John D. Hopkins. Jr., VP. Legislative Affairs Headquartered in Toledo. Ohio. Owens Corning is a $3.8 billion, publicly held company of 19,000 people with manufacturing. sales and research facilities. including joint venture and licensee relationships, in more than 30 countries worldwide. Originally a glass company, the company now offers a diversified array of products. including complete building materials systems. advanced glass fiber used in more than 40,000 composite end-use applications from skis and golf clubs. to bridge decking and transmission towers. to automobiles, computers, and fiber optic cables. and large-diameter pipe used to build the infrastructure of developing nations. Owens Corning joined in the insulation industry's Lisbon Declaration on CO2 reductions. It says that the greenhouse effect requires urgent action. and that there is massive potential for energy savings in space heating through the use of proven thermal insulation technology. It says that 133 million tons of CO2 could be reduced if all American homes were to be insulated to the Council of American Building Official's 1992 Model Energy Code. On the other hand. Owens Corning signed the BRT ad. Joint implementation is especially valuable because the quality of building stock in Central and Eastern Europe is poor. Dow Chemical Paul Cicio, Global Issues Manager/Government Affairs Dow is the sixth largest chemical company in the world. operating in 157 countries. Headquartered in Midland. MI. they have sales of $20 billion a year. Dow is the largest producer of plastics in the world. Dow is also one of the largest energy consumers in the world. Dow has 323 operating facilities globally, including plants in about 20 states in the U.S. Over 90% of their energy consumption is through cogeneration. Dow is the only company (to their knowledge) who has committed to a 20% energy efficiency improvement over the next ten years (2% per year; about twice as high as the national average.) Dow has made voluntary commitments to reduce energy use in the U.S., Canada, Germany. and the Netherlands. Regarding climate change. Dow strongly supports actions to reduce energy use. Dow believes tough decisions on the treaty should be delayed until the science and economics are better understood. Dow is supporting more meaningful dialogue with the U.S. government regarding what it is we truly need to do without losing competitiveness. Whirlpool Michael Thompson. Director of Government Relations Whirlpool is the world's leading manufacturer and marketer of home appliances. Headquartered in Benton, MI., the company manufactures in 13 countries and markets products in more than 140 countries. In the last 8 years. Whirlpool has grown from a primarily U.S. manufacturer to a global company employing some 50,000 people on four continents. Whirlpool was the first company to develop and implement a CFC recovery and recycling for refrigerators. In 1994 Whirlpool began producing the refrigerator that won the Super Efficient Refrigerator Program (SERP) contest sponsored by U.S. public and private utilities. Whirlpool is also a voluntary participant in EPA's 33/50 program. Whirlpool has not been active on the climate change issue. It is a Republican bedrock company from the midwest. They signed the Business Roundtable ad. They are a company that should be better off under climate change restrictions. because they typically make the most efficient products in the appliance industry. They may still harbor some bitterness toward the Administration because they were unhappy that DOE took so long to complete the refrigerator appliance efficiency standards that Whirlpool lost its technological head start. They use refrigerants (HFCs) that would be covered under our proposed "comprehensive" approach and strongly oppose any harmonized policies and measures. They are a member of the International Climate Change Partnership. 06/20/97 10:55 202 647 9099 OES-OA-MLP 001/015 K OFFICE OF TIMOTHY E. WIRTH UNDER SECRETARY Copy AM JS FOR GLOBAL AFFAIRS MM DEPARTMENT OF STATE 2201 C Street, N.W. Room 7250 Washington, D.C. 20520 Phone: 202-647-6240 Fax: 202-647-0753 Please deliver to: Jim Baker, Commerce/NOAA Rosina Bierbaum, White House Dirk Forrister, CEQ Jeffrey Frankel, CEA John Garamendi, Interior Jack Gibbons, White House T.J. Glauthier, OMB Sherri Goodman, Defense Fred Hansen, EPA Number of Pages (including cover): 15 Date: June 20, 1997 I thought you would be interested in the following testimony on climate change, which I delivered yesterday to the Senate Committee on Foreign Relations. TEW 10:55 C202 647 9099 OES-OA-MLP 4 002/015 Testimony of Timothy E. Wirth Under Secretary for Global Affairs Department of State Before the Subcommittee on International Economic Policy, Export and Trade Promotion of the Senate Committee on Foreign Relations June 19, 1997 06/20/97 10:55 202 647 9099 OES-OA-MLP 003/015 Good morning, Mr. Chairman. I am pleased to join you this morning to discuss the importance of climate change and to outline the United States negotiating position as we move toward December's multi-national conference in Kyoto. Climate change is probably the most important environmental challenge facing the world. The ecological, human, economic and political consequences are of enormous importance for the mid-term and for the long-term - and each of us needs to understand them. We look forward to active and frequent consultations with this Committee and with the other members of Congress as we seek to reach an agreement and as we set up the needed long-term process. The Science I want to begin with the science - because scientists were the ones who drew our attention to climate change in the first place, and because we continue to base our policies on the best evidence and the most rigorous scientific analysis available. Let me highlight some of the key scientific issues on which there is a global consensus: human activities have significantly increased the atmospheric concentrations of greenhouse gases over the last century. 1 06/20/97 10:56 202 647 9099 OES-OA-MLP 4 004/015 global average temperatures have already increased by about one half to one degree Fahrenheit. the balance of evidence suggests a discernible human influence on global climate. projections of the future change, based on complex climate models and on our best understanding of the physics of the climate system, suggest an increase of another 2 to 6 ½ degrees Fahrenheit by 2100, with an average greater than any seen in the last 10,000 years. Sea levels are projected to rise an additional 1 ½ feet by 2100, from expansion of the oceans due to global warming, and from a melting of glaciers and ice sheets. Climate change is likely to have wide-ranging and mostly adverse effects on human health, with direct and indirect effects leading to increased mortality. Coastal populations and infrastructure are vulnerable: a 20 inch rise in sea levels would put about 100 million people at risk each year from storm surges, with significant costs. 2 06/20/97 10:56 202 647 9099 OES-OA-MLP 1 005/015 Natural and managed ecosystems are at risk as ideal ranges shift with the climate. The location of forest and agricultural zones will change significantly. Future unexpected changes in the climate are not included in the models. These surprises may have impacts of global magnitude such as fundamental changes in global ocean circulation or ecosystem behavior. These are the conclusions of the Intergovernmental Panel on Climate Change - an international body of more than 2500 scientists, expert in all aspects of climate change, including the physical sciences, the social sciences and the economics. U.S. government experts have endorsed their work, as have the academic communities in the United States and around the world. An excellent summary of the science and the impacts that could occur as a result of global climatic disruption was presented yesterday on behalf of nearly 2500 leading American scientists and I would like to include their statement for the record. We do not yet have all the answers with respect to the science. We cannot yet say with certainty what the local effects of climate change will be. But, with better scientific data, the picture is becoming clearer. 3 06/20/97 10:56 202 647 9099 OES-OA-MLP 006/015 For instance, in the United States, twenty inches of sea level rise would inundate 9,000 square miles of U.S. coastal land, with great loss of property and infrastructure. Rising temperatures could double the number of heat-related deaths. We now know that the ten warmest years since records began all occurred since 1980. Some of the most recent data shows that four of the five hottest years have occurred since 1990. With CO2 concentrations doubled in the atmosphere, heat waves like the one that killed around 500 people in Chicago two summers ago would be four to six times as likely to occur. While we acknowledge uncertainties about where, how fast and when climate change will occur, and while we continue to press for research that will help us to answer these important questions, the basic fact remains that we are having a discernible impact on our climate. Our policy is based on the current scientific consensus and on the need to achieve the most cost-effective emissions reductions possible. Our policy has three simple and straightforward objectives which are outlined in detail in a framework proposal we submitted to the climate convention in January. The proposal was shared with this Committee and was distributed widely with the public. The three objectives are as follows: 1. We are seeking to establish a legally binding emissions target for developed countries which is verifiable, credible and realistic. 4 06/20/97 10:56 202 647 9099 OES-0A-MLP 007/015 2. We are seeking an agreement in Kyoto that maximizes the flexibility for each country to meet this legally binding target, including through the use of market mechanisms. 3. Third, we recognize the importance of involving all countries in the agreement - and to this end we have incorporated extensive language into our proposal that calls for developing countries to act. Let me go through each of these in greater detail. The Target: It is clear that the Framework Convention on Climate Change has not proven adequate to the task of reducing global emissions. We anticipate that only two countries will meet the Convention's non-binding aim of lowering emissions to 1990 levels by the year 2000. We ourselves will miss the aim by about 10%. We believe a binding legal obligation to act will result in the passage of domestic laws - in all countries - that compel action. In order to build in some flexibility, our proposal calls for the targets to be multi-year in nature. Without this sort of legal obligation, countries will continue to pay only lip-service to their efforts to solve this problem. The past shows this is not enough. 5 9099 OES-0A-MLP 008/015 Flexibility: Solving the problem of climate change is a long-term proposition that will require enormous effort over a sustained period. It is therefore vital that we achieve emissions reductions as cost-effectively as possible. Our approach to climate change seeks to do this. We have recommended that each country be given the maximum flexibility to meet its legal obligation. And we have rejected common, harmonized policies and measures recommended by some countries. We have also learned from the successes of the past, and are, wherever possible focusing our efforts on the use of market mechanisms to reduce costs. One of the most innovative of these is the introduction of "emissions trading" into the lexicon of international agreements. The concept has been successfully used to reduce costs (as much as tenfold) in meeting the standards set for power plant emissions of sulfur dioxide. A similar program has also been successfully implemented in the Montreal Protocol on Substances that Deplete the Ozone Layer. In the climate context, we envision that Parties would be allowed to trade their emissions - seeking to reduce them where it is most cost-effective to do so. While we are still engaged in working through some of the details of how to implement this proposal, it is clear that such a program could significantly reduce the costs; some studies suggest by up to one-half. Another piece of our strategy on flexibility is joint implementation. Through joint implementation, countries are allowed to undertake emissions reductions 6 projects in developing countries and count these reductions against their own emissions. We believe that joint implementation holds enormous potential to reduce global greenhouse gas emissions in a cost-effective manner. Joint implementation would also produce other benefits such as encouraging technological innovation, promoting the use of cutting-edge U.S. energy technologies, and protecting forests and other critical habitat around the world. The U.S. has extensive experience with successful joint implementation projects. Recently, our approach on joint implementation received a major boost when President Clinton received the endorsement of the Dominican Republic and the seven Central American nations to endorse our concept of joint implementation for credit. This is a good example of our commitment to pushing through flexible mechanisms to implement new commitments under the Climate Change Protocol. Developing Countries: We recognize the importance of including developing countries in this agreement. Their participation is critical to achieving any kind of a lasting success in combating the threat of climate change. For that reason, the participation of developing countries has been a central piece of our own negotiating strategy. We must seek a level playing field in which all countries that contribute to the problem contribute to its solution. 7 06/20/97 10:57 202 647 9099 OES-OA-MLP 010/015 Developed countries, including the former Soviet Union and the countries of Eastern Europe, contribute about 60% of global emissions today, and developing countries account for about 40%. What do these numbers tell us? First, that the developed countries have historically contributed the greatest amount to the current heightened concentrations; we have fouled the nest. But the developing countries are rapidly growing, as are their emissions. The United States, with 5% of the world's population, is the largest greenhouse gas emitter, with more than 20% of the world's emissions. But China is not far behind, and is expected to pass us sometime in the first quarter of the 2 1st Century, although on a per capita basis, its emissions are projected to be less than one fifth of our own even then. There is a clear concern about the potential impacts on our international competitiveness. Let me assure you that developing countries are part of our negotiating strategy and they must join us in order to insure that no country suffers significant competitive disadvantage. We are all in this together, with different histories but with the same future. We pull a heavier oar at the beginning; over time, we all must pull together. Our policy has to be calibrated to reflect this reality. We cannot expect to solve the global problem unless all countries -- developed and developing -- participate in the solution. To this end, we have proposed three separate elements for developing countries in our proposal for Kyoto: 8 9099 OES-OA-MLP 011/015 1. We call on developing countries to continue to elaborate on their commitments in the Convention - including by providing information on emissions on an annual basis (the same as for developed countries), and by taking "no regrets measures" (actions which may be valuable in their own right, and which also mitigate climate change). We also call for a regular review of the actions developing countries are taking (again, using a review process similar to that established to assess our own actions). 2. We call on the newly developed countries (such as Mexico and Korea) to take on binding legal obligations to reduce emissions, recognizing that while the targets they adopt may not be the same as our own, such commitments will codify their new status, and differentiate them from the lesser developed countries. We are now working with potential members of this group to seek their agreement on such a step. While by no means an easy task, we believe that in Kyoto, we can find some language to insure that countries in this category will take on commitments that correspond to their more developed status. 3. We call for the negotiation of a new legal instrument which will include legally binding obligations for all countries - including all developing countries - as a next step in the path toward the ultimate stabilization of greenhouse gas concentrations in the atmosphere at a level that is not 9 06/20/97 10:58 202 647 9099 OES-OA-MLP 012/015 dangerous. This step, too, faces significant difficulty in the negotiations leading toward Kyoto. Finally, I want to take this opportunity to note that one of the most important potential incentives with regard to additional developing country participation-- the Global Environmental Facility - would be seriously undermined if Congress does not fully fund the U.S. contribution to this program. I hope you will support our request of $100 million for the GEF for this year. Let me close this morning by briefly reviewing for you the negotiating process between now and December 1- when we meet in Kyoto for the third session of the Conference of the Parties to the Convention. We have two more one-week officials-level negotiating sessions - the first in late July in Bonn, and the second in late October, also in Germany. During these two weeks we will be examining and negotiating the extensive text, which is a compilation of all the material submitted by all countries. This is an extremely divergent and broad document reflecting many interests around the world and it must be moved toward some consensus. At one end of the spectrum, reflecting their strong commitment to making an aggressive statement, the European Union has proposed that developed countries reduce emissions by 15 % below 1990 levels by the year 2010. The 10 06/20/97 10:58 202 647 9099 OES-0A-MLP 013/015 Organization of Small Island States has proposed a 20% reduction by the year 2005. At the other end, reflecting their concerns with the potential impacts of various emission reduction proposals (particularly on reductions in the consumption of fossil fuel), OPEC countries have introduced a proposal that they be compensated for any economic cost they might incur as a result of treaty requirements. Other countries have introduced recommendations that they be allocated an individualized, different target. This commitment to so-called "differentiation" is not yet defined, but is used by many countries as a first step toward finding their own way of joining the negotiating process. As we examine these proposals, and develop our own negotiation strategy, we will continue to be guided by our own principles of feasibility and economic opportunity. We are, as you know, doing extensive economic modeling, and we have not yet completed the process. We expect the modeling will soon be completed and available to all interested parties. I think it is useful as we think about the economic impacts of reducing greenhouse gas emissions that we remember over 2,300 economists, including eight Nobel Laureates, have endorsed a statement which in part states: 11 06/20/97 10:58 202 647 9099 OES-OA-MLP 014/015 " As economists, we believe that global climate change carries with it significant environmental, economic, social, and geopolitical risks, and that preventive steps are justified For the United States in particular, sound economic analysis shows that there are policy options that would slow climate change without harming American living standards, and these measures may in fact improve U.S. productivity in the longer run." I would ask that the economists' statement also be included in the record. Finally, I should note that we understand that Kyoto is but one more step on the long road toward stabilizing the atmospheric concentrations of carbon and other greenhouse forcing gases. The long-term goal is stabilization of concentrations of greenhouse gases in the atmosphere at an acceptable level. This is a task that must begin now but which will require a sustained effort over the next decades. Kyoto is a first step, but a very important one. The message that we send, by what we do, is enormously important. We believe we can succeed by: -- developing new technologies, and thus improving the way we fuel our economy, transport ourselves, and process materials -- using flexible economic instruments and market mechanisms 12 015/015 -- bringing in developing countries as full partners -- fulfilling the obligations of our leadership role And throughout this process, we can continue to promote economic development and improve the standard of living for the American people, while we protect the environment. It is important, in Kyoto, that we set up a system that will work -- one that will allow us to reduce our emissions at the lowest possible cost so that we can achieve the maximum protection of the environment. And it is also important that we send a clear signal to governments and industries so they can make significant investments in the new technologies that will be required if we are to achieve our ultimate goal. And finally, although those of us in the developed world must take the lead, everyone must participate in moving toward the solution. I look forward to working closely with you and your colleagues on this most challenging and complex of environmental issues. Thank you very much and I will be happy to answer any questions you may have. 13 Apr-09-97 02:21P Climate Change Task Force P.02 OMR F41 CC:JS White House Climate Change Task Force 750 Jackson Place. N.W. Washington, DC 20503 April 9, 1997 MEETING NOTICE Per Alicia work will To: Distribution Dirk Forrister 343-1060 Jeff, also CEA. warkent Calledin name ja From: Re: First Monthly Task Force Meeting marks wary washington. of As you know. Katie McGinty (Council on Environmental Quality) and Dan Tarullo (National Economic Council) established the White House Climate Change Task Force to coordinate communications efforts across agencies in order to support the international negotiations leading up to the Kyoto Summit in December. I appreciate the many words of encouragement and support as we have been getting organized. I would like to invite you to serve on the Task Force itself. which will meet on a monthly basis to coordinate communications efforts across agencies. If you are not the appropriate representative for your agency, please give me a call to discuss who would be more appropriate. The Task Force will help guide the work of three staff-level working groups: (1.) public communications and education: (2.) congressional affairs: and (3.) media response. Given the importance of this effort. there will be no substitutions for Principals at the Task Force meetings. The Task Force staff has been working hard to audit our current communications situation and to begin to plan and work with your agencies to implement improved communications about the Administration's policy priorities. In order to develop and finalize our work plan. we need an intensive "kick off' session of the Task Force. After consulting with several of you. [ plan to schedule a 3 hour off-site meeting. If you are willing to devote this time and we use it wisely. it should save us many hours of meetings later. The Task Force staff will provide agenda and background papers prior to the meeting to expedite our work. Given scheduling difficulties. I thought it best to poll Task Force Members on your availability SQ that we can ensure maximum attendance. Please fill out the attached form with your preferences on meeting times and return it by fax to Mary Washington at the Task Force (fax: 343-1162) by noon Thursday. April 10. Your prompt response will enable us to select a final time and place SO that you can plan your schedule accordingly. I appreciate your interest in this effort. If you have questions, please feel free to give me a call. 'II' 1060 Fax 202 Apr-09-97 02:21P Climate Change Task Force P.03 RESPONSE FORM FOR TASK FORCE OFF-SITE PLANNING SESSION Please respond with your preferences by noon Thursday, April 10 Name: Agency: I can be available the following days and times: Thursday, April 17, 3:00 to 6:00 pm Friday, April 18, 9:00 am to Noon Friday, April 18, 2:00 pm to 5:00 pm Friday, April 18, to Apr-09-97 02:21P Climate Change Task Force P.01 Distribution: David Sandalow, CEQ/NSC Marc Chupka, DOE Mark Mazur, CEA/NEC Kyle Simpson, DOE Shelly Fidler, CEQ Josh Gottbaum, Treasury Rosina Bierbaum, OSTP Ev Ehrlich, Commerce Jerry Melillo, OSTP Jeffrey Hunker, Commerce T.J. Glauthier, OMB Bill Samuels, Labor Alicia Munell, CEA Frank Kruesi, Transportation Jeffrey Frankel, CEA Charlie Rawls, Agriculture Eileen Claussen, State Brooks Yeager, Interior Rafe Pomerance, State Terry Garcia, NOAA David Gardner, EPA Mary Nichols, EPA Jun-17-97 03:59P Climate Change Task Force P.01 do:s June 17, 1997 JAT FAX MEMO J.S TO: Katie McGinty, David Sandalow at CEQ Am Dan Tarullo, Mark Mazur at NEC FROM: Dirk Forrister, Climate Change Task Force RE: Attachment Attached is the version of the document that was delivered to Todd Stern. It was shortened per Todd's comments, eliminating the "message" text. Thanks. Jun-17-97 04:00P Climate Change Task Force P.02 Climate Change: The President Engages the American Public Overall Goal: Show the American public that President Clinton is determined to combat climate change in a way that deserves broad support and benefits from the involvement of a broad range of participants. Overall-Strategy: A Three Pronged Approach 1. President's Vision Set Forth at UNGASS 2. Engage American Public in National Dialogue 3. Outreach to Policy Community 1. President's Remarks at UNGASS: Intensive Engagement to Chart Path Forward Goal: Set President's vision for approaching climate change and begin national dialogue. drawing business. labor and environmentalists into a cooperative process on how best to move forward. 2. Engaging the American Public in a National Dialogue on Path Forward Goal: Elevate public understanding of the importance of changing climate and build support for national policy priorities developed cooperatively through an open dialogue with the range of affected constituencies. Strategy: Presidential Events: 3 radio addresses by end of September (first possibly on June 28) Message-of-the-day events; for example: - Kick-off of Million Solar Rooftops (Virginia PV plant or sites in SW/West Coast) - Visit Chicago's Board of Trade SO₂ Trading Center - Visit a GLOBE school site - Visit the Denver Clean Car Exhibit at G-8 - Visit New York Harbor to highlight sea level rise issues - Visit National Park where fragile ecosystems are threatened. Vice Presidential Events: Site visits to technology demonstration projects (e.g. biomass or wind demonstrations in Iowa or Minnesota) Announce a New Clean Cities participant (Houston. Phoenix, New York City) Partnership for Advanced Housing Technology (new development at Stapleton Airport in Denver or southern California/Florida in disaster vulnerable areas) Visit a Federal facility participating in the Federal Energy Management Program Jun-17-97 04:00P Climate Change Task Force P.03 Regional and National Workshops: Conduct.three regional conferences leading to a White House Conference. Three to five cabinet members and senior White House staff would participate in each. Conferences conducted in roundtable format, chaired by senior Cabinet members. Each would begin with key presentations, followed by open dialogue. Open to press and encourage live C-Span coverage. Conduct press backgrounders before and after. Involve regional corporate CEO's, academics, environmental & labor leaders. governors, other state & local leaders. religious leaders and members of Congress. All conferences would be comprehensive. but each would have a special focus, tailored to region. Locations: East: New Orleans, Charleston, Miami, or the New Jersey shore. Highlight: Coastal storms damage, infectious disease risk and forest system impacts in southern and eastern states. Mid: Columbus, Detroit. Chicago, or Indianapolis. Highlight: Agriculture shifts, coal community impacts, heavy manufacturing impacts and opportunities. West: Sacramento, Phoenix, Portland, Seattle or San Francisco. Highlight: Water resource conflicts, public lands impacts. technology response opportunities. National: White House/DC, Baltimore, Richmond, New York. Highlight: Comprehensive integration of concerns into a need and pathway for action. 3. Outreach to the Policy Community Goal: Engage policy community (CEOs and Congress in particular) in design of policies that comprehensively address climate change mitigation and that garner their support. Strategy: President and VP should each reserve 10 - 12 slots for climate orientation briefings and meetings with industry leaders between now and Labor Day. Cabinet members should be given key responsibilities for particular sectors/industries. Should schedule in close coordination with National Dialogue meetings. Also encourage Cabinet members to host at least one public meeting and make a major speech. Examples for President: meeting with Nobel laureates, meeting with religious leaders, meet with Congressional leaders to stress environmental imperative. Examples for Vice President: Dinner with Congressional leaders: Lead a Congressional visit with scientific leaders to the Smithsonian's climate change exhibit. Industry Roundtables: Series of CEO meetings with POTUS. VP, Cabinet members & Jun-17-97 04:00P Climate Change Task Force P.04 other senior staff. Offer our policy inclinations, get feedback and ask for their ideas on what's missing. Examples: Invite Norm Augustine, CEO of Lockhead Martin, to bring 10-15 CEOs of major environmental technology firms for meeting. Invite John Browne, CEO of BP. to bring 10-15 oil/gas CEOs for meeting. Invite R. Linn Draper, CEO of AEP, to bring 10-15 moderate electric utility CEOs for meeting. Invite Ken Lay, CEO of Enron, and Dennis Bakke, CEO of AES. to bring 10-15 independent power developers for meeting. Invite Michael Bonsignore, CEO of Honeywell, to bring 10-15 energy efficiency technology firms for meeting. Invite 10-15 renewable energy CEOs for meeting. Disseminate broadly the results of the PCAST review. The Committee has been challenged to produce an energy strategy that will meet the "energy and environment needs of the next century" by October. We should still consider an open meeting with the Washington, D.C., policy community on peer-reviewed economic analysis and other information to be used in the regional conferences. Notational Schedule: June 24-7: OSTP South East Regional Workshop (Vanderbilt) - scheduled June 25: VP Attends OSTP Impacts Workshop (Nashville) - scheduled June 26: President Speaks at UNGASS - scheduled June 27: President meets with CEO's of Big 3 automakers - scheduled June 28: First Presidential radio address to speak to climate change, perhaps with discussion of transportation sector (mtg. with Big 3 on 6/27), including the results of SunRayce 97 (pv powered car race) - TBD June/July: VP hosts Congressional Dinner - TBD Early July: Public Release of Economic Analysis - TBD Early July: Cabinet Orientation - TBD July 14-16: OSTP North West Regional Workshop (Seattle) - scheduled July/August: Industry Roundtables with President, Vice President, Cabinet and industry leaders - TBD Late July: Eastern Regional Meeting - TBD Mid August: Mid Regional Meeting . TBD Late August: Western Regional Meeting - TBD :- Jun-17-97 04:00P Climate Change Task Force P.05 Late September: White House National Conference - TBD September: President's Remarks to UNGA - TBD September 3-5: OSTP New England Regional Meeting (U of NH) - scheduled Nov. 10-12: OSTP National Impacts Workshop at NAS - scheduled October: PCAST strategy due Jun-17-97 02:51P Climate Change Task Force P.01 CC JY June 17, 1997 FAX MEMO ASAF Am TO: Todd Stern, Staff Secretary Katie McGinty, David Sandalow at CEQ Dan Tarullo, Mark Mazur at NEC FROM: Dirk Forrister, Climate Change Task Force 03 RE: Attachment At the direction of Shelley Fidler and David Sandalow, I have tried to incorporate comments to the attached in response to the morning meeting. OSTP sent several suggestions. which we incorporated as best we could in time available. Obviously, it got longer. Now 5 pages. I am open to suggestions -- easiest way to shorten is to drop out "messages" and save for later. Please advise. Thanks, Dirk at 343-1060 (Or fax changes to 343-1162) : Jun-17-97 02:51P Climate Change Task Force P.02 Climate Change: The President Engages the American Public Overall Goal: Show the American public that President Clinton is determined to combat climate change in a way that deserves broad support and benefits from the involvement of a broad range of participants. Overall Strategy: A Three Pronged Approach 1. President's Vision Set Forth at UNGASS 2. Engage American Public in National Dialogue 3. Outreach to Policy Community 1. President's Remarks at UNGASS: Intensive Engagement to Chart Path Forward Goal: Set President's vision for approaching climate change and begin national dialogue, drawing business, labor and environmentalists into a cooperative process on how best to move forward. Message: America has played an important role in this century for a peaceful and prosperous world. There are new challenges on the horizon. As America prepares to enter the 21" century. we are committed to improving our public education, advancing free trade, and beginning the transformation to a more sustainable environment. Climate change is our most important global environmental challenge as we approach the 21" century. The science is firm; the early evidence in consistent. Risks of inaction are high and unacceptable: increased storms, droughts and heat waves; increased sea level rise; more spread of infectious disease; problematic agricultural shifts; loss of forests and ecosystems. Costs of action are low and manageable, provided that policies are flexible and market based and that technology is deployed. Waiting isn't the answer because it makes the job harder to solve. I know the economy and how to create jobs. I am going to promote America's economic future and enhance the prospects for American workers. And I am going to find a way to address climate change effectively. We can do both. The path forward is clear: we need an effective international policy to control emissions. We're committed to maximum flexibility for businesses SO we can achieve the greatest environmental benefits at the lowest cost. We need a commitment to act but act thoughtfully and a recognition that this is a global issue to be addressed globally. We need policies that send strong signals to the market spurring investment and innovation in technologies that reduce greenhouse gas emissions. Jun-17-97 02:51P Climate Change Task Force P.03 I need the business community to step forward to work with us to find solutions. We need honest dialogue and a common vision. We need pragmatic steps now and ambitious goals for the future. We need to turn our technological prowess into an engine for change in abating greenhouse gas emissions. We can do this together, if we set our minds to it. Today, I'm asking every American to consider being part of this solution. Over the coming weeks, I'm asking the Vice President and my cabinet to engage in a new dialogue with the American public to find a common vision on the policy solutions required. I want them to report back to me at a White House Conference in early September with their findings on how best to move forward. I know that with the strength of the American spirit, the ingenuity of industry and the dedication to our children, we will meet this new challenge. 2. Engaging the American Public in a National Dialogue on Path Forward Goal: Elevate public understanding of the importance of changing climate and build support for national policy priorities developed cooperatively through an open dialogue with the range of affected constituencies. Message: We're serious about addressing climate change problems. We can meet the challenge better by working together than apart. We want to share what we have learned about climate science, economic impacts and opportunities, and possible policy alternatives. We want to listen to your views and incorporate them into our decision making. With concrete proposals, business can play a critical role in our decision making. We want to draw together America's best scientists, economists. and industry leaders to chart a path forward. And we want to go united into the world community with a vision of where all of America believes we should go on this critical issue. Strategy: Presidential Events: 3 radio addresses by end of September (first possibly on June 28) Message-of-the-day events; for example: - Kick-off of Million Solar Rooftops (Virginia PV plant or sites in SW/West Coast) - Visit Chicago's Board of Trade SO₂ Trading Center - Visit a GLOBE school site - Visit the Denver Clean Car Exhibit at G-8 - Visit New York Harbor to highlight sea level rise issues - Visit National Park where fragile ecosystems are threatened. Vice Presidential Events: Site visits to technology demonstration projects (e.g. biomass or wind Jun-17-97 02:52P Climate Change Task Force P.04 demonstrations in Iowa or Minnesota) Announce a New Clean Cities participant (Houston, Phoenix, New York City) Partnership for Advanced Housing Technology (new development at Stapleton Airport in Denver or southern California/Florida in disaster vulnerable areas) Visit a Federal facility participating in the Federal Energy Management Program Regional and National Workshops: Conduct three regional conferences leading to a White House Conference. Three to five cabinet members and senior White House staff would participate in each. (Include mix of Albright. Rubin. Daley, Browner. Peña, Glickman, Babbitt. Shalala, Richardson, Witt, McGinty, Sperling. Tarullo. Gibbons, Yellin. etc.). Conferences conducted in roundtable format, chaired by senior Cabinet members. Each would begin with key presentations, followed by open dialogue. Open to press and encourage live C-Span coverage. Conduct press backgrounders before and after. Involve regional corporate CEO's, academics, environmental & labor leaders. governors. other state & local leaders, religious leaders and members of Congress. All conferences region. would be comprehensive. but each would have a special focus, tailored to Locations: East: New Orleans, Charleston, Miami, or the New Jersey shore. Highlight: Coastal storms damage. infectious disease risk and forest system impacts in southern and eastern states. Mid: Columbus, Detroit, Chicago, or Indianapolis. Highlight: Agriculture shifts, coal community impacts. heavy manufacturing impacts and opportunities. West: Sacramento. Phoenix. Portland, Seattle or San Francisco. Highlight: Water resource conflicts, public lands impacts, technology response opportunities. National: White House/DC. Baltimore, Richmond, New York. Highlight: Comprehensive integration of concerns into a need and pathway for action. 3. Outreach to the Policy Community Goal: Engage policy community (CEOs and Congress in particular) in design of policies that comprehensively address climate change mitigation and that garner their support. Message: We need your help. Work with us, and we will jointly develop solutions that will work effectively and mitigate negative economic impacts to your business. Strategy: President and VP should each reserve 10 - 12 slots for climate orientation briefings and Jun-17-97 02:52P Climate Change Task Force P.05 meetings with industry leaders between now and Labor Day. Cabinet members should be given key responsibilities for particular sectors/industries. Should schedule in close coordination with National Dialogue meetings. Also encourage Cabinet members to host at least one public meeting and make a major speech. Examples for President: meeting with Nobel laureates, meeting with religious leaders, meet with Congressional leaders to stress environmental imperative. Examples for Vice President: Dinner with Congressional leaders; Lead a Congressional visit with scientific leaders to the Smithsonian's climate change exhibit. Industry Roundtables: Series of CEO meetings with POTUS, VP, Cabinet members & other senior staff. Offer our policy inclinations, get feedback and ask for their ideas on what's missing. Invite Norm Augustine. CEO of Lockhead Martin, to bring 10-15 CEOs of major environmental technology firms for meeting. Invite John Browne, CEO of BP, to bring 10-15 oil/gas CEOs for meeting. Invite R. Linn Draper, CEO of AEP, to bring 10-15 moderate electric utility CEOs for meeting. Invite Ken Lay. CEO of Enron, and Dennis Bakke, CEO of AES, to bring 10-15 independent power developers for meeting. Invite Michael Bonsignore. CEO of Honeywell, to bring 10-15 energy efficiency technology firms for meeting. Invite 10-15 renewable energy CEOs for meeting. Disseminate broadly the results of the PCAST review. The Committee has been challenged to produce an energy strategy that will meet the "energy and environment needs of the next century" by October. We should still consider an open meeting with the Washington, D.C., policy community conferences. on peer-reviewed economic analysis and other information to be used in the regional Additional Points: Resources: In order to implement the strategy effectively. we need to significantly upgrade our Jun-17-97 02:52P Climate Change Task Force P.06 outreach effort. It will take significant financial and staff resources to conduct preparations and carry out events and follow up. White House communications and advance personnel could contribute expertise in planning this education drive. In addition, principals would need to make time available for preparation. speeches, roundtables, etc. Up to $2 million (rough estimate) would be required for the regional and White House conference. We will need to designate a central coordinating facility to augment the White House Climate Change Task Force on this project. Orientation: In order to jump start the process, it will be necessary to have a half-day orientation session for principals, perhaps at the Vice President's residence or the Blair House. This would cover science, economics. technology, and policy options. This would happen in early July. Notational Schedule: June 24-7: OSTP South East Regional Workshop (Vanderbilt) - scheduled June 25: VP Attends OSTP Impacts Workshop (Nashville) - scheduled June 26: President Speaks at UNGASS - scheduled June 27: President meets with CEO's of Big 3 automakers - scheduled June 28: First Presidential radio address to speak to climate change, perhaps with discussion of transportation sector (mtg. with Big 3 on 6/27), including the results of SunRayce 97 (pv powered car race) - TBD June/July: VP hosts Congressional Dinner - TBD Early July: Public Release of Economic Analysis - TBD Early July: Cabinet Orientation - TBD July 14-16: OSTP North West Regional Workshop (Seattle) - scheduled July/August: Industry Roundtables with President, Vice President, Cabinet and industry leaders - TBD Late July: Eastern Regional Meeting - TBD Mid August: Mid Regional Meeting - TBD Late August: Western Regional Meeting - TBD Late September: White House National Conference - TBD September: President's Remarks to UNGA - TBD September 3-5: OSTP New England Regional Meeting (U of NH) - scheduled Nov. 10-12: OSTP National Impacts Workshop at NAS - scheduled October: PCAST strategy due R EDEFINING PROGRESS ONE KEARNY STREET 4TH FLOOR SAN FRANCISCO CALIFORNIA 94108 Telephone 415.781.1191 Facsimile 415.781.1198 March 10, 1997 Jeffrey Frankel Member Nominee Council of Economic Advisers Old Executive Office Building Washington, DC Dear Mr. Frankel, Peggy Duxbury, the Director of Corporate Policy for Redefing Progress, asked me to forward this information to you. Enclosed you will find the list of signatories to the Economists' Statement on Climate Change. There are currently 2,488 signatories. As you peruse the list you will notice that one asterisk (*) denotes one of the original five economists that drafted the statement, two asterisks (**) denotes a Nobel laureate in Economic Science. If you have any questions regarding the statement or the list of signatories please contact Peggy Duxbury at 202-588-8900; or you may want to contact our Senior Economist, Professor Stephen DeCanio of the University of California, Santa Barbara at 805-893-3130. Sincerely, am Chland Elsa Cleland Program Assistant Printed on Kery Paper ECONOMISTS' STATEMENT ON CLIMATE CHANGE LIST OF ECONOMISTS WHO HAVE ENDORSED TO DATE MARCH 7, 1997 NAME AFFILIATION NAME AFFILIATION Herbert S. Wong Howard M. Wachtel American University Robert L. Wood, Jr. James H. Weaver American University Dhez Woodworth Karen Hallows American University, Averett College Donald Wooten Ralph E. Beals Amherst College Jiehjou Joe Wu Richard C. Hoyt Analytics Martin J. Wyand Samuel Gubins Annual Reviews Inc. Steven Yamarik Elbert V. Bowden Appalachian State University Richard Young James Cavallo Argonne National Laboratory Robert C. Young Lutz Hendricks Arizona State University Piljoo Yum Michael Lemmon Arizona State University Katherine K. Yunker Gary A. Latanich Arkansas State University Peter Zadrozny Brian J. Cody Arthur Andersen Jay Zarnikau Kevin J. O'Connor Assistant Attorney General Stephen H. Zeller Thomas White Assumption College M. G. Zephirin Jian Cao AT&T Mingliang Zhang Douglas G. Hobbs AT&T Jacob Benus ABT Associates Christopher J. Monroe AT&T Clark C. Abt ABT Associates, Inc. Kumiko Powell AT&T Leland Deck ABT Associates, Inc. Gregory Napiorkowski AT&T Laboratories Ulrich F.W. Ernst ABT Associates, Inc. Louis T. Brewer AT&T. Rtd. Robert Kornfeld ABT Associates, Inc. Robert F. Hebert Auburn University Marty Makinen ABT Associates, Inc. John P. Sophocleus Auburn University Gregory B Mills ABT Associates, Inc. Henry Thompson Auburn University Larry L. Orr ABT Associates, Inc. Hiro Fukao Aurthur D. Little Gunars Hauff Platais ABT Associates, Inc. Patrick J. Kennon Aviation Economics Allen B. Ferguson AFE, Inc. Mark Tomass Babson College Amy K. Taylor Agency for Health Care Policy and Research Stephen Silver BADM, The Citadel Chiou-nan Yeh Alabama State University Judith A. Smrha Baker University Earl W. Adams Allegheny College Barbara Sherman Rolleston Baldwin-Wallace College Kenneth G. Ainsworth Allegheny College Terence E. Byrne Baltimore-Washington Financial Advisors Stephen D. Casler Allegheny College Leland S. Prussia Bank of America Corporation Pamela Mobilia Alpine PCS R. McFall Lamm, Jr. Bankers Trust Co. Michael Stavy Alternative Energy and EV's Maxwell Rhee Banque Nationale de Paris Paul Thompson AMBAC Indemnity Mary Lashley Barcella Barcella Associates Riad Tabbarah Ambassador of Lebanon to the U.S. Dimitri Papadimitriou Bard College Daniel Bell American Academy of Arts & Science Shannon Mudd Barente Group Paul Kahane American Economic Association Gopal Iyer Baruch College M. Abdul Shibli American Economic Association Theodore Joyce Baruch College Jay G. Chambers American Institutes for Research Ted Walther Bates College Donald Rosenthal American Management Systems Steve Shanltle Battelle Tom Everding American Medical Association Kathrine F. Wellman Battelle Memorial Institute Donald Bowles American University Dave Anderson Battelle-Northwest Robin Hahnel American University David B. Belzer Battelle-Northwest Sue Headlee American University Joseph A. McKinney Baylor University Alan G. Isaa American University John Katharopoulos BCBS of Michigan Bruce H. Lubich American University Ernie Nadel BCI SPONSORED BY: REDEFINING PROGRESS - ONE KEARNY STREET - FOURTH FLOOR - SAN FRANCISCO - CALIFORNIA - 415-781-1191 ECONOMISTS' STATEMENT ON CLIMATE CHANGE LIST OF ECONOMISTS WHO HAVE ENDORSED TO DATE MARCH 7, 1997 NAME AFFILIATION NAME AFFILIATION Wayne A. Morra Beaver College Andrew Weiss Boston University James Lacey Bell Labs Carla Y. Willis Boston University Steven G. Lanning Bell Labs Lucent Technologies Wei Yu Boston University Roger Story Bellcore William F. Samuelson Boston University School of Management Kristina Weir Bellevue Community College John Fitzgerald Bowdoin College Gary L. Hodgin Belmont University Charles R. Chittle Bowling Green State University Mary M. Thompson Belmont University Paul F. Haas Bowling Green State University Warren Palmer Beloit College Alan Day Haight Bowling Green State University Marc Bendick, Jr. Bendick & Egan Economic Consultants, Inc. Mark Kasoff Bowling Green State University Bertrand LaNoue, O.S.B. Benedictine College Kyoo Kim Bowling Green State University Janet M. Thomas Bentley College Harold I. Lunde Bowling Green State University Lucy Ackert Berry College Stephen Ziliak Bowling Green State University Bassem Abou-Zeid Bethel College Felicia Yesari BPBA-New York Phyllis Campbell Bethel College Kalman Goldberg Bradley University Miles O. Bidwell Bidwell Associates Inc. Kevin M. O'Brien Bradley University Charles W. Bischoff Binghamton University Anne P. Carter Brandeis University Clifford D. Clark Binghamton University Gary H. Jefferson Brandeis University Stanley H. Masters Binghamton University Arthur Lewbel Brandeis University Dr. N.J. Wulwick Binghamton University Rachel McCulloch Brandeis University L. Aubrey Drewry, Jr. Birmingham-Southem College Brian Kelly Brian Kelly Inc. M. Iqbal Akhtar Blackburn College Robert Axtell Brookings Institution Bennett W. Golub Blackrouk Financial Management Margaret M. Blair Brookings Institution Edward Bloom Bloom Research William Dickens Brookings Institution Woo-Bong Lee Bloomsburg University Edward R. Fried Brookings Institution Marshall Reinsdorf BLS Robert E. Litan Brookings Institution Ronald L. Friesen Bluffton College Nora Lustig Brookings Institution Chong-en Bai Boston College Robert Solomon Brookings Institution Christopher Baum Boston College Leo J. Raskind Brooklyn Law School Frank M. Gollop Boston College Louis Putterman Brown University Marvin Kraus Boston College Mark B. Schupack Brown University Robert G. Murphy Boston College Michael Spagat Brown University Harold Petersen Boston College Akio Yasuhara Brown University Joseph F. Quinn Boston College David R. Ross Bryn Maur College Paul Streeten Boston College Thomas Loo Budget Comp. Donald J. White Boston College Christian Ehemann Bureau of Econ.Analysis, U.S. Dept. of Commerce Eli Berman Boston University Gerald A. Pollack Bureau of Economic Analysis Zvi Bodie Boston University Joel D. Fischer Burnham Securities Inc. William M. Capron Boston University Hasan MacNeil Butte College Jonathan Eaton Boston University Bruce W. Kimzey BYU-Hawaii, School of Business Shane J. Hunt Boston University Robert Wassmer Cal State Sacramento Laurence J. Kotlikoff Boston University James M. Payne Calhoun Community College Thomas McGuire Boston University Tsong-Yue Lai Califonia State University Zvika Neeman Boston University Malcom Dole, Jr. California Air Resources Board Debraj Ray Boston University Seymour Goldstone California Energy Commission Ingo Vogelsang Boston University Lionel J. Lerner California Energy Commission, Rtd. David Weil Boston University Charles R. Plott California Insitute of Technology SPONSORED BY: REDEFINING PROGRESS - ONE KEARNY STREET - FOURTH FLOOR - SAN FRANCISCO - CALIFORNIA - 415-781-1191 ECONOMISTS' STATEMENT ON CLIMATE CHANGE LIST OF ECONOMISTS WHO HAVE ENDORSED TO DATE MARCH 7, 1997 NAME AFFILIATION NAME AFFILIATION Lance E. Davis California Institute of Technology Robert K. Arnold CCSCE Phillip Fanchon California Polytechnic State University Robert Deuson Center for Disease Control James Ahern California Polytechnic University Stephen T. Parente Center for Health Affairs Franklin Y. Ho California Sate Polytechnic University Carol Moore Center for Naval Analysis Daniel R. Blake California State University Jan Ondrich Center for Policy Research, Syracuse University Neil Garston California State University Sidney Weintraub Center for Strategic and IntL. Studies Tom G. Geurts California State University Paul B. Ginsburg Center for Studying Health System Change A. R. Gutowsky California State University James Reschovsky Center for Studying Health System Change Don R. Leet California State University Richard Glendening Central College Madhu S. Mohanty California State University Brian Peterson Central College Eduardo M. Ochoa California State University N. Wayne Jordan Central Florida Community College Michael Perelman California State University Paul Natke Central Michigan University Anil K. Puri California State University Baird Allen Brock Central Missouri State University Eric J. Solberg California State University David A. Anderson Centre College Donald J. Oswald California State University, Bakersfield Bruce K. Johnson Centre College Robert G. James California State University, Chico Robert E. Martin Centre College Suleman A. Moosa California State University, Chico Michael J. Walsh Centre Financial Products Ltd. Scott Houser California State University, Fresno Raymond Sfeir Chapman University Robert S. 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Wolf SPONSORED BY: REDEFINING PROGRESS - ONE KEARNY STREET - FOURTH FLOOR - SAN FRANCISCO - CALIFORNIA - 415-781-1191 ECONOMISTS' STATEMENT ON CLIMATE CHANGE Endorsed by Over 2000 Economists including six Nobel Laureates I. The review conducted by a distinguished international panel of scientists under the auspices of the Intergovernmental Panel on Climate Change has determined that "the balance of evidence suggests a discernible human influence on global climate." As economists, we believe that global climate change carries with it significant environmental, economic, social, and geopolitical risks, and that preventive steps are justified. II. Economic studies have found that there are many potential policies to reduce greenhouse-gas emissions for which the total benefits outweigh the total costs. For the United States in particular, sound economic analysis shows that there are policy options that would slow climate change without harming American living standards, and these measures may in fact improve U.S. productivity in the longer run. III. The most efficient approach to slowing climate change is through market- based policies. In order for the world to achieve its climatic objectives at minimum cost, a cooperative approach among nations is required-such as an international emissions trading agreement. The United States and other nations can most efficiently implement their climate policies through market mechanisms, such as carbon taxes or the auction of emissions permits. The revenues generated from such policies can effectively be used to reduce the deficit or to lower existing taxes. Sponsored By REDEFINING PROGRESS One Kearny Street 4th Floor San Francisco, CA 94108 Phone: (415) 781-1191 Fax: (415) 781-1198 EMail: [email protected] MEMORANDUM COUNCIL OF ECONOMIC ADVISERS Date: 13 Feb 97 To: Alicia Munnell Jeffery Frankel From: Jason Shogren RE: GCC Outreach Program Should we pay more attention to the outreach program? I talked with Sally Kane from NOAA (ex-CEA) who gave us a heads-up on the framing of the outreach programs that Dirk from DOE is organizing. The fear is that these regional outreach programs will present an unbalanced view of what we do and do not know about GCC--leaning toward alarming the public. We should care about this because these workshops might not present the best state of the art knowledge about the likely economic impacts of GCC. Attached is one example from the Central Great Plains workshop. On page 2, the wording is: Day 1: "potential vulnerabilities and risks..." Day 2: "critical constraints to economic, social and ecological sustainability..." Day 3: "needed community efforts to deal with climate change..." Also attached in a letter from John Gibbons following up on a GCC meeting with the VP that outlines what is going on in the outreach program. We have not been invited to any of the outreach meetings to discuss content or process. Apparently there is a central great plains regional meeting tomorrow--I am trying to find out where and when. What can we do? Attend the meetings to make sure that the economic message is balanced. Write a letter to Katie McGinty/Dan Tarullo suggesting that a formal or informal Advisory Board be established to help provide useful information to the outreach programs. 301 427 2073 P.03/04 FEB-13-1997 13:48 NOAA/OGP ran as. QIU 701 1000 1.00 WORKSHOP PROPOSAL OUTLINE CLIMATE CHANGE IMPACTS ON RANCHING, FARMING AND WILDLIFE CONSERVATION IN THE CENTRAL GREAT PLAINS (COLORADO, KANSAS, NEBRASKA, WYOMING) OSTP SPONSORED The evidence for climate change is becoming more compelling, yet must regions of the United States do DDI have a strategy to deal with the potential Impacts of climate change. In the Central Great Plains region (Ls., the Colorado, Kansas, Nebraska and Wyoming area). the potential impact of elimate changes is anticipated to affect winter snowfall, growing season rainfall amounts and intensities, minimum winter temperatures, and summer time average temperannes. The combined effect of these changes in weather patterns and average seasonal climate will affect numerous sectors critical 9 the economic, social and ecological welfare of this region. Water resources already scarce in the region may come under greater competition among the various users, for instruce ustan demands for drinking water may compete for water available for agriculture and wildlife conservation. Climate warming may severely impact the werland areas of the region bringing about SEVEIC consequences to the migratory and local water fowl and wildlife popularions. Climate change may also result in greater crop damages due B increased drought stress resulting from higher growing scaron temperatures. The loss of soil from these croplends may be enhanced by the lack of plant cover. Ranchers in the region may not be sble B support the current number of animals on the existing rangelands due to reduced dryland pasture production and back water resources for their andress Associated with climare change will be 8 mumber of indirect effects that will modify the ecological imegrity of mary of the ccosystems in the region. The increased number of moxious weeds, greater pest outhreaks, increased rate of aquifer use, and loss of werlands for water fowl may result due to increased temperatures in the region The economic and acathetic costs of these changes have not been evaluated within the region, nor strategies for mitigating or adapting to those changes have been developed. In order to better understand the scope of climate change issues and the potential economic and political implications of these climate impacts, we proposa to hold an initial workshop of critical smkeholders in this region and the scientific community to highlight the regional concerns and knowledge, The initial focus of this workshop will be on the ranching, farming, and wildlife sectors within the region. The goals of the workshop are: To more clearly. understand the scope of the potendal climate changes impacts that this region may need a deal with in the future, To identify the critical climate related constraints to economie, environmental, and social well-bring in the region among the stakeholders of the region; To begin the development of a regional mitigation and adaptation strategy that is politically, economically, and socially feasible. 301 427 2073 P.04/04 FEB-13-1997 13:49 NOAA/OGP 6- 1:00PM ENVIRONMENT DIVISION- 2023584103:# 3/ with -- WI 1110 will 181 THANK THE 014 TO: 1000 1.43 The Workshop participants will include representativies from the following sectors. Political Sector Congressional representatives, state legistlatures, county and city council members Land management sector Agricultural extension agents, rangeland extension agents, water conservation board members, wildlife conservation mangers, national and smite park resource managers Non-goveramental organizations The Name Conservancy, Audoban Society, Cattlemen's Association Commercial and Industrial sector Seed developers, agrobusiness, crop insurance Citizens Ranchers, furners, recreationists, hunters, fisherman Scientists Climatologists, ecosystem selentiats, hydrologists, agricultural scientists, wildlife scientists The structure of the workshop will be designed to provide a forum to present what is known about the climate change issues and identify the impacts of these changes and then to provide 4 platform for identification of critical issues related to climate impacts on various economic and anvironmental sectors critical to the region. We anticipate a three day warkshop in order to address these issues. The location of the meeting is still be decided, but H location in Colorado is being contemplated The timeframe of the forum in ser for May or June of 1997. Day 1: Presentation of climate change issues and potential impacts relevant to the region; identification of potential vulgerabilities and risks associated with regional climate change impacts Day 2 Discussion of critical constraints to economic, social, and emlogical sustainability in the region; development of possible minigation and adaptive strategies. Day 3: Develop framework for needed community efforts to deal with climate change impacts and identify critical issues for further development Plenary discussion of Summary comments and future plans The outcome to the workshop will be & regional appreciation of what critical climate change issues are that would affect the regional development and sustainability. The workshop will provide forma for beter understanding of the scientific basis of climare change impacts and the interwoven. sucio-economie and environmental fabrie from which the climate change impacts will be TOTAL P.04 FEB-13-1997 13:48 NOAA/OGP 301 427 2073 P.02/04 THE WHITE HOUSE WASHINGTON Fobruary 5, 1997 MEMORANDUM FOR: ATTENDEES AT THE VICE PRESIDENT'S CLIMATE RESEARCH MEETING FROM: John H. Glbbon 8ay SUBJECT: Follow-up on the Papers Assigned by the Vice President on January 30 At the end of our very productive meeting on Global Change Research, the Vice President gave a number of charges: 1) to help with the CEQ/NEC communication outreach effort (Kalie Metiinty and Dan Tarullo will send you a follow-up memo on this); 2) to assist with regional impacts workshops (Tim Wirth has since held an initial meeting and asked agencies to submit information about planned events to DOS), and 3) some agencies were tasked to prepare short impacts papers over the next 3-4 weeks. OSTP will serve as the focal point for this effort. This miemo is to clarify the assignment to produce impacts papers. The lead agencies designated were: NIH/EPA: Health NOAA: Fisheries. Coastal Zones USDA: Agriculture, Forests DOI: National Parks, Water Resources FEMA: Disaster Mitigation and Preparedness The ideal product would be short text, about 5 pages, written to address 3 key topics: what is the condition of the resource today (current stresses): what additional impacts does climate change pose for the resource: what resources (and where) are most vulnerable to as climate-changed world. what sncin-economic impacts might ensue, and what options for managing natural resources in the face of such change, ought to he explored. The papers will serve many purposes over the coming months as we work with stakeholders to explain what climate change incans for the average oitizen. We want good graphics-some national and some regional-that help explain the vulnerabilities of resources to climate change. Because several agencies may have Interesting work to bring to hear on each of these resources, I suggest the load agencies for each paper convene a meeting with other relevant agencies as soon as possible. Agencies should bring to these mestings an inventory of their completed, ongoing and proposed work on climate change so we can share this information as soon 36 possible. We hope you can complete your papers and submit them to us by the end of February. Rosina Bierbaum and Jeny Melillo of my office (456-6202) are assigned leads on this effort and will be happy to attend the inter- agency meetings and help with the overall process. 01/14/97 10:47 '2026470217 5. 002/004 GROUP OF SIX PLUS OSTP Rosina Bierbaum 456-6202 FAX: 456-6025 CEA Alicia Munnell 395-5036 FAX: 395-6958 NEC Elgie Holstein 456-5370 FAX: 456-2223 OMB T.J. Glauthier 395-4561 FAX: 395-4639 Justice Lois Schiffer 514-2701 FAX: 514-0557 Commerce Jeffrey Hunker 482-6055 FAX: 482-4636 NOAA Terry Garicia 482-3567 FAX: 482-6318 Treasury Robert Gillingham 622-2220 FAX: 622-2633 Interior Brooks Yeager 208-6182 FAX: 208-4561 USTR Jennifer Haverkamp 395-7320 FAX: 395-4579 Agriculture - Charlie Rawls 720-6158 FAX: 720-5437 DOE Dirk Forrister 586-5506 FAX: 586-9987 EPA Mary Nichols 260-7400 FAX: 260-5155 David Gardiner 260-4332 FAX: 260-0275 DOT: Frank Kruesi 366-2222 FAX: 366-3997 OVP Pete Jordan (ID) 456-9501 FAX: 456-9500 CEQ David Sandlow 456-6543 FAX: 456-2710 CEQ Steve Seidel 395-3706 FAX: 456-6546 01/14/97 10:47 '2026470217 003/004 The Washington Post BUSINESS Linking Business's Climate and Earth's Some Companies Begin to Explore Whether Global Warming Could Hurt Their Bottom Lines By Martha M. Hamilton santo Co., the chemical and biotech- public policy for the St. Louis-based Because of that, the issue of global Washington Post Staff Writer nology company. has begun measuring company. warming is taken seriously by senior its own CO² emissions. "If you look at "We depend on farmers to a large management at the company, she said. A few U.S. businesses are begin- the kind of businesses Monsanto is in, part, and farmers depend on things "The first step is where are you with ning to take practical steps to deal the economic consequences of even a like stable weather patterns and soil CO2 emissions," she noted. Although with what their managers regard as a slightly warmer world are pretty dev- moisture content," she said. "Extreme environmental laws require companies real and potentially dangerous trend- astating," said Kate Fish, director of weather patterns are daunting." to keep track of other emissions:- global climate change. such as sulfur dioxide and nitrous ax- These companies have concluded ide-carbon dioxide emissions have that the spread of carbon dioxide and TOO HOT TO HANDLE? been "free," she noted. other "greenhouse" gases-through the burning of fossil fuels such as coal Other companies have studied ways and oil-could produce devastating T he earth is almost two degrees Fahrenheit warmer than it was 130 to offset or reduce emissions of carbon worldwide changes in temperature and years ago; that, coupled with coastal erosion caused by particularly dioxide. AES Corp., a company that precipitation. They fear this "global bad hurricane seasons, has businesses looking at ways to limit the builds independent power generating warming" will be harmful to the envi- environmental harm they cause. plants, has in several cases in the past ronment-and also to the corporate planted trees or bought endangered Mean global temperature bottom line. 60" forests-because the trees will help Some of the corporate steps are absorb carbon dioxide produced by the tentative, and they come at a time power plants. when most U.S. companies are still 59 Northeast Utilities, the largest elec spewing out carbon dioxide without tric utility in New England, joined in E thinking much about its potential 58 voluntary federal program to reduce costs, Indeed; representatives of the emissions. The company reported lás U.S. coal, oil and utility industries are month that it had limited CO2 emis vigarously opposing a Clinton adminis- 57 sions to 11.1 million tons systemwide tration plan to seek binding limits on 1996: 58 in 1995-even lower than the targe releases of greenhouse gases. But 56 it had set, of 14.7 million tons. there are signs, too, of changing busi- Dow Chemical Co. has established ness attitudes toward global warming. At Mobil Corp., for instance, there 55 1866: 56.3 goal of improving energy efficiency have been staff-level discussions about a rate of 2 percent per year, per prod whether the company should track its uct manufactured, according to Pau 54 emissions of carbon dioxide. Mobil Cicio, the company's manager of gov 1870 '80 '90 1900 '10 20 '30 '40 '50 60 '70 '80 '90 '96 hasn't yet reached any decision on the ernment relations, hydrocarbons and matter, a spokesman said. SOURCE NASA energy policy. This is one of a series 0 But some are more concrete. Mon- See CLIMATE, H8, CoL 1 01/14/97 10:48 2026470217 004/004 H8 SUNDAY, JANUARY 1997 Signs Increase That Business Attitudes Are Changing Toward Global Warming CLIMATE, From H1 One industry that is mindful of the measures" while waiting for additional global environmental goals the chemi- potential effects of global climate scientific assessment, Nutter said. cal company has established, he said. change is the insurance industry- "There's no certainty as to what the "The most important way compa- which would have to pay for floods, impact of climate change will be on droughts and other natural disasters nies improve energy efficiency is when weather patterns," said Karen M. that might result from changes in glob- Clark, president of Applied Insurance they build new facilities," Cicio said. al temperature and weather. Research of Boston, a company that For instance, a new plant in Alberta, A warning to the industry came last provides computer modeling for the Canada, which produces ethylene- April from Franklin W. Nutter, direc- insurance industry. The computer the basic raw material for the produc- tor of the Reinsurance Association of models can only assess what the indus- tion of plastics-is 30 percent more America. In a speech to the Casualty try's losses would be if predictions efficient than a similar plant built just Actuarial Society, he urged the indus- about the impact of global warming on 17 years ago. try to encourage energy efficiency, weather patterns are true, she said. "The key is looking for projects that Reinsurance is the process of sharing Clark and others said that, so far, accomplish the best of both worlds- risks among insurance companies. there has been more corporate inter- the ones that allow us to make a re- Nutter noted that the International est in the possible business impact of turn for our shareholders and also to Panel on Climate Change "predicts' global climate change in Western Eu- that over the next 100 years the earth improve the environment." he said. rope than in the United States. "That doesn't happen by accident." will warm from 1.5 degrees to 6.3 de- Monsanto's Fish said she worries grees Fahrenheit, and that sea level And other companies have achieved that "it will put U.S. business at a com- will rise from 6 inches to 38 inches- greenhouse-gas-reducing energy effi- petitive disadvantage worldwide, if we roughly the same amount of change in ciency in the course of pursuing other see companies in other countries driv- goals. Carrier Corp., for instance, was the next 100 years as has occurred ing toward more efficient production." looking for a new type of chiller to re- over the Earth since the last Ice Age International negotiators are ham- place an old technology that relied on nearly 10,000 years ago." ozone-depleting chlorine. The compa- The result of these climate changes, mering out details of how to address according to the panel, "would be the issue of global climate change, in- ny chose to skip over an interim gen- eration of chillers that would still have greater frequency and intensity of cluding whether to set legally binding used the ozone-depleting chemical. droughts, geographic spreading of dis- targets for reducing emissi ns of ease more common in warmer cli- greenhouse gases after the year 2000. Instead, it went directly to an alter- mates, the retreat of mountain gla- Said Eileen Claussen, the State De- native that used no chlorine at all, ac- ciers, storms of greater malevolence partment's assistant secretary for cording to Matt Chadderdon, vice and more intense wet and stormy con- oceans and international environmen- president for government relations for ditions." tal and scientific affairs: "I think it is a the United Technologies Corp. subsid- iary. The insurance industry "should not competitiveness issue, and I would like postpone reasonable and appropriate us to be out there in the lead." for Divu Hdw ve ice Peer revew. CEX Predecisional Draft / Not for Quotation or Distribution OUTREACH PLAN FOR MODELING RESULTS Stage I - Base case runs and major assumptions -- Mid February. Release in briefings to Congressional staff (we go to them) and outside groups (invite in to DOC). Announce formation of peer review panel & process. -- 12 members (3 recommendations each from Secretary of Energy's Advisory Board, EPA Administrator's Science Advisory Board, OSTP's Science Advisory Panel ??? and Council of Economic Advisors???). -- Selection criteria: range of sectoral expertise, energy/environmental/economic modeling expertise, published work in area w/ peer review, independent from government, (also, academics, enviro's and industry???) -- Convened as Climate Modeling Review Panel. We will not seek consensus, just individual views. Should comply with FACA. -- Base case & assumptions would be presented to Taskforce by Ehrlich group in early March, and Taskforce members would be invited to provide review comments and recommendations for improvement within 2 weeks. Stage II -- Modeling Runs -- Late April to Early May Provide confidential briefings to Congressional staff (and Members, where requested) at OEOB. Convene peer review panel to hear Ehrlich's presentation on modeling results and key interpretations; respond with written comments within 2 weeks. This process would not become public until stage III. Again no FACA problem with keeping pre-decisional info confidential. Predecisional Draft / Not for Quotation or Distribution Predecisional Draft / Not for Quotation or Distribution Stage III -- Public Workshop on Modeling & Results -- Late May to Early June Opportunity for full public participation. Ehrlich group presents full package: basecase, runs, assumptions and interpretations of results. Peer review panel responds with individual review and comments. Ehrlich group provides response re: how we dealt with recommendations. Audience participates in question and answer session with Ehrlich group and review team. Package put on internet for public at large to consider. Package put in Federal Register as Notice for public at large. Predecisional Draft / Not for Quotation or Distribution GLOBAL CLIMATE COALITION GROWTH GLOBAL ) CC.Am Ca AW IN A JS 19 February 1997 TR Dear Member of the Interagency Taskforce on Climate Change Policy: Attached for your information is a letter from the Global Climate Coalition to Assistant Secretary Eileen Claussen outlining several concerns expressed by Coalition members with the January 17 "U.S. Draft Protocol Proposal." Also attached are questions that the GCC believes need further clarification so that sound climate policies can be developed. I hope you find this information useful. Sincerely, William F. O'Keefe Chairman 1331 Pennsylvania Avenue, NW - Suite 1500 - North Tower . Washington, DC 20004-1703 Telephone: (202) 637-3162 Fax: (202) 638-1032 Fax: (202) 638-1043 GLOBAL CLIMATE COALITION ENVIRONMENT GROWTH IN IN A GLOBAL February 14, 1997 The Honorable Eileen Claussen Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs Room 7831 U.S. Department of State 2201 C Street, NW Washington, Rileen DE. 20520 Dear Ms Claussen: On behalf of the Global Climate Coalition, I want to thank you and other State Department officials for the time you set aside January 17 to brief interested parties about provisions in the "U.S. Draft Protocol Proposal" to the Framework Convention on Climate Change. In the interest of continuing that dialogue, I want to express several general impressions and to pose a number of questions prompted by this latest U.S. proposal and its predecessor last December. First, we note the impressive effort evident in the proposal's elaborate policy architecture, given the short time allowed by the Secretariat to submit such documents. However, it is difficult to analyze the draft protocol and its implications until we are fully informed about the Administration's proposed target, timetables and policy tools-such as emissions trading-that have been proposed to implement a Kyoto agreement. The lack of detail denies the American public, labor and industry groups such as ours the ability to fully assess the merits of the U.S. draft protocol proposal, especially its implications for our nation's economic well-being. In our view, any protocol of this nature, were it ratified, may well result in policies, regulations and other measures many times more costly than they need be. Certainly, the growing body of economic analyses argues strongly against early actions that would be many times more costly but would produce no greater benefits than policies that were based on optimal timing. As you know, our members strongly share the view that developing nations need to be part of any new Kyoto agreement. We have attached questions on 1331 Pennsylvania Avenue, NW Suite 1500 - North Tower Telephone: (202) 637-3162 Washington, DC 20004-1703 Fax: (202) 638-1032 Fax: (202) 638-1043 The Honorable Eileen Claussen February 14, 1997 Page Two this matter, as well as others. It is vitally important to establish in advance of the Kyoto meeting appropriate criteria for including developing countries and the resolve not to support any agreement that does not involve a specific schedule for active developing country participation. There is a political and equity. argument why developing countries must be included in any new commitments. Would Americans accept a U.N. agreement that requires substantial personal, economic and lifestyle sacrifices, yet allows environmental gains, however distant or few, to first be marginalized and then completely overrun by the absence of active participation by developing nations, which will be the major emission sources in the next century? We think not, and urge the Administration to stand firm on developing country participation in any new agreement. At home, we urge you to make public as soon as possible the economic analyses on which your draft protocol proposal is based. The GCC is encouraged by the stipulation that all greenhouse gases be included in any new agreement and by the attention given to the "free rider" problem. However, the GCC believes a number of points in this document require additional comment so that policymakers and the public may more precisely understand what U.S. representatives are preparing to negotiate in Kyoto. For example, how are the results of the Administration's economic analyses linked to the policy choices outlined in this draft protocol proposal? What, if any, institutional organizations need to be created or strengthened to implement the proposed tradable permits initiative? If international oversight is not contemplated, how would the integrity of such a system be protected, and by whom? Given the myriad of proposals now before the Parties, is the Administration concerned that important issues will not be resolved at the December meeting in Kyoto? If key issues are left unresolved, would the "Kyoto Agreement" be contingent on the satisfactory resolution of those issues by a time certain? In short, we are encouraged by the Administration's January 17 effort to clarify its position regarding post-2000 greenhouse gas emissions, but we also are concerned by the important questions the draft protocol raises and does not answer. Rather than dwell on those concerns here, we enclose a list of some of the questions that we hope you can respond to before or after the Bonn meeting late this month. The Global Climate Coalition appreciates this opportunity to comment on the U.S. draft protocol proposal. Be assured we will continue to participate The Honorable Eileen Claussen February 14, 1997 Page Three constructively in this national and international debate seeking to identify realistic, flexible climate policies whose benefits are commensurate with costs. Sincerely, fir William F. O'Keefe Chairman Attachment CC: Federal Interagency Group on Climate Change Policy February 14, 1997 GLOBAL CLIMATE COALITION ENCLOSURE RE: SOME ISSUES CONCERNING U.S. NON-PAPER OF DECEMBER 1996 AND U.S. DRAFT PROTOCOL FRAMEWORK OF JANUARY 17, 1997 In asking these questions, we, of course, recognize that, in some cases, (such as Articles 2.7 and 4.6) you have not had an opportunity to spell out all of the details in the draft protocol and, of course, the specific target and timetable are absent. However, in other Articles, the lack of details raises issues and serious concerns. Our primary interest is in understanding what you intend or what you were thinking in crafting any particular Article, Annex, or provision in order for industry, labor and others to better understand the impact of the draft U.S. proposal and how it would be implemented from a practical sense should it or elements of it combined with proposals by other Parties be adopted in Kyoto. Article 1 - Definitions A. The draft defines "Party" to mean a "Party to the Protocol". Annex A includes the Annex I Parties to the Convention that sign and ratify or accept the Protocol and Annex B includes such non-Annex I Parties to the Convention that want to be included in Annex B. Article 5.5 and 5.6 seem to suggest that other Convention Parties may become Parties to the Protocol. Is that intended? If the U.S. draft protocol or significant elements thereof are agreed to in Kyoto, could non-Annex I Parties to the Convention sign and ratify or accept the Protocol, have equal voting rights, and also not agree to be included in either Annex A or B? Article 5 - Advancement of the Implementation of Article 4.1 of the Convention B. As drafted, Article 5 of the draft Protocol only applies to those Convention Parties who become Parties to the Protocol. Since Article 5 seems to impose new requirements or obligations, which you presumably believe are consistent with section 2.(b) of the Berlin Mandate Decision, on Protocol Parties in regards to Article 4.1 of the Convention, what is the incentive for non-Annex I Parties to the Convention (i.e. developing countries) to become Parties to the U.S. draft protocol and be subject to such requirements? C. Article 5.5 applies to non-Annex A and B Parties, while Article 5.7 applies to all Parties to the draft Protocol. Both include the words "no regrets measures" which are not defined. What are such measures? Is it true that "no regrets measures" are not necessarily "no risk measures"? Does Article 4.1 of the Convention provide for or require "no regrets measures" for any Party? If not, what is the application of Article 5.7(b) to Parties not subject to Article 5.5 of the draft Protocol? Article 16 - Evolution D. There is concern that greenhouse gas emissions are growing rapidly in developing countries and that the Berlin Mandate precludes any new commitments applicable to such countries in any AGBM protocol or other legal instrument with the result that any such CLMTENCL.DOC 1 2/14/97 February 14, 1997 instrument will not be fully global, will create economic and competitive disadvantages and will not be environmentally sound. We think a provision like Article 16 is needed for the developing countries, although we realize that it is only an agreement to agree. It does not, for example, include even a hint as to whether the agreement might, as minimum, be patterned after Article 5 of the Montreal Protocol. However, we are concerned that Article 16 (which, as drafted, now applies only to Protocol Parties) will not apply to developing country Parties to the Convention unless they become Protocol Parties and become Annex B Parties. Is it your intention that Article 16 should apply to developing country Parties to the Convention? What if they are not included in Annex B of the Protocol? Would that intention be better achieved by converting Article 16 to an amendment to the Convention? E. Do you contemplate that the process of implementation of Article 16 would be spelled out in a decision at COP3 by the Convention Parties or by the Parties to the Protocol at their first meeting after entry into force? Are you concerned that some Parties to the Convention might delay signing and ratifying the draft Protocol until they see the results of the process under Article 16, particularly if the delaying Parties are developing countries with significant growth in greenhouse gases? F. Annex B states that it includes Convention Parties "not listed in Annex A" that "indicate" they want to be "included" in Annex B. One country that immediately comes to mind because of its recent accession to the OECD would, based on Administration testimony in the House Commerce Committee last September, seem to be Korea which is a U.S. trading partner. However, we understand that an OECD document entitled "Korea's Accession Revised Draft Report to the Council" and dated last August states in paragraph 24 of an Annex entitled "Korean Undertakings" that: "For purposes of future negotiations and agreements, Korea would not choose to be classified as a developing country, except in the areas of agriculture and the UN Framework Convention on Climate Change." If the U.S. draft protocol was agreed to in Kyoto, is Korea committed as an OECD member to becoming a Party subject to Articles 5 and 16, but not Annex A or B, or does it mean that, as a developing country Korea could choose not to become a Protocol Party? G. As you know, non-Annex I Parties are participating in negotiations for new commitments for Annex I Parties, while they enjoy an exemption from new commitments. However, Article 16 provides no similar exemption for Annex I Parties. Why should Article 16 which calls for new and progressive "quantitative greenhouse gas emissions obligations" based on some future "agreed criteria" be applicable to Annex A Parties to the Protocol, including the U.S., since the U.S. draft of the Kyoto protocol otherwise applies to them and imposes new obligations on them beyond those in Article 4.1 and 2 of the Convention? What new obligations for Annex A Parties do you contemplate in the Article 16 process? Does, for example, this mean that under Article 4.1(b) Annex I Parties, like the U.S., by signing the Protocol are agreeing to reductions beyond the requirements of Article 2 of the draft protocol? CLMTENCL.DOC 2 2/14/97 February 14, 1997 Article 2 - Emissions Budgets H. We observe that Section III of the December Non-Paper called for "focusing" negotiations on a "binding, medium-term emissions target" and expressed interest in working toward a "longer-term concentration goal". However, Article 2.3 appears to call for a second target or "budget period" before there is an agreement by non-Annex A and B Parties to the Protocol that are developing countries to negotiate "quantitative greenhouse. gas emissions obligations" under Article 16 and to adopt such obligations by [2005]. Does this second target send the wrong signals to the developing countries who agree to become Parties to the draft protocol and are subject to Article 16? .Why is it in the best economic and competitive interests of the United States to offer a second target and timetable before negotiations with all Parties to the Convention in the AGBM begin and before the U.S. analysis and assessment and its assumptions are provided to Congress, industry, labor, environmentalists, and others? What is the need? I. The Non-Paper states that the U.S. "strongly urges consideration of banking" and that multi-year averaging would give Parties "important flexibility". However, Article 2.5 seems to weaken that support for banking by providing that emissions of tonnes "may" (not "shall") be carried over and added to the "next budget period". That leaves uncertainty for industry and suggests that a Party like the U.S., might retire such tonnes rather than bank them which could have future economic and competitive consequences. Why did you take this discretionary approach? Why not follow the mandatory approach of Article 2.6? The Article does not specifically mention multi-year averaging. Why? Is it implied? Article 6 - International Emissions Trading J. As the chief proponent of an emissions trading program, the U.S. in its December Non- Paper said it was "critical" that provisions for "international" emissions trading "be included in the Kyoto agreement." When Title IV of the Clean Air Act (CAA) was signed into law, it spelled out in great detail the allowance program for existing and new electric utility units, including the timetable, the target, the cap, the trading system, the nature of the allowances, the rights of allowance holders, the tracking system, and the limitations. Upon enactment, the utility industry knew the program details and could plan their future. That program, which applied equally to all covered units of the electric utility industry, is for one industry with an identified and limited number of sources and it is a national trading program. Presumably, an international trading program will cover many industries, sectors, and gases on an international scale. However, our review of Article 6 of the draft protocol provides none of the details of an international trading program. It merely authorizes trading between Annex A and B Parties that establish a "mechanism" for certifying and verifying trades. It does not require that a trading program be established by all such Parties or that such a "mechanism" be put "in place" or that it be operated uniformly. All the important details are missing. CLMTENCL.DOC 3 2/14/97 February 14, 1997 Do you intend to include these "critical" provisions in the protocol to be adopted in Kyoto or do you plan to defer development of such provisions to a post Kyoto. legal instrument, to a decision of the Parties to the Protocol after it enters into force, to bilateral negotiations between Parties, or some other means? K. Article 6 provides that a Party "may authorize" any domestic entity to participate in actions "leading to transfer" of tonnes. What "actions" do you have in mind for this entity? In the case of the CAA, the trades are between utilities with reporting to the Environmental Protection Agency. Is that same approach likely to be accepted on an international scale if the domestic entity is a non-governmental organization in one country and a government agency in another? L. As noted, Article 6 authorizes trading between Parties. However, unlike the CAA no mention is made of trading by private sector entities that will likely need such trading to operate. Also, unlike the CAA it does not allocate, or provide for an allocation of, the initial tonnes for various industries and sources to operate or indicate whether such industries and sources will be faced with penalties for continuing to operate without such allocation if such a program is initiated. It only allows private sector entities, after receiving authorization from a Party, to "participate in actions leading to transfer and receipt. of carbon equivalent emissions. Therefore, it appears that private sector entities can only suggest to Parties that certain emissions trading transactions take place. This imposes significant constraints on private sector international emissions trading, establishes a bureaucracy involving two separate governments or their designees between the private sector and the completion of trades, lowers any possible expectation that private sector entities would receive any benefit from trades, and makes the private sector subservient to the political and policy whims of governments in order to carry out what industry does best, i.e., produce goods and services and employ workers. The wording of Article 7 on Joint Implementation carries the same structure and constraints. Under Article 7.1, any Party can generate tonnes of carbon equivalent emissions. Under Article 7.5, only Annex A or B Parties may acquire those tonnes of carbon equivalent emissions. And under Article 7.6, private sector entities, even after receiving authorization from a Party, are limited to "participat[ing] in actions leading to generation, transfer and receipt under this Article of tonnes of carbon equivalent emissions." Again, the private sector entities cannot, themselves, engage in emissions trading. The proposed construction of Articles 6 and 7 and lack of details would appear to virtually eliminate the functioning of an international market in tradable permits. Instead, trading, as noted, can occur only between governments. The type of trading activity that would occur between governments, as a practical matter, would likely bear little resemblance to the trading activity that would be expected to occur in a private sector international tradable permits market if the program works as its proponents contend. Is the Administration intending an international governmental trading system? Who will CLMTENCL.DOC 4 2/14/97 February 14, 1997 make the trades, pay for the tonnes, and receive the tonnes and money? If not, when will we learn the details for evaluation by industry, labor, and others? Article 3 - Measurement and Reporting M. Article 3.5 suggests that the transfers of tonnes of carbon equivalent emissions under Articles 6 and 7 would be reported to the Convention Secretariat annually. Do you intend that the Secretariat would perform the role in trading that EPA does under Title IV of the CAA and if so is annual reporting adequate? If not, what entity should perform that role and what is the purpose and need for a Party to also report to the Secretariat? What are the advantages and disadvantages to the U.S. of an international entity performing the EPA-type role in trading? Article 7 - Joint Implementation (JI) N. Article 7.2(b) uses the term "additional" which is not defined or explained. The definition of "additional" and the methodology for calculating greenhouse gas reductions from JI projects must be determined in order to estimate the magnitude of the cost savings due to JI. How will the Administration obtain this information in order to factor the cost savings of JI into its economic analysis? CLMTENCL.DOC 5 2/14/97 February 14, 1997 GLOBAL CLIMATE COALITION ENCLOSURE RE: SOME ISSUES CONCERNING U.S. NON-PAPER OF DECEMBER 1996 AND U.S. DRAFT PROTOCOL FRAMEWORK OF JANUARY 17, 1997 In asking these questions, we, of course, recognize that, in some cases, (such as Articles 2.7 and 4.6) you have not had an opportunity to spell out all of the details in the draft protocol and, of course, the specific target and timetable are absent. However, in other Articles, the lack of details raises issues and serious concerns. Our primary interest is in understanding what you intend or what you were thinking in crafting any particular Article, Annex, or provision in order for industry, labor and others to better understand the impact of the draft U.S. proposal and how it would be implemented from a practical sense should it or elements of it combined with proposals by other Parties be adopted in Kyoto. Article 1 - Definitions A. The draft defines "Party" to mean a "Party to the Protocol". Annex A includes the Annex I Parties to the Convention that sign and ratify or accept the Protocol and Annex B includes such non-Annex I Parties to the Convention that want to be included in Annex B. Article 5.5 and 5.6 seem to suggest that other Convention Parties may become Parties to the Protocol. Is that intended? If the U.S. draft protocol or significant elements thereof are agreed to in Kyoto, could non-Annex I Parties to the Convention sign and ratify or accept the Protocol, have equal voting rights, and also not agree to be included in either Annex A or B? Article 5 - Advancement of the Implementation of Article 4.1 of the Convention B. As drafted, Article 5 of the draft Protocol only applies to those Convention Parties who become Parties to the Protocol. Since Article 5 seems to impose new requirements or obligations, which you presumably believe are consistent with section 2.(b) of the Berlin Mandate Decision, on Protocol Parties in regards to Article 4.1 of the Convention, what is the incentive for non-Annex I Parties to the Convention (i.e. developing countries) to become Parties to the U.S. draft protocol and be subject to such requirements? C. Article 5.5 applies to non-Annex A and B Parties, while Article 5.7 applies to all Parties to the draft Protocol. Both include the words "no regrets measures" which are not defined. What are such measures? Is it true that "no regrets measures" are not necessarily "no risk measures"? Does Article 4.1 of the Convention provide for or require "no regrets measures" for any Party? If not, what is the application of Article 5.7(b) to Parties not subject to Article 5.5 of the draft Protocol? Article 16 - Evolution D. There is concern that greenhouse gas emissions are growing rapidly in developing countries and that the Berlin Mandate precludes any new commitments applicable to such countries in any AGBM protocol or other legal instrument with the result that any such CLMTENCL.DOC 1 2/14/97 February 14, 1997 instrument will not be fully global, will create economic and competitive disadvantages and will not be environmentally sound. We think a provision like Article 16 is needed for the developing countries, although we realize that it is only an agreement to agree. It does not, for example, include even a hint as to whether the agreement might, as minimum, be patterned after Article 5 of the Montreal Protocol. However, we are concerned that Article 16 (which, as drafted, now applies only to Protocol Parties) will not apply to developing country Parties to the Convention unless they become Protocol Parties and become Annex B Parties. Is it your intention that Article 16 should apply to developing country Parties to the Convention? What if they are not included in Annex B of the Protocol? Would that intention be better achieved by converting Article 16 to an amendment to the Convention? E. Do you contemplate that the process of implementation of Article 16 would be spelled out in a decision at COP3 by the Convention Parties or by the Parties to the Protocol at their first meeting after entry into force? Are you concerned that some Parties to the Convention might delay signing and ratifying the draft Protocol until they see the results of the process under Article 16, particularly if the delaying Parties are developing countries with significant growth in greenhouse gases? F. Annex B states that it includes Convention Parties "not listed in Annex A" that "indicate" they want to be "included" in Annex B. One country that immediately comes to mind because of its recent accession to the OECD would, based on Administration testimony in the House Commerce Committee last September, seem to be Korea which is a U.S. trading partner. However, we understand that an OECD document entitled "Korea's Accession Revised Draft Report to the Council" and dated last August states in paragraph 24 of an Annex entitled "Korean Undertakings" that: "For purposes of future negotiations and agreements, Korea would not choose to be classified as a developing country, except in the areas of agriculture and the UN Framework Convention on Climate Change." If the U.S. draft protocol was agreed to in Kyoto, is Korea committed as an OECD member to becoming a Party subject to Articles 5 and 16, but not Annex A or B, or does it mean that, as a developing country Korea could choose not to become a Protocol Party? G. As you know, non-Annex I Parties are participating in negotiations for new commitments for Annex I Parties, while they enjoy an exemption from new commitments. However, Article 16 provides no similar exemption for Annex I Parties. Why should Article 16 which calls for new and progressive "quantitative greenhouse gas emissions obligations" based on some future "agreed criteria" be applicable to Annex A Parties to the Protocol, including the U.S., since the U.S. draft of the Kyoto protocol otherwise applies to them and imposes new obligations on them beyond those in Article 4.1 and 2 of the Convention? What new obligations for Annex A Parties do you contemplate in the Article 16 process? Does, for example, this mean that under Article 4.1(b) Annex I Parties, like the U.S., by signing the Protocol are agreeing to reductions beyond the requirements of Article 2 of the draft protocol? CLMTENCL.DOC 2 2/14/97 February 14, 1997 Article 2 - Emissions Budgets H. We observe that Section III of the December Non-Paper called for "focusing" negotiations on a "binding, medium-term emissions target" and expressed interest in working toward a "longer-term concentration goal". However, Article 2.3 appears to call for a second target or "budget period" before there is an agreement by non-Annex A and B Parties to the Protocol that are developing countries to negotiate "quantitative greenhouse gas emissions obligations" under Article 16 and to adopt such obligations by [2005]. Does this second target send the wrong signals to the developing countries who agree to become Parties to the draft protocol and are subject to Article 16? Why is it in the best economic and competitive interests of the United States to offer a second target and timetable before negotiations with all Parties to the Convention in the AGBM begin and before the U.S. analysis and assessment and its assumptions are provided to Congress, industry, labor, environmentalists, and others? What is the need? I. The Non-Paper states that the U.S. "strongly urges consideration of banking" and that multi-year averaging would give Parties "important flexibility". However, Article 2.5 seems to weaken that support for banking by providing that emissions of tonnes "may" (not "shall") be carried over and added to the "next budget period". That leaves uncertainty for industry and suggests that a Party like the U.S., might retire such tonnes rather than bank them which could have future economic and competitive consequences. Why did you take this discretionary approach? Why not follow the mandatory approach of Article 2.6? The Article does not specifically mention multi-year averaging. Why? Is it implied? Article 6 - International Emissions Trading J. As the chief proponent of an emissions trading program, the U.S. in its December Non- Paper said it was "critical" that provisions for "international" emissions trading "be included in the Kyoto agreement." When Title IV of the Clean Air Act (CAA) was signed into law, it spelled out in great detail the allowance program for existing and new electric utility units, including the timetable, the target, the cap, the trading system, the nature of the allowances, the rights of allowance holders, the tracking system, and the limitations. Upon enactment, the utility industry knew the program details and could plan their future. That program, which applied equally to all covered units of the electric utility industry, is for one industry with an identified and limited number of sources and it is a national trading program. Presumably, an international trading program will cover many industries, sectors, and gases on an international scale. However, our review of Article 6 of the draft protocol provides none of the details of an international trading program. It merely authorizes trading between Annex A and B Parties that establish a "mechanism" for certifying and verifying trades. It does not require that a trading program be established by all such Parties or that such a "mechanism" be put "in place" or that it be operated uniformly. All the important details are missing. CLMTENCL.DOC 3 2/14/97 February 14, 1997 Do you intend to include these "critical" provisions in the protocol to be adopted in Kyoto or do you plan to defer development of such provisions to a post Kyoto. legal instrument, to a decision of the Parties to the Protocol after it enters into force, to bilateral negotiations between Parties, or some other means? K. Article 6 provides that a Party "may authorize" any domestic entity to participate in actions "leading to transfer" of tonnes. What "actions" do you have in mind for this entity? In the case of the CAA, the trades are between utilities with reporting to the Environmental Protection Agency. Is that same approach likely to be accepted on an international scale if the domestic entity is a non-governmental organization in one country and a government agency in another? L. As noted, Article 6 authorizes trading between Parties. However, unlike the CAA no mention is made of trading by private sector entities that will likely need such trading to operate. Also, unlike the CAA it does not allocate, or provide for an allocation of, the initial tonnes for various industries and sources to operate or indicate whether such industries and sources will be faced with penalties for continuing to operate without such allocation if such a program is initiated. It only allows private sector entities, after receiving authorization from a Party, to "participate in actions leading to transfer and receipt..." of carbon equivalent emissions. Therefore, it appears that private sector entities can only suggest to Parties that certain emissions trading transactions take place. This imposes significant constraints on private sector international emissions trading, establishes a bureaucracy involving two separate governments or their designees between the private sector and the completion of trades, lowers any possible expectation that private sector entities would receive any benefit from trades, and makes the private sector subservient to the political and policy whims of governments in order to carry out what industry does best, i.e., produce goods and services and employ workers. The wording of Article 7 on Joint Implementation carries the same structure and constraints. Under Article 7.1, any Party can generate tonnes of carbon equivalent emissions. Under Article 7.5, only Annex A or B Parties may acquire those tonnes of carbon equivalent emissions. And under Article 7.6, private sector entities, even after receiving authorization from a Party, are limited to "participat[ing] in actions leading to generation, transfer and receipt under this Article of tonnes of carbon equivalent emissions." Again, the private sector entities cannot, themselves, engage in emissions trading. The proposed construction of Articles 6 and 7 and lack of details would appear to virtually eliminate the functioning of an international market in tradable permits. Instead, trading, as noted, can occur only between governments. The type of trading activity that would occur between governments, as a practical matter, would likely bear little resemblance to the trading activity that would be expected to occur in a private sector international tradable permits market if the program works as its proponents contend. Is the Administration intending an international governmental trading system? Who will CLMTENCL.DOC 4 2/14/97 February 14, 1997 make the trades, pay for the tonnes, and receive the tonnes and money? If not, when will we learn the details for evaluation by industry, labor, and others? Article 3 - Measurement and Reporting M. Article 3.5 suggests that the transfers of tonnes of carbon equivalent emissions under Articles 6 and 7 would be reported to the Convention Secretariat annually. Do you intend that the Secretariat would perform the role in trading that EPA does under Title IV of the CAA and if so is annual reporting adequate? If not, what entity should perform that role and what is the purpose and need for a Party to also report to the Secretariat? What are the advantages and disadvantages to the U.S. of an international entity performing the EPA-type role in trading? Article 7 - Joint Implementation (JI) N. Article 7.2(b) uses the term "additional" which is not defined or explained. The definition of "additional" and the methodology for calculating greenhouse gas reductions from JI projects must be determined in order to estimate the magnitude of the cost savings due to JI. How will the Administration obtain this information in order to factor the cost savings of л into its economic analysis? CLMTENCL.DOC 5 2/14/97 01/07/97 14:21 202 647 0191 STATE OES/EGC 002/006 December 9, 1996 The President The White House Washington, DC 20500 Dear Mr. President: We appreciate your summary of the Administration's position regarding climate change outlined in your letter dated September 17. We share common ground on several critical aspects. including the need for participation by all countries, the rejection of inflexible, harmonized policies and measures, and the effectiveness of market-based mechanisms. We also share your view that responsible stawardship of the environment is interdependent with sustainable economic growth. However, we still have significant concerns with regard to the U.S. position. While we are encouraged by your call for additional economic analyses and technical assessments, we believe it is imperative that they be conducted using a transparent peer review process to ensure the objectivity and credibility necessary to build support for appropriate policy decisions. We encourage the active involvement of academics, labor, business, think tanks, and other stakeholders, along with consultations with Congress. Policy decisions that can have a significant impact on the U.S. and global economies deserve national debate and broad consensus. Indeed, a premature policy decision that could cost the equivalent of our annual economic growth for a decade warrants careful review and analysis. Most importantly, we agree that this is a global issue requiring global solutions. Any actions must be predicated on a defined role and timetable for developing nations, which are projected to soon surpass industrialized nations in total carbon emissions. In addition, we need to focus on long-term, comprehensive global solutions that address the environmental, economic and societal consequences of policy decisions. We remain concerned about the Administration's call for urgent action and the appearance that the U.S. may be prepared to make premature commitments that could have serious economic and competitive consequences. Given the long-term nature of this issue, there is time to reduce scientific uncertainties and to refine the climate models that predict the timing, extent and effect of human impacts on global climate. It is imperative that we take the time to do this right. We welcome the opportunity for further dialogue on this critical issue as climate change policy has significant implications for America's economic health, for jobs, for the lifestyles of Its citizens, and for trade relationships with other nations. You can count on our continued involvement as responsible corporate citizens. Sincerely, 01/07/97 14:22 202 647 0191 STATE OES/EGC 003/006 My Dannel C.E. Buyanth Garry N. Drummond Garold R. Spindler Chief Executive Officer C.E. Bryant. Jr. President President Drummond Company, Inc. Cyprus Amax Coal Continental Conveyor & Equipment Wam. Didk Cheney I H Keyes William Carr Dick Cheney President & COO James H. Keyes Chairman, President & CEO Jim Walter Resources, Inc. President and CEO Halliburton Company Johnson Controls, Inc. RR Juni Bruce R. Clark harry Bosisely Ray R. Irani Bruce R. Clark Chairman of the Board & CEO Lawrence A. Bossidy President Occidental Petroleum Corporation Chief Executive Officer Lake Shore Mining Equipment, Inc. AilledSignal, Inc. Dept. T.2: Supple Trains Enger David Tarasevich Timothy L. Guzzle President and CEO Travis Engen Chairman of the Board Tuscaloosa Steel Corporation Chairman, President and CEO TECO Energy, Inc. ITT Industries Phefle John D. Letler Hams W Backer President and CEO Harry M. Conger Gulf States Steel, Inc. Hans W. Becherer Chairman Chairman and CEO Arther grow Homestake Mining Company Deere and Company Arthur Brown CEO and Chairman of Board Daid M. LN Charlefrona Hecla Mining Corporation David M. LeVan Charles J. DiBona John WSun Chairman, President & CEO President CONRAIL Inc. American Petroleum Institute John W. Snow Chairman, President and CEO CSX Corporation Phil Hutchinson Peter I. Bijur Philip A, Hutchinson, Jr. andrew aloe Chairman of the Board and CEO President & CEO Texaco Ing. Andrew Aloe Association of International Automobile Chairman and CEO Manufacturers Shenango, Inc. D'D G. belief John any William 0 Gay David A. Arledge William D. Fay President and CEO John D. Ong President & CEO The Coastal Corporation Chairman of the Board and CEO American Highway Users Alliance The BF Goodrich Company 01/07/97 14:22 202 647 0191 STATE OES/EGC 004/006 Robert J. Eaton W.R. W.R. Timken, Timber Chairman & CEO Ken Kenneth L. Way Way Chairman - Board of Directors Chrysler Corporation Chairman & CEO The Timken Company Lear Corporation HL Full Don-H Dairs H.L. Fuller Don H, Davis, Jr. James James F. Hardymon 7. Hardymon Chairman & CEO President & COO Amoco Corporation Chairman & CEO Rockwell International Textron, Inc. Hank Binth Junes E Dempany Curtis H. Barnette Jerry E. Dempsey Chairman & CEO H. Leighton Steward Chairman & CEO Bethlehem Steel Corporation Chairman of the Board PPG Industries, Inc. Louisiana Land and Exploration Co. Mike R. Bown John Smith Michael R. Bowlin John F. Smith, Jr. Chairman & CEO Robert J. Allison, Jr. Chairman, CEO & President ARCO Corporation Chairman, President & CEO General Motors Corporation Anadarko Petroleum Corporation Pash Mercott Peter S. Hellman Southwood J. Morcott President & COO Samir G. Gibara Chairman & CEO TRW. Inc. Chairman, CEO & President Dana Corporation Goodyear Tire & Rubber Company my Monan R. Barry Barry Uber When Alex Trotman Dan't N Hong Chairman, President & CEO David H. Hoag Vice President Ford Motor Company Chairman & CEO Ingersoll-Rand Company LTV Corporation Freel Teader Rafneer DD make Fred Tucker Richard A. Snell Executive V.P. & General Manager James J. Mulva President & CEO Motorola President & COO Tenneco Automotive Phillips Petroleum Co. LuRRayund John F. Fiedler Lee R. Raymond VGBeghini Victor G. Beghini Chairman & CEO Chairman & CEO Borg-Warner Automative Fresident Exxon Corporation Marathon Oil Company 01/07/97 14:23 202 647 0191 STATE OES/EGC 005/008 Rx That Ray L Hunt Ron He ddod Jan. Boyd Ron W. Haddock Chairman & CEO President & CEO James W. Boyd Hunt Oil Company President FINA John T. Boyd Company L.O.Wad Lee M. Gardner Keith Bailey President & CEO L.O. Ward Chairman, President & CEO Mascotech, Inc. Chairman & CEO The Williams Companies, Inc. Ward Petroleum Corporation Canoll Philip J. Carroll Thomasr Petry Thomas E. Petry Bobby E cooper President & CEO Chairman & CEO Bob E. Cooper Shell Oil Company President & CEO Eagle-Picher Industries, Inc. Kennecott Corporation A. Noto Thom Fallure Heinz C. Prechter Chairman & CEO Thomas V. Falkie Chairman & Founder Mobil Corporation President & CEO ASC Incorporated Berwind Natural Resources Corporation James E. Declusin Frank A. MEDurson . Homas Moore Frank McPherson Chief Operating Officer M. Thomas Moore Chairman & CEO California Steel Industries, Inc. Chairman & CEO Kerr-McGee Corporation Cleveland-Cliffs, Inc. John R Aall John R. Hall Calphs. Anningham Chairman Ralph S. Cunningham President & CEO John K. Carrington Ashland, Inc. CITGO Petroleum Corporation Chief Operating Officer Barrick Gold Corporation Clabome Claiborne P. Deming ? Dearing B.E. Douglas J.Fanell Joseph C. Farrell President & CEO President Murphy Oil Corporation Chairman & CEO Truax-Harris Energy The Pittston Company Ken Den Rfsh A. pennett Kenneth T. Derr Thomas J. Usher Chairman & CEO Stephen D. Bennett Chairman, President & CEO Chevron Corporation President & CEO USX Corporation Acme Metals Incorporated 01/07/97 14:24 202 647 0191 STATE OES/EGC 006/006 J. Viodes Seven 7. Leer B.R. Brown James T. Rhodes Steven F. Leer Chairman of the Board President & CEO President and CEO CONSOL, Inc. Virginia Power Arch Mineral Corporation Robert BVL a Krebs Edward R. Caine Edward R. Caine Robert Robert G. Spencer Spenser President & CEO President & CEO President Burlington Northern Santa Fe WCI Steel, Inc. Corporation Hepburnia Coal Company Desk will C. Payment David R. Goode William C. Payne Edward L. Watson Chairman. President & CEO Chairman, President & CEO Vice Chairman Norfolk Southern Corporation Ashland Coal, Inc. Texas Utilities Electric Co. R. a AND amisia John C. Grisham A.W. Dahlberg Alan J. Noia President Chairman & CEO President & CEO Buckeye Industrial Mining Co. Southern Company Allegheny Power System, Inc. T.Lellin 6. R agery Paul H. Tellier Michael T. Puskarich President & CEO E. Linn Draper, Jr. President Chairman. President & CEO Canadian National Railways Cravat Coal Company American Electric Power HOD Robert J. Darnell Larry D. Haab Theodore F. Gundlach Chairman, President & CEO Chairman, President & CEO Chairman & CEO Inland Steel Industries. Inc. Illinois Power Company T.J. Gundlach Machine Company X x. Engellands WCHound James Q Hunduson Irl F. Engelhardt W.R. Holland James A, Henderson Chairman & CEO Chairman & CEO Chairman & CEO Peabody Holding Company, Inc. Ohic Edison Company Cummins Engine Company. Inc. R. Thomas Green; to Cal W. Smith R. Thomas Green. Jr. John Nils Hanson Carl W. Smith Chairman, President & CEO President & COO Chairman & CEO Oglebay Norton Company Harnischfeger Industries, Inc. AMVEST Corporation F-743 T-060 P-001/005 JAN 10 '97 14:32 EDF JAF ENVIRONMENTAL DEFENSE FUND Capital Office 1875 Connecticut Ave., N.W. Washington, DC 20009 (202) 387-3500 Fax 202-234-6049 URGENT PLEASE DELIVER BEFORE AFTERNOON MEETING ON 1/10/97 Everett Erhlich 482-0432 Jennifer Havercamp 395-4579 Jeffrey Hunker 482-4636 Mary Nichols 260-5155 Rosina Bierbaum 456-6025 David Gardiner 260-0275 Alicia Munnell 395-6958 Frank Kruesi 366-7127 Elgie Holstein 456-2223 Pete Jordan 456-9500 Joshua Gotbaum 622-2633 Steve Seidel 456-6546 Lois Schiffer 514-0557 David Sandalow 456-2710 Brooks Yeager 208-4561 David Hales 703-875-4205 Terry Garcia 482-6318 Alan Larson 647-5713 T.J. Glauthier 395-4639 Elleen Claussen 647-0217 Charlie Rawls 720-5437 Rafe Pomerance 647-0217 Dirk Forrister 586-9987 Jonathan Pershing 647-0191 Mark Chupka 586-0861 Sue Ben Aida 736-4520 FROM: Joe Goffman DATE: January 10, 1997 Number of pages including cover sheet (5) National Headquariers 257 Park Avenue South 5655 College Ave. 1405 Arapahoe Ave. 128 East Hargett St. 44 East Ave., Suite 304 New York, NY 10010 Oakland, CA 94618 Boulder, CO 80302 Ruleigh, NC 27601 Austin. TX 78701 (212) 505-2100 (510) 658 8008 (303) 440-4901 (919) S21-7793 (512) 478-516) 700% Post-Consumer Recycled Paper F-743 T-060 P-002/005 JAN 10 '97 14:33 EDF ENVIRONMENTAL DEFENSE FUND Capital Office 1875 Connecticut Ave., N.W. To: Participants, Inter-Agency Process on Climate Change Washington, DC 20009 (202) 387-3500 Fax 202-234-6040 From: Dan Dudek, Joe Goffman, Annie Petsonk Re: U.S. Protocol Submission for January 15 Date: January 10, 1997 Last July, Undersecretary Wirth transformed the international debate on climate change, establishing the United States' leadership role in that debate. His dramatic statement at the Geneva meetings forged an inextricable linkage between a U.S. commitment to support the development of an international agreement legally binding countries to greenhouse gas emissions (GHG) reduction obligations and flexible compliance elements exemplified by emissions trading and joint implementation for credit. Now, the U.S. has reached the moment when it must provide the international community with the essential details of an international GHG emissions budget and trading program that can fulfill that linkage. The document submitted by the U.S. at last December's meeting of the Advisory Group on the Berlin Mandate outlined to an impressive and encouraging extent some of the elements of the structure of such a program. Nevertheless, many critical details remained unspecified in the December submission. In addition, the skepticism freely expressed by many other governments and interests, both here and abroad and including the environmental community, testified to the failure of the U.S. to communicate its ideas and intentions convincingly. The severity of this criticism and the apparent absence of a forceful U.S. response to it raises fears that the U.S. would be unable or unwilling to deliver in a final protocol those clements essential to integrating the flexibility and environmental integrity so necessary to the linkage established by Undersecretary Wirth. That is why it is critical that the upcoming U.S. submission be carefully crafted to ensure that no one misconstrues or dismisses the U.S. commitment to fashioning an international agreement that can achieve political, economic and, above all, environmental success. We believe that the attached detailed specifications -- which represent a fully integrated design, not merely an accretion of discrete, negotiable elements -- for a GHG emissions budget and trading system can provide the structure for an international regime that meets these demands for success. A protocol that includes only some of these elements and thus meets only some of these tests will justify the vigorous opposition of the environmental community for the National fundamental reason that it will not accomplish its environmental objectives. 257 Park Avenue South 5055 College Ave. 1405 Arapahoe Ave. New York, NY 10010 128 Basi Hargett St. 44 East Ave., Suite 304 Oakland. CA 94618 Boulder, CO 80.02 (212) 505-2100 Raleigh. NC 27601 (510) 658-8008 Austin, TX 78701 (303) 140-4901 (919) 821-7793 (512) 478-5161 100% Post-Consumer Recycled Paper F-743 T-060 P-003/005 JAN 10 '97 14:33 We stress the necessity of maintaining the integration of all of the proposed elements set forth here because the test for success of an international GHG protocol is an exacting one. First, an international protocol and the regime it establishes must impose comprehensive and credible GHG emissions obligations. Second, it must ensure compliance by sovereign nations whose voluntary agreement lies at the foundation of the protocol itself and its implementation. Participants in the protocol also will no doubt demand assurance that their economic aspirations can be met even while fulfilling their GHG emissions requirements. At the same time, the protocol must accommodate the inevitable diversity of nations' domestic responses to their GHG obligations. Finally, to succeed environmentally. the protocol must stimulate early commitments to GHG emissions reductions and to innovation, foster the broadest menu of strategies, tools and opportunities for the development of successful solutions to the GHG emissions problem and maximize participation by both industrialized and developing countries. In addition, capitalizing on the construct enunciated by Undersecretary Wirth last July, the proposed design adopts an approach under which those elements affording flexibility to nations and firms and those ensuring the environmental integrity of the system are identical. Thus, one of the rationales for setting emissions budgets on a 10- year scale, for example, is to ensure that the international community has the necessary time to complete the scientific and technology assessments as well as generate sufficient information (i.c., on the basis of 5 years' experience) about ongoing performance under the then-current budget regime in order to establish the GHG emissions budget for the ensuing period. At the same time, a 10-year budget period affords nations and firms the temporal latitude needed to respond both to their GHG emissions constraints and to changing economic demands, while also forcing nations and firms to take the actions necessary to curb their GHG cmissions. Accurate annual reporting is more crucial to the integrity of a GHG emissions budget and trading system than shortened or more frequent budget periods. Similarly, one of the critical features of the proposed design ties an automatic, limited "debt-carryover"-with-interest provision for nations' GHG emissions budgets to penalties for failure to meet budget obligations. This feature exemplifies the iron linkage that must be forged between flexibility and compliance accountability -- just as it is critical to ensuring the balancing of nations' compliance accounts and the atmospheric GHG ledger. Without these structural and substantive provisions. any protocol negotiated by the next Conference of the Parties to the Framework Convention on Climate Change, scheduled for Kyoto, Japan before the end of the year will merit rejection by the U.S. With these provisions, an international protocol can blaze the path to a global solution to a crucial environmental threat. To ensure this, we urge that the U.S. January 15 submission fully reflect the details of the attached proposal. 2 F-743 T-060 P-004/005 JAN 10 '97 14:34 We are prepared to offer you extensive support and assistance in the development of this effort both before and after January 15. Thank you for your consideration in this matter. 3 F-743 T-060 P-005/005 JAN 10 '97 14:34 MINIMUM ELEMENTS OF AN INTERNATIONAL PROTOCOL FOR GREENHOUSE GAS EMISSION REDUCTIONS January 9. 1997 I. Credible Environmental Goals first period of emissions reductions begins by 2005 and ends not later than 2014 ultimate concentrations of 450 ppmv (CO₂ equivalent), inclusive of all GHG Transient constraint: warming rate not to exceed of 1° C per Century II. Legally Binding Obligations For OECD nations and economies in transition. Established on the basis of historic emissions baselines and Set as a cumulative emissions budget For other nations, Comprehensive GHG Inventory and Reporting III. Transparent and Verifiable Annual National Reporting all gases, sources and sinks by sector all transacted international GHG reductions by country and vintage IV. Continuing Review and Evaluation Process to Set New Budget Levels Assessment of Science Review of Progress of the Parties Review of Development and Adoption of Technologies Then Set New Decadal Emissions Budget V. International Greenhouse Gas Emissions Trading decadal emissions budgets to provide both economic investment, planning, and response flexibility and action-spurring certainty banking for both carly reductions and debt carryover all GHG emissions by sources, uptake by sinks, and transactions in terms of 100-year GWPs Joint Implementation, for credit, is an essential element for addressing both graduation and economic competitiveness concerns In nations that have not taken a budget, project-by project crediting with international review For nations with a budget, full international trading of reductions VI. Enforcement All GHG reduction obligations remain until discharged For Cumulative Net Emissions Greater Than Budget But Less Than 110%: All Emissions Greater Than Budget Automatically Deducted From Next Budget Dispremium (interest) charged on emissions over budget For Cumulative Net Emissions Greater Than 110% But Less Than 120%: Above Plus automatic discounting of the non-complier's sold GHG reductions that have not yet been used by other countries for compliance beginning in the year of first occurrence (discounting to be in proportion to amount of non-compliance) For Cumulative Net Emissions Greater Than 120%: Above Plus Mandatory COP Review of Party's Non-Compliance White House Climate Change Task Force 734 Jackson Place, N.W. Washington, DC 20503 October 31, 1997 TO: DISTRIBUTION FROM: Dirk Forrister SUBJECT: Path forward based on recent outreach meetings Over the past few weeks, I have arranged with representatives of the Assistant Secretaries working group on climate change meetings with three industries--air transport, cement, and steel- -to discuss climate change policy. I am attaching detailed reports on these meetings for your review. Each contain a set of recommended "next steps" that Assistant Secretaries should consider at an appropriate future meeting. And each produced insights about low cost emission reduction potentials--ranging from 5 to 15%--for technology strategies in those sectors. For the airline industry, the main issue is whether the Framework Convention on Climate Change (FCCC) should defer to the International Civil Aviation Organization (ICAO) in addressing greenhouse gas emissions from airplanes. At the United States' suggestion, the FCCC's Subsidiary Body for Scientific and Technological Advice (SBSTA) has already agreed to defer the issue temporarily while it requests a report from ICAO on how greenhouse gases should be addressed. Even though the U.S. government has already moved in the industry's direction, the industry is advocating a complete exemption of aircraft emissions in the Protocol, believing that emissions are more properly addressed by ICAO and its aviation experts. To that end, they will craft language for our consideration that would refer emission limitation responsibility for aircraft greenhouse gas emissions to ICAO in a way that (1) assures that action will be taken; and (2) respects the provisions of international law regarding what parties from one treaty can impose/request of parties to another treaty. They also plan to consult with other countries and with ICAO on this matter. On a particularly encouraging note, they provided a MITRE Corporation study indicating that improved air traffic control, measures could reduce emissions by about 12% worldwide. We agreed to convene a future meeting to discuss this study after government experts have reviewed it. 202 343-1060 Fax 202 343-1162 For our cement industry consultations, we held an initial meeting with Holnam (America's largest cement manufacturer). Holnam believes that we could achieve a 5-15% reduction in cement industry emissions, while reducing costs, by using more cement substitutes. While there are numerous institutional and market barriers to increasing this utilization, there are a number of things that the federal government could do to reduce these barriers. EPA has already begun to work on this through its labeling and federal procurement programs. NIST is working within the American Society of Testing Materials (ASTM) cement committee on possible updated cement specifications to allow more substitutes. The Assistant Secretaries should discuss additional actions that other agencies could take to encourage the use of cement substitutes, particularly in public education and federal procurement. The steel industry claims it could reduce its emissions 10% below 1990 levels by the year 2010 using voluntary programs, but they oppose mandatory programs. The Assistant Secretaries may want to consider further discussions about mechanisms (e.g., a la the 33/50 program under EPA's toxics programs) whereby the steel industry could make a voluntary commitment that would prompt significant action by this sector. The steel industry also had a number of suggestions for things the government could do. The Assistant Secretaries may be interested in following up on these as well. I have received requests from a few other groups interested in briefing us on their ideas, but I know your time is very limited. I will be in touch regarding scheduling additional meetings, and III promise not to over-burden you. Finally, I hope you can help me make sure that all of these ideas receive appropriate consideration. Thanks for your interest. DISTRIBUTION: Organization Name Fax Phone State Rafe Pomerance 647-0217 647-2232 Melinda Kimble 647-3004 Commerce Jeffrey Hunker 482-4636 482-6055 OSTP Rosina Bierbaum 456-6025 456-6077 Henry Kelly 456-6023 456-6033 CEA Jeff Frankel 395-6947 395-5046 Treasury Robert Gillingham 622-2633 622-2220 Jon Gruber 622-0563 Karl Scholtz 622-0120 Justice Lois Schiffer 514-0557 514-2701 Jim Simon Interior Brooks Yeager 208-4561 208-6182 Brooke Shearer 208-1873 208-6291 Mark Schacfer 371-2815 208-4811 NOAA Terry Garcia 482-6318 482-3567 OMB T.J. Glauthier 395-4639 395-4561 USTR Jennifer Haverkamp 395-4579 395-7320 USDA Charlie Rawis 720-5437 720-6158 DOE Dan Reicher 586-0148 586-9500 Mark Chupka 586-0861 586-5523 Joe Romm 586-9260 586-9220 Mark Mazur 586-9626 586-7700 EPA David Doniger 260-2865 David Gardiner 260-0275 260-4332 DOT John Lieber 366-7127 366-4544 OVP Pete Jordan 456-9500 456-9513 PCSD Marty Spitzer 408-1655 408-5296 CCTF Dirk Forrister 343-1162 343-1060 Steve Seidel USAID Sally Shelton-Colby 216-3235 712-1479 David Hales 216-3174 712-1750 DOL Ed Montogmery 219-4902 219-5108 DOD Sherri Goodman 703-693-7011 703-695-6639 NEC Peter Orszag 456-2223 456-5358 Bill Antholis 456-5334 456-2198 CEQ/NSC David Sandalow 456-2710 456-6224 Meeting with Holnam, Inc. September 5, 1997 Meeting Summary and Proposed Next Steps Dirk Forrister welcomed the attendees from Holnam and several federal agencies. (See attached list of attendees.) Gary Sauer of Holnam presented background information on the cement industry and explained how CO2 emissions could be reduced by 5 to 15 million tons per year from the U.S. cement industry by using blended cement. Holnam is a U.S. company, held by Holderbank, a global company. Holnam is also in the business of providing cement blending materials such as flyash, slag and limestone. Sauer said that other countries are doing much more blending than the U.S. He said the barriers are antiquated standards; fragmented markets; and conservatism. Sauer argued that policymakers need to create incentives for reducing CO2 emissions. Gloria Jeff of FHWA said that the blended cement tends to take longer to reach maximum strenghth; and this can be an issue, especially in the construction industry. The price of blended cement is lower, but there is this tradeoff with setting up time, and quicker set-up times are important. She also said that all concrete uses some flyash--98 to 99% of concrete has some flyash. However, not much slag is being used because it is not widely available. In Europe, the roads contain more substitutes and they are more durable, but they are rougher. FHWA is conducting a test case in Michigan using European road specifications. FWHA is willing to work with ASHTO to look at specifications for more flyash, and to try to get more research on optimizing strength. durability and set-up times. She is also willing to work on education and training of state highway personnel responsible for state specifications. Jean Briskin suggested a performance based standard in lieu of a content based standard. Jeff said FWHA already has both performance standards and content standards. M.S. Chawla of the Navy said that the Navy already allows substitution of materials as long as the performance standard is met. Geoff Frohnsdorff of NIST, and chair of the ASTM cement committee, said he has advocated broade cement substitution for its energy efficiency benefits for nearly 25 years. After decades of work, he expects a draft specificcation for blended cement to be out this year. He said the barriers to broader substitution are lack of familarity and lack of data. Briskin and Jeff pointed out that there are air quality benefits (in terms of Nox and particulates) as well as CO2 benefits to using blended cement, and that non-attainment areas have an incentive to look at blending. Judi Greenwald suggested that Holnam might want to quantify these benefits. Mark Bernstein suggested that we might want to consult with the Construction and Building Subcommittee of the National Science and Technology Council. Tom Rutherford of DOD said that they use a lot of blended cement in construction, so the set up time is often not a problem. He suggested a federal task force to set up federal purchasing standards as well as a non government standards. M.S. Chawla of the Navy suggested that we could require blended cement but allow waivers. Thus the norm would become blended cement, but there would still be an "out" when necessary. Jean Briskin suggested that EPA could work with the cement industry on an energy star labeling program. PROPOSED NEXT STEPS: To follow up on meeting suggestions, the Assistant Secretaries climate change working group should consider appointing 1. EPA (Jean Briskin) could work with Holnam (Gary Sauer) on an Energy Star Labelling program and voluntary corporate commitment to reduce emissions. EPA could value Energy Star program benefits as credits under Clean Air Act State Implementation Plans. (See attachment.) 2. PUBLIC EDUCATION AND OUTREACH: FHWA (Gloria Jeff), OSTP (Mark Bernstein) and Holnam (Gary Sauer) could work with ASHTO and NSTCto : --develop an education and training program on blended cement for highways, housring and other applications --develop a model state specification aimed at increasing the amount of flyash in highway cement --develop a joint research program to optimize strength, durability, and set-up time for blended cement 3. FEDERAL PROCUREMENT: EPA (Jean Briskin); DOD (Tom Rutherford), GSA (?), and FHWA (Gloria Jeff) should develop an effective approach (e.g., an executive order) to encouraging agencies to purchase cement that meets the Energy Star labelling requirements to be developed by EPA. 4. NATIONAL STANDARDS: NIST (Geoff Frohnsdorff) should continue working with ASTM to develop a standard for blended cement that can be used by all of the other efforts. Opportunities to Reduce Carbon Emissions Associated with Production and Use of Coment September 10, 1997 1. Energy Star Concrete EPA could label concrete that has low carbon content during its production and use. Low carbon content could be achieved by increasing the amount and frequency of use of mix-ins such as fly ash or slag. As is the case for all Energy Star products, the criteria would be set lo assure that product performance was the same or better than non-Encrgy Star products. Energy Star labeling is an effective way to educate purchasers and the public about environmentally prefcrable products. 2. Energy Star Pavement EPA could labcl pavement that has a high albedo- reflects heat well. By reflecting rather than absorbing heat, Energy Star pavement could contribute to a reduced urban heat island effect. As part of a comprehensive set of Cool Communities Activities, Energy Star pavement would help slow the formation of ground level ozonc (reducing local air pollution) while reducing energy needed for air conditioning in urban arcas. The critcria would be set to assure that product performance was the same or better than non-Energy Star products, including assurance of driver safety through no increased glare. Energy Star labeling is an effective way to educate purchasers and the public about environmentally preferable products. EPA has already begun a Cool Communities effort, and is presently identifying communities who wish to test appropriate measures on a pilot basis. 3. Energy Star Pavement/Concrete Procurement Initiative EPA could work with other federal, state and local agencies to assist them in specifying low carbon concrete and/or reflective paving surfaces through performance rather than content based specifications. EPA has much experience with using procurement initiatives to promote the use of environmentally proferable products by providing model procurement specifications and leveraging key actors to undertake mass procurements. Experience with the Energy Star Computers program has proven that a procurement initiative would be greatly assisted by an Executive Order for federal agencies to follow the procurement specifications where their performance criteria are met by the specified products. 4. (SIPs) Incorporate effects of Energy Star Pavement/Concrete into Clean Air Act State Implementation Plans EPA has begun to work with states to improve the way in which energy cfficiency and other measures are credited into State Implementation Plans (SIPs). By incorporating the effects of Energy Star Pavement/Concrete into SIPs, communities will have an increased incentive to accelerate their adoption of these environmentally preferable materials, because they can contribute to lower cost compliance with the National Ambient Air Quality Standards for ozone and particulate matter. Increased use of fly ash, blast furnace slag or other appropriate mix-ins reduces the combustion of fuel used to make clinker, thereby reducing the emissions of regulated air pollutants, while also reducing cmissions of carbon dioxide. Increased use of reflective pavements can cool urban heat islands. slowing the formation of ozonc and reducing the need plants. for air conditioning, thereby allowing for more efficient use of electricity, and reducing emissions from power SignIn Sheet Name Affil Phone # PAX# Judi Greenwald WHCCTF 202 343 1060 20234343463 Jeffrey Humker Commerce 202 482 - 6055 482-4636 TOM CHIZMADIA HOLNAM 313-529-4306 313-529-5268 GANY SAUER HOLNAM 313 529 4341 11 " Veanne Briskin EPA 202 233 - 9135 202-233-9575 Matt Williamson EPA 202 233 9054 " " 9578 M.S. CHAWLA NAVY DEPT 202-433-8760 202-433-8777 GEOFF FROHNSDORFF NIST/DOC 301-975-6706 301-990-6891 MARK BERNSTEIN OFFICE DFSCIENCE&TECHNOLOGY POLICY 202-456-6041 -6023 DAVID GARDINER EPA 202-260-4332/0275 Jerry L. MALONE DOT 202-366-6800 / 202-366-3956 GARY BACHUA DOC 202-482-1091 202-501-2492 GLORIA J. JEFF DOT 202-366 2240 202-366 9626 Joe Canny DOT 202-366-4540 366-7127 CHUCK PITCHER DOC 202-482-0385 482-0382 NAZIR BHAGAT DOC (202) 482 - 3855 (202)482-5656 Bill Hooke D.C (202) 482 - 5419 (202)482-4636 DIRK FORRISTER Holnam WH Climate Change TF 202/343-1060 202/343-1162 Mike Mullin 313529.4310 529-5268 MACRIENSULLIVAN DoD (703)604-0519 (703)607-4237 DOD Meeting with Air Transport Association and Air Industries Association September 17, 1997 Meeting Summary and Proposed Next Steps Dirk Forrister, the Chair of the White House Climate Change Task Force, opened the meeting and introductions were made. (See attached attendees list). The business representatives asked about the outreach effort, and Dirk Forrister described the Task Force's activities. Richard Kettler of the ATA began the substantive discussion. He explained that returning to 1990 CO2 emissions levels would require a 25% reduction in air traffic. He said the industry is looking for some recognition in the climate negotiations that ICAO (International Civil Aeronautics Organization) needs to be the only worldwide agency for setting aviation standards. ICAO has been around for almost 50 years; they should remain in charge. Howard Ayleswowrth from AIA pointed out that there are tradeoffs between NOx and CO2 and between environmental performance and safety that ICAO is able to address. He also said that fuel use per passenger mile has been steadily declining. Airlines have an enormous incentive to reduce fuel costs by improving fuel efficiency, regardless of climate change. ATA's counsel said that it is very important that the climate treaty not conflict with the Chicago convention, which sets up an international regime for aviation regulation and provides a process for ensuring that nationsl comply. Jonathan Pershing of the State Department explained that the United States had successfully inserted language into the Subsidiary Body for Scientific and Technological Advice (SBSTA) at the August negotiating session in Bonn. The language says that Parties should work through ICAO and report to SBSTA. Pershing said that this will essentially defer the issue until ICAO reports back. The industry representatives said that while this language is helpful, it is not suffficient. The industry wants complete deference to ICAO. Pershing said that the Europeans would object to that, and there was a risk that if the U.S. raised this matter and it was explicitly rejected, the aviation industry would be worse off. Pershing also explained that there were many things the U.S wants that no one else wants and that a provision such as the airlines are suggesting could simply become a negotiating target--i.e., people would object because we want it. Pershing suggested that the aviation industry work with their counterparts in other countries and see if they can find support for this. Judi Greenwald asked what happens if we defer to ICAO, and then ICAO doesn't do anything. The industry representatives responded that the U.S. is a major player in ICAO and that we would work through ICAO to ensure action. Cindy Newberg of EPA said that ICAO is a consensus based organization and that they might not be able to move forward on this, even if the U.S. takes an aggressive stance. Greenwald also asked whether ICAO could do something prior to Kyoto that would give the climate negotiators confidence that they were actually moving forward on this. The industry representatives said that they would work on that. The U.S. Government's representative to ICAO, James Erickson, said that ICAO is aware of this issue. Jim Conley of the IAM (representing labor) said that the workers are in agreement with the industry on this matter, and that we in the government need to keep the job implications of ths treaty in mind as we move forward. Jonathan Pershing also handed out and discussed a report, "Special Issues in Carbon/Energy Taxation; Carbon Charges on Aviation Fuels" by the Annex I Expert Group on the UNFCCC. He said that the report describes the difficulties inherent in raising aviaiton fuel taxes, and thinks the report makes it less likely that aviation fuel taxes would be adopted as a common policy and measure. The U.S. position is to oppose any common policies and measures. At the close of the meeting, industry provided a brief summary of a "MITRE study" that finds substantial greenhouse gas reductions available from air traffic control improvements. NEXT STEPS 1. The industry will work on Protocol language for our consideration that would refer emission limitation responsibility to ICAO in a way that (a) ensures action will be taken and (b) respects international law regarding what parties of one treaty can impose/request of parties to another treay. The industry will also meet with their international counterparts to identify other countries who would support complete deferral to ICAO on aviaiton greenhouse gases. 2. The industry and the U.S. ICAO representative will try to get ICAO to report to the parties on its greenhouse gas activities prior to the Kyoto negotiating session. 3. NASA and FAA will provide their comments on the MITRE study (on the greenhouse gas reduction benefits of air traffic control improvements) to Dirk Forrister. 4. Dirk Forrister will hold a follow-up meeting to discuss the MITRE study. Sign In Just NAME AFFIL PHONE FAX JUDI GREENWALD WHCCTF 343 1060 343 1163 Cindy Newberg CPA 233-9729 233 - 9665 Howard Wesoty NASA 358-4650 358-3550 Greta Creech NASA 358-1734 358-4066 Howard Aylesworth AIA 371.8456 371.8471 Laurance 5. Camparel DOL 482-3038 482-0325 Shelley Longmur United Airlines 296-2337 296-2869 John Buscher United Arline 296-2337 296-2869 3reg Dole Boeing 103-526-2540 X 2578 D.H. HILTON GULFSTREAM 912 865 3106 912965 +812 Susan Walsh Eva Seydel United Technologies 202-336-7415 x 7447 Pratt+ Whitney/UTC 2023367443 x7421 Bob Bluhm American Airlines 817/967-3764 817/963-2047 JAMES ERiCKSON FAA 202/267-3576 267-5594 Jim Conley IAM 301-967-4558 967-4591 RICHARD RIDGE GE AIRCRAFT ENGINES 202-637-4024 637-4224 John Bogin Northwest Airlines (612) 726 7370 727-4845 Michael Wascom Julie Ellis Air Transport Assn (202) (202)626-4033 626-4033 (202)626 4208 FEDEX 901 395-5129 901-395-3812 JIM MULDOON FAA 202-267-7573 267-5594 Pat SNYDER Dyer Ellis&Joseph for ATA 202 944 - 3562 944-3068 Mary Raines Delta 404 715-2705 404 715 RA BRowN DELTA AIR LINES 404 715-7230 715-722 -Tohn Montgomery AMERICAN Auslines 817-967-1069 967-9352 Meeting Summary Thursday. September 25 Greenhouse Gas Reduction Opportunities in the Steel Industry Continuing our outreach efforts on climate change, Agency representatives met with several member companies of the American Iron and Steel Institute (AISI). (See attached list of attendees). AISI requested the meeting to follow up on Bethlehem Steel's suggestions to the President regarding voluntary programs. Dirk Forrister, Chair of the White House Climate Change Task Force, opened the meeting with introductions. Bruce Steiner made a presentation called "Global Climate Change and the Steel Industry." He said that this issue is important to steel. Steelmaking is energy intensive and largely coal-based (coal is not only an energy source but also a feedstock). The steel industry has made major investments in energy conservation, accomplishing a 45% reduction in energy consumption since 197, without decreasing production. But the pace of reductions is slowing and further reductions are more difficult to obtain. The economic consequences of climate change policy could be devastating to the domestic steel industry, based on studies by Argonne and ESI. The developing countries are major competitors for U.S. steel makers. 4 of the top 10 steelmaking countries--China, Korea, India, and Brazil--are not Annex 1 countries. The U.S. steel industry does not own facilities abroad. The key issues for the steel industry are : (1) a global solution is needed; (2) maximum flexibility is needed (including voluntary commiments and recognition of progress to date; they applaud Administration's flexibility proposals, but have some questions); (3) taxes and energy reduction mandates should be avoided; and (4) science must lead policy. The industry has already done a lot to reduce greenhouse gas emissions through more effective utilization of materials; improved energy efficiency in existing processes; other efforts such as Green Lights; development and implementation of new technology; employee and community awareness and education programs; and product-related remission reduction efforts (e.g., participation in PNGV). THE OVERALL STEEL INDUSTRY EXPECTATION IS THAT THEY CAN ACHIEVE AT LEAST A 10% GREENHOUSE GAS EMISSION REDUCTION BELOW 1990 LEVELS BY 2010 THROUGH VOLUNTARY EFFORTS. This would be achieved through a wide variety of activities--from greater scrap utilization to fuel substitution to reducing plant traffic to replacement of existing units with more efficient new technologies. AISI also pointed out that the government could do more. They want us to avoid overstatement of the science; work toward more cost-effective regulations; support electricity competition; promote voluntary programs; provide R&D assistance and incentives; promote CO2 sinks; promote joint implementation, technology transfer; and flexibility; promote energy efficiency labelling (taking into account materials and energy use over the whole life cycle); promote life-cycle analysis in procurement policies; develop safe, economical nuclear power; and include all greenhouse gases. Judi Greenwald of the WHCCTF commended AISI for their constructive suggestions regarding what the steel industry can do; as well as what the government can do. Denise Swink of DOE said that it is important to keep in mind that all of the technologies don't work all the time. She finds the estimate believable, and suggested that a few concrete examples of what technology has achieved in specific cases would be helpful. Jean Briskin of EPA said that the steel industry could work with her office and/or DOE on labeling. She said another promising area would be the use of steel slags in cement. She also said that her office works on federal and state procurement guidelines for energy efficient equipment, and would like to work with the steel industry on this. Judi Greenwald asked whether EPA was working on life-cycle labeling in terms of materials, and Jean said no. Bruce Steiner said that the International Iron and Steel Institute is doing a study on life cycle analysis. Jean said that recycled content labelling would also have potential benefits. Jean also siad that the federal advisory committee on clean air, energy and climate might be a useful forum for these ideas. Denise Swink pointed out that in many states cogeneration facilities have one-stop permitting, which is a big advantage. Diane Regis talked about the Common Sense Initiative, where all the stakeholders have learned that technology is the key. The NGO participants would support targeted investment tax credits. Chuck Carson of USX said that it is important to keep in mind that for many years the steel industry wasn't profitable. Now they've done the hard work and sacrifice to become profitable agin, but there still isn't enough capital to do all the things everyone wants them to do. Diane thinks CSI has had some success in raising the level of appreciation for these capital issues, and for things like plantwide performance standards. Diane also pointed out that there is a continuum between voluntary and regulatory approaches; it's not a purely either/or choice. Judi Greenwald explained that she would be putting together a more detailed path forward as a result of this meeting. She asked for suggestions from Jean Briskin, Denise Swink and Diane Regis, and from AISI (if they decide they have anything more to add). NEXT STEPS: 1. EPA (Jean Briskin) and/or DOE (?) could work with the steel industry on labelling (including of recycled content, encouraging the use of steel slags in cement; and on federal and state procurement guidelines for energy efficient equipment. 2. EPA (Diane Regis) could work with the steel industry through the Common Sense Initiative on one-stop permitting, investment tax credits, and plantwide standards. 3. DOE (Denise Swink) could work with the steel industry on coming up with illustrative real- world examples of the benefits of technology. WED 04:25 PM FAX NO. P. 02 Opportunities to Reduce Carbon Emissions Associated with Production and Use of Steel September 30, 1997 1. Label Star for Recycled Content Using stecl scrap consumes less energy and lowers the cost of producing new steel. EPA could label products made from steel (i.e. appliances) that contain a certain specified level of recycled material. Labeling can bc an effective way to educate purchasers and the public about environmentally preferable products. Need to research current status of labeling efforts in this area. 2. Energy Star Steel Procurement Initiative EPA could work with other federal, state and local agencies to assist them in specifying high efficiency equipment. This equipment could include motors which use a higher grade of steel that is more efficient and therefore uses less energy and emits less CO2 into the atmosphere. EPA has considerable experience with using procurement initiatives to promote the use of environmentally preferable products by providing model procurement specifications and leveraging key actors to undertake mass procurement. Experience with the Energy Star Computers program has proven that a procurement initiative would be greatly assisted by an Executive Order for federal agencies to follow the procurement specifications where their performance criteria are met by the specified products. 3. Incorporate effects of Energy Star Steel into Clean Air Act State Implementation Plans (SIPs) EPA has begun to work with states to improve the way in which energy efficiency and other incasures are credited into State Implementation Plans (SIPs). EPA can work to understand the relationship between energy efficiency and air quality in steelmaking to assure appropriate accrediting of efficiency improvements undertaken by the industry. Mutually agreed upon measures may provide an increased incentive for the industry to accelerate their adoption of energy efficiency measures because they can contribute to lower cost compliance with the National Ambient Air Quality Standards for ozone and particulate matter Sign- - in wheet Judi Name Greenwald Afhl Phone Fax WHCCTF 343-1060 343 106 Jeanne Briskin US EPA 202 233 - 9135 233-9575 MARTIN SUHOZA LTV STEEL 216-622-4835 622-1951 BRUCE STENNER AISI 202-452-7112 463-657 GARY ALLIE WLAND STEEL 219/399-3332 399-603 JIM SCHULTZ CARGILL STAR 012-688-1243 688-129 SCOTT SALMON USX CORP. 202/783-6797 783-63c Charles Bell DOC/ITA 202/482-0608 482-14 A.E. MOFFAT Bethlehemskel 610-694-7640 694-587 Moe Carino Bethlehem Steel 202-775-6211 775-622 Alex Cristofaro EPA 202 260-5503 260-078c Kevin James BPA 202 260-2424 260-051 CHUCK CARSON U.S. STEEL 412-433-1174 433-20, imise Swinch DOE 2025869232 9234 Drani Regas EPA-Water 202-260-5700 260-571 DICK FORRISTER Task Four 343-1060 343-1162 1400 16th Street, NW Fax 202.797.6501 =10 Suite 330, Box 5 Email [email protected] or Washington, DC 20036-2266 [first initial]+{lastname]@acpa.com Phone 202.797.6500 Web http://www.igc.apc.org/eic Environmental Information CA: JAF Center TR JS Friday, February 21, 1997 Alicia Munnell Member Council of Economic Advisers OEOB Room 314 17th St. and Pennsylvania Ave, NW Washington, DC 20502 Dear Ms. Munnell: As you probably know, in January, five preeminent economists -- Kenneth Arrow, Dale Jorgenson, Paul Krugman, William Nordhaus and Robert Solow -- signed the enclosed "Economists' Statement on Climate Change," and circulated it to their colleagues. The Statement has now been endorsed by eight Nobel Prize-winning economists and over 2,300 economists around the country. Never before, even in the case of the Smoot- Hawley Tariff Act, have so many economists endorsed a consensus declaration. This remarkable consensus has garnered significant attention in the press. For example, Peter Passel of the New York Times commented that "the nation's movers and shakers would do well to pay attention" to the statement. The Washington Post discussed the Statement in a Sunday editorial that concluded that a "near-term date" should be set for reducing greenhouse gas emissions and that the consequences of inaction on climate change "are likely to be dire." We have enclosed copies of these and other press reports on the Statement. We expect that the same special interests who continue to dispute the science of climate change will also continue to claim that climate change cannot be mitigated without adversely impacting Americans' standard of living. We believe, however, that the consensus expressed in the Economists' Statement makes such claims untenable, and we hope that the Administration's consideration of mitigation strategies is based on sound economics, just as its consideration of climate science has been based on sound science. We would welcome the opportunity to discuss any aspect of climate change mitigation with you in greater detail. Please call either of us at (202) 797-6500. Sincerely, George Abar Ah Day Kedull Doug Kendall Enclosures ECONOMISTS' STATEMENT ON CLIMATE CHANGE Endorsed by Over 2000 Economists including six Nobel Laureates I. The review conducted by a distinguished international panel of scientists under the auspices of the Intergovernmental Panel on Climate Change has determined that "the balance of evidence suggests a discernible human influence on global climate." As economists, we believe that global climate change carries with it significant environmental, economic, social, and geopolitical risks, and that preventive steps are justified. II. Economic studies have found that there are many potential policies to reduce greenhouse-gas emissions for which the total benefits outweigh the total costs. For the United States in particular, sound economic analysis shows that there are policy options that would slow climate change without harming American living standards, and these measures may in fact improve U.S. productivity in the longer run. III. The most efficient approach to slowing climate change is through market- based policies. In order for the world to achieve its climatic objectives at minimum cost, a cooperative approach among nations is required-such as an international emissions trading agreement. The United States and other nations can most efficiently implement their climate policies through market mechanisms, such as carbon taxes or the auction of emissions permits. The revenues generated from such policies can effectively be used to reduce the deficit or to lower existing taxes. Sponsored By REDEFINING PROGRESS One Kearny Street 4th Floor San Francisco, CA 94108 Phone: (415) 781-1191 Fax: (415) 781-1198 EMail: [email protected] January 3rd, 1997 Dear Colleague, As you may know, representatives of the world's nations will convene in Kyoto in December, 1997 to negotiate an international agreement addressing the threat of global climate change due to greenhouse gas emissions. This presents a significant opportunity for the United States to exercise a leadership role in ensuring our long-term well-being. Conversely, a failure on the part of the U.S. government to put forward a well-reasoned position would be a major environmental, economic, and diplomatic setback. As the climate debate unfolds, it is imperative that public policy be guided by sound economics rather than misleading claims put forward by special interest groups. For this reason, we invite you to join us in endorsing the attached non-partisan consensus statement on the economics of climate change. Once this statement has been signed by a large number of economists, it will be widely disseminated to leaders in the public and private sectors, and to the general media. This effort is being coordinated by Redefining Progress, a non-partisan, non-profit public policy organization. Attached please find an endorsement form for your consideration. This letter and endorsement form are being sent to the membership of the American Economic Association. Please feel free to circulate it to your colleagues in case they are not on the AEA mailing list. We thank you for your prompt attention to this critical issue. Sincerely, Kemeth Kenneth/J I Arrow anow Dew Joye Pal RKL Dale W. Jorgenson Paul R. Krugman Wiman D. Northaus Robert M. Solour William D. Nordhaus Robert M. Solow NOBEL LAUREATE SIGNATORIES Kenneth J. Arrow Stanford University Gerard Debreu University of California at Berkeley John C. Harsanyi University of California at Berkeley Lawrence R. Klein University of Pennsylvania Wassily Leontief New York University Franco Modigliani Massachusetts Institute of Technology (Emeritus) Robert M. Solow Massachusetts Institute of Technology James Tobin Yale University ECONOMISTS' STATEMENT ON CLIMATE CHANGE Among the over 2,300 economists who have endorsed the Economists' Statement on Climate Change are the following, they include scholars at top universities and economists from top corporations. Michael C. Barth ICF Kaiser Laurence J. Kotlikoff Boston University William J. Baumol New York University Anne O. Kreuger Stanford University Steven Neil Braun Council of Economic Advisers Mordecai Kurz Stanford University W.A. Brock University of Wisconsin, Madison Steven G. Lanning Bell Labs-Lucent Technologies Martin Bronfenbrenner Duke University Lester Lave Carnegie Mellon University John P. Brown KPMG Econmic Consulting Services David Lui Southern California Edison R. Thomas Burge Proctor & Gamble Pharmaceuticals Paul W. MacAvoy Yale School of Management Dallas Burtraw Resources for the Future Gerald M. Meiser Stanford University Trudy Ann Cameron University of Los Angelos California John R. Meyer Harvard University Jian Cao AT&T Christopher J. Monroe AT&T Carl F. Christ Johns Hopkins University Richard R. Nelson. Columbia University Gerard Debreu University of California at Berkeley Richard B. Norgaard University of California at Berkeley Stephen J. DeCanio University of California at Santa Barbara Charles Plott California Institute of Technology Robert Dorfman Harvard University Richard E. Quandt The Andrew W. Mellon Foundation Franklin M. Fisher Massachusetts Institute of Technology Roy Radner New York University Peter J. Francis CNA Corporation Gordon Rausser University of California at Berkeley Victor R. Fuchs Stanford University Kenneth Rogoff Princeton University Claudia Goldin Harvard University David Romer University of California at Berkeley Edward Gramlich University of Michigan Michael Rothschild Princeton University Jerry R. Green Harvard University Daniel Rubinfeld University of California at Berkeley Frances Hammond General Motors Corporation Vernon W. Ruttan University of Minnesota John C. Harsanyi University of California at Berkeley Jeffrey Sachs Harvard University Oliver Hart Harvard University Thomas Sargent University of Chicago James J. Heckman University of Chicago F.M. Scherer Harvard University Albert O. Hirschman Institute for Advanced Study T. Paul Schultz Yale University Jack Hirshleifer University of Los Angelos California M.M. Shahjahan PEPCO Robert Hunt World Bank Steven Shavell Harvard University Leonid Hurwicz University of Minnesota A. Michael Spence Stanford University Christopher Jencks Harvard University Robert Stavins Harvard University, Kennedy School Gale D. Johnson University of Chicago Bruce Stram Enron Corporation Carl Kaysen Massachusetts Institute of Technology James Tobin Yale University Robert Kirchner PEPCO Gordon Tullock University of Arizona Lawrence R. Klein University of Pennsylvania Hal R. Varian University of California at Berkeley J. Kmenta University of Michigan W. Kip Viscusi Harvard Law School Oliver E. Williamson University of California at Berkeley The Washington Pos C6 SUNDAY, FEBRUARY 16, 199 Staying Cool E NOW KNOW that the old saying W administration accepted, in principle, the no- attributed to Mark Twain-"We all tion of binding targets. Now nations are negoti- grumble about the weather but nothing ating those targets-amounts and dates-hop- is done about it"-is not quite true. By virtue of ing to reach agreement at yet another the coal we burn and the gasoline we use and in a conference in Kyoto in December. thousand other ways, we all have a great effect on the weather. The earth has grown warmer by Opponents of meaningful action, led by parts about one degree, on average, during the last of the energy and utilities industries, have century, and scientists believe the process is shifted their strategy from attacking the scien- accelerating. If nothing is done to slow global tists to warning of dire economic consequenc- warming, the consequences in the next century es. But last week more than 2,000 economists aré likely to be dire. Much turns on decisions the signed a statement challenging the industry government must take this year. claims. The broad array of economists, led by After years of debate, few now dispute that Nobel-Prize winners Kenneth J. Arrow and the burning of fossil fuels releases gases into Robert M. Solow, said that measures to reduce the atmosphere which then trap more of the greenhouse-gas emissions need not harm the sun's warmth than the planet would otherwise economy-and "may in fact improve U.S. pro- retain. The effects of this are more complex ductivity in the longer run." That's because than the term "global warming" suggests. there are many innovative and energy-efficient Some parts of the earth are likely to become technologies just awaiting the right financial colder, others drier; monsoon and hurricane incentives to enter the market. In many such paths may shift; storms may become more fields, U.S. industry leads the way. extreme; sea levels will⁻ rise. Many small The key, then, is for the United States to set islands and low-lying coastal areas, such as a goal that's not pushed off to some distant date Maryland's Eastern Shore, are at risk. Rela- like 2020 or beyond. A near-term date would tively small temperature changes could have a send the signal industry needs to begin serious- dramatic impact on agriculture and even the ly investing in more efficient technologies, and spread of disease. the commercialization of such technologies At the 1992 Earth Summit in Rio de Janeiro, would offer an alternative path for development the United States-which produces something to giants like China and India. Their economies like one-quarter of the world's greenhouse-gas are sure to grow in coming decades; and if they emissions-vowed to reduce them to 1990 follow the U.S. path to prosperity, we will all be levels by the year 2000. It seemed a modest doing more than just grumbling about the goal, but it won't be met. So last year the weather. THURSDAY, FEBRUARY 13, 1997 Economic Scene Peter Passell stitutions to enforce the targets is in the talking Yawn. A global-warming alert. stage. That's where the economists' statement fits in. "We wanted to be there early," said Stephen But this one has solutions. DeCanio of the University of California at Santa Barbara, "before governments and politicians TERNLY worded petitions and ringing were locked into positions." Specifically, the state- S screeds of principle are as much a part of ment is intended to give the Clinton Administra- campus life as grade Inflation - which Is tion some help in pressing the Idea of creating an why Washington rarely takes them seriously. But International market in emissions permits at the the nation's movers and shakers would do well to next global meeting on climate change, set for pay attention to a statement on global warming by Kyoto, Japan, in December. some 2,000 mostly academic economists. The Idea Is simple. If and when world leaders For one thing, the signatures collected by Rede- start to deal with the practical issues, they are apt fiaing Progress, a group of policy-minded social to set national targets for containing emissions scientists based in San Francisco, range from the himlor that will be very expensive to meet in the rich newish left (Duncan Foley of Barnard College) to industrial economies, and probably won't be hon- the skeptical center (James Heckman of the Uni- Niculae Asclu ored in the large emerging economies like China, versity of Chicago) to the libertarian right (Gor- Russia, India and Indonesia. don Tullock of the University of Arizona). "Mar- policy options that would slow climate change Creating an emissions trading system that al- ket-based approaches to coping with climate without harming American living standards." lows already rich economies to pay the emerging change generate as much consensus among econo- And what might these policy options be? Here, economies to use less energy and less carbon- mists as free trade," explains Paul Krugman of the drafters stake out a position that seems almost Intensive fuels as they develop offers a double M.I.T., one of the organizers of the statement. obvlous to economists, but has barely entered the dividend. It reduces the cost for developed coun- More important, the statement focuses on what consciousness of environmental policy makers. "A tries, in turn reducing the chances their legisla- Is now regarded by Insiders as a make-it-or-break- cooperative approach among nations is required tures will balk. And it creates a pool of capital to it Issue in slowing atmospheric warming: design- - such as an International emissions trading be used as an incentive to push emerging econo- ing an international system that permits rich agreement," the statement asserts. economies to contribute cash In lieu of emissions To understand where the economists really mies toward environmentally benign growth. Translation: Getting, say, China or India to reductions. "Allowing some to pay others to re- want the diplomats to go, consider where we are dure greenhouse emissions could reduce the total now. Current rates of deforestation and combus- switch from coal to natural gas, or to encourage cost by 80 to 90 percent," estimates William tion of carbon-based fuels - coal, oil, gas are energy conservation by charging world market Nordhaus, an economist at Yale and another or- adding carbon dioxide Into the atmosphere faster prices at home would be a lot easier if they were than the oceans can absorb it. The higher carbon paid billions of dollars each year to do it. gahizer of the statement. dioxide concentrations trap solar energy. Rising temperatures will likely change weather patterns Not every economist who favors emissions trad- Like any committee looking for consensus, the drafters of the climate statement cast their net radically and raise the level of the oceans. ing signed the statement. "I'm worried It will be widely. "We believe that global climate change Governments of all the major economies are used at Kyoto to commit America to useless, carries with it significant environmental, econom- vaguely committed to containing greenhouse gas expensive unilateral actions in reducing emis- ic"social and geopolitical risks, and that preven- emissions before once-a-century hurricanes be- sions," says Robert Hahn, an economist at the tive steps are justified," the unshocking Introduc- come an annual event In the Carlbbean, Kansas American Enterprise Institute. turns Into a dust bowl and the Bay of Bengal But Mr. Nordhaus has very different worrles. tion reads. doubles In size at the expense of Bangladesh. But "Economists haven't been important players in Those who read on, however, will discover there is meat on these bones: "Sound economic analy- the emphasis Is on the vague: the process of environmental policy over the last 30. years," he setting emissions targets or creating political In- said. "This time we could make a difference." sis," the authors argue, "shows that there are D2 FINANCIAL TIMES 4 FRIDAY FEBRUARY 14 1997 Economists back call for new carbon taxes By Mark Suzman in Washington that would slow climate change bating global warming ahead of across the country by Redefining revenues generated from such pol without harming American living the international conference on Progress, a non-partisan, non- cies can effectively be used t More than 2,000 US economists, standards, and these measures the issue in Kyoto, Japan, next profit public policy organisation reduce the deficit or to lower exis including six Nobel laureates, may in fact improve US productiv- December. based in San Francisco. ing taxes," it says. yesterday endorsed an unprece- ity in the long run," the statement The administration recently The statement cites scientific Mr Stephen DeCanio, senior ect dented statement calling for new says. indicated its support for emissions evidence from the United Nations- nomic fellow with Redefinin taxes on carbon use and an inter- Although there are still some trading but has backed away from sponsored Intergovernmental Progress, said the statement 1 national emissions trading agree- sceptics, the overwhelming con- the idea of a carbon tax. Panel on Climate Change in 1995 aimed at persuading the US t ment to help control global sensus among economists is a The statement was drafted by to argue that "preventive steps are take an international lead in con warming. blow for energy companies and five prominent economists, Mr justified" to combat the "signifi- bating global warming. The economists argue that using other lobby groups which have Kenneth Arrow and Mr Robert cant environmental, economic, "Some groups have asserted the such market-based policies to limit managed to derail previous Solow, both Nobel prizewinners, social and geopolitical risks" asso- we cannot address the global cl the growth in greenhouse gas attempts to introduce such a car- Mr Dale Jorgenson of Harvard Uni- clated with global warming. mate change problem withou emissions could ultimately prove bon tax on the grounds that it versity, Mr Paul Krugman of the Specifically, it calls for the US incurring serious economic harm, beneficial for the economy. would be prohibitively expensive. Massachusetts Institute of Tech- and other countries to co-operate he said. "These 2,000 economist "For the United States in partic- It will also put pressure on the nology and Mr William Nordhaus on reforms such as carbon taxes have said essentially the opposit ular, sound economic analysis Clinton administration to come up of Yale University. and the auction of internationally - that the greatest risks lie wit shows there are policy options with concrete proposals on com- It was circulated to economists tradeable emission permits. "The inaction." THE WALL STREET JOURNA THURSDAY, FEBRUARY 13, 1997 B Group of Economists Seeks Treaty on Global Warming By a WALL STREET JOURNAL Staff Reporter WASHINGTON - A group of 2,100 economists signed a statement calling for international controls to prevent global warming, asserting that such controls would not harm Americans' standard of living and "may in fact improve" the nation's economic productivity. The statement - to be announced here today - takes issue with a letter by more than 100 chief executives of U.S. compa- nies sent to President Clinton in Decem- ber that warned that a global treaty "could have serious economic and com- petitive consequences." The proposed treaty would control emissions of carbon dioxide and other "greenhouse gases" that many scientists believe are slowly warming the planet by trapping sunlight. In their letter, the CEOs also warned the president to avoid making "premature commitments" be- cause of "scientific uncertainties" that require further study. But Kenneth J. Arrow, a Nobel Prize- winning economist at Stanford Univer- sity who helped shape the agreement among the economists, said they believe there now is enough scientific research to establish that man-made causes of global warming will have a "significant" detri- mental effect on climate. The Washington Pos FRIDAY, FEBRUARY 14, 1997 A3 Economists Urge Reduced U.S. Emissions Reuter More than 2,000 economists said in a state- ment yesterday that the United States would be able to reduce its industrial emissions to slow global climate change without damaging its economy. Prepared by five leading economists, the statement said well-designed policies relying on market mechanisms "may in fact improve U.S. productivity in the longer run." Spokesmen for industries that depend largely on fossil fuels such as oil and coal have argued that the threat of climate change from heat-trapping industrial emissions is over- blown, and countries should wait for more sci- entific proof of global warming before imple- menting policies to slash emissions. But the economists, who released the state- ment at a news conference, said climate change "carries with it significant environmen- tal, economic, social and geopolitical risk," and that "preventive steps are justified." They endorsed a system of "market mecha- nisms, such as carbon taxes or trading of mar- ketable emissions permits among countries." Revenues from carbon taxes or emissions credits could be used to reduce budget deficits or lower taxes to benefit the economy, said the statement drafted by Nobel laureates Ken- neth Arrow and Robert Solow, as well as Dale Jorgenson of Harvard University, Paul Krug- man of the Massachusetts Institute of Tech- nology, and William Nordhaus of Yale Univer- sity. 1 Predecisional Draft / Not for Quotation or Distribution Revised 2/27 OUTREACH PLAN FOR MODELING RESULTS Objectives: Improve Congressional, stakeholder & public confidence in economic underpinnings of negotiating position. Support (but not compromise) negotiating strategy. Identify any problem spots early enough to respond -- not awaiting critique at end that could spoil value of analytical effort. Build on momentum of recent statement by 2,000 economists. Stage I -- Base case runs and major assumptions -- Mid March Release in briefings to Congressional staff (we go to them) and outside groups (invite in). Announce formation of peer review panel & process. -- 12 members (Interagency Analysis Team ("IAT") recommends members + Deputies sign-off). Selection criteria: macro-economic expertise, range of sectoral expertise (including economics of energy, environment, labar, agriculture, industry, etc.), published & peer reviewed work in the climate change field, independent from government. Convened as Climate Modeling Review Panel, with written Charge outlining scope of review provided by IAT. Since we would not seek consensus, but rather individual views, it would not come within the ambit of the Federal Advisory Committee Act [see Natural Resources Defense Council vs. Herrington, 637 F. Supp. 116 (D.D.C. 1986)]. Base case & assumptions would be presented to the Panel by Ehrlich group in mid March, and Taskforce members would be invited to provide review comments and recommendations for improvement within 2 weeks (early April). 2 Predecisional Draft / Not for Quotation or Distribution Stage II -- Modeling Runs -- Late April to Early May Provide confidential briefings to Congressional staff (and Members, where requested). Convene Panel to hear Ehrlich's presentation on modeling results and key interpretations; they respond with written comments within 2 weeks. This process would not become public until stage III. Stage III -- Public Workshop on Modeling & Results -- Early June Opportunity for full public participation. Full economic analysis offered to Congress. Ehrlich group presents full package: basecase, runs, assumptions and interpretations of results. Peer review panel responds with individual review and comments. Ehrlich group provides response re: how we dealt with recommendations. Audience participates in question and answer session with Ehrlich group and review team. Package put on internet for public at large to consider. Package put in Federal Register as Notice for public at large. R EDEFINING PROGRESS ONF KEARNY STREET 4TH FLOOR SAN FRANCISCO CALIFORNIA 94108 Telephone 415.781 1191 Facsimile 415.781 1198 Jue Gravender January 14th, 1997 I Elsa Cleveland Mr. Jeffrey Frankel Member Designate 8 Nibels Council of Economic Advisors OEOB Room 315 2,500 Washington, DC 20502 Dear Mr. Frankel, Modia Learnef We want to bring to your attention the enclosed "Economists" Statement on Climate Change." The statement - originally drafted by Kenneth Arrow, Dale Jorgenson, Paul Krugman, William Nordhaus, and Robert Solow - is now being circulated for endorsement to the entire membership of the American Economics Association (AEA). We expect a large number of endorsements from economists across the country, after which an official public announcement will be made in mid-February. This initiative is being coordinated by Redefining Progress, a non-partisan, non-profit public policy organization. We are pleased to provide you with advance notice of this undertaking. As you will notice, the attached statement represents a remarkable consensus. It not only provides strong support for the United States to seek an international agreement on climate change, but also a rebuke to those who claim that any meaningful effort to mitigate climate change will devastate the economy. We would welcome the opportunity to discuss this initiative or the economics of climate change in more detail. Please call Ted Halstead at (415) 781-1191 or Stephen DeCanio at (805) 893-3130. Most Sincerely, threethre Stephen J. Decimo Ted Halstead Stephen J. DeCanio, Ph.D. President Senior Economist enclosure Printed OM Recyclar Paper 3 White House Climate Change Taskforce February 26, 1997 Agenda 1. Outreach Plan for Modeling Results Insights from Hill Discussions Objectives Straw-person Proposal on Process Next Steps 2. Initial Draft Outreach Plan for Year Organization Key Activities Staff Support Next Steps 3. Around the Table Guih, Sut Cordon hua STate Cid JSTR noi Jerry Jin ^' I'D DUE Robit SP omF us UMM WH CC YOU FORE Spp N B." X Miny Same' Keate Labor Agr Bran 1.0 or uson 2 Predecisional Draft / Not for Quotation or Distribution Convene peer review panel to hear Ehrlich's presentation on modeling results and key interpretations; they respond with written comments within 2 weeks. This process would not become public until stage III. Again no FACA problem with keeping pre-decisional info confidential. still not am antride-circulary or This stage. Stage III -- Public Workshop on Modeling & Results -- Early June Opportunity for full public participation. Full economic analysis offered to Congress. Ehrlich group presents full package: basecase, runs, assumptions and interpretations of results. Peer review panel responds with individual review and comments. Ehrlich group provides response re: how we dealt with recommendations. Audience participates in question and answer session with Ehrlich group and review team. Package put on internet for public at large to consider. Package put in Federal Register as Notice for public at large. On Trach Sandolow wity GOAL To solicit public input on a variety of domestic policy options so that the Administration can be informed as it makes decisions with respect to both domestic and international policy issues, and to communicate the most current Administration thinking regarding domestic policy options and approaches. TIMETABLE February 15 Administration produces a white paper regarding overall policy options and publishes in Federal Register. May 15 Comment Period Closes. July 15 Administration publishes summary of comments and reactions as part of updated paper. October 15 Comment Period Closes. January 15 Administration publishes final paper. Ongoing Discussions in specified fora, and in informal meetings with interested parties. DISCUSSION FORA President's Council on Sustainable Development EPA Advisory Committee on Climate Change Heinz Center Project Kennedy School Utility Effort Center for Clean Air Policy Group