Obama Administration Moves on Climate Policy ’Encouraging’

The Obama administration and the U.S. Congress have started work on crafting climate policy for the United States. Meanwhile, work continues on a successor to expiring provisions of the Kyoto Protocol; UN negotiators hope to have a deal when they meet in Copenhagen in December 2009. Yvo de Boer, executive secretary for the UN Framework Convention on Climate Change, says Washington has signaled it will fully engage in international negotiations. "Having talked to leaders in both the House and the Senate, a strong desire is there to put national legislation in place to back up the administration on this issue, and to think along with the president on how we can agree on something in Copenhagen that would also make it through the Senate this time around," he says. He says global economic woes are a setback for movement on climate change but new U.S. leadership is a "huge signal of encouragement to the international community."

You met with officials in Washington, both on Capitol Hill and in the Obama administration, about climate change policy. What did you take away from those meetings?

Very encouraging messages both from the administration and from people on the Hill, in the sense that there is, on the part of the administration, a really strong desire to get national legislation in place. The president has asked the Senate and the House to come up with cap-and-trade policy and to move the domestic agenda forward aggressively.  Secondly, [there is] a big commitment to be active in leadership in international negotiations, to fully engage in those negotiations, and to work towards an agreement in Copenhagen at the end of this year. And what I also found  particularly encouraging is the realization that essential to a Copenhagen agreement is going to be significant financial resources that will allow developing countries to engage in both emissions [reductions] and to adapt to impacts of climate change. So, a very strong push within the administration on both domestic and international fronts. Having talked to leaders in both the House and the Senate, a strong desire is there to put national legislation in place to back up the administration on this issue, and to think along with the president on how we can agree on something in Copenhagen that would also make it through the Senate this time around.

What is going on in Europe with the carbon trading market? What lessons can be derived from the EU system and how it has worked so far?

People say that the EU made mistakes in the beginning by allocating emission rights too generously. And I don’t think that is the case. What they actually did was develop the system in a fairly soft way, allow industry to become familiar with it, and then gradually as targets become more aggressive, the share of auctioning increases and the emission allowances decrease. So they put in place the architecture and then tightened things up as we moved forward. Of course, the clock is ticking and we cannot afford to be too relaxed about climate change policy too long. So the challenge here will be to strike the right balance between a cap-and-trade regime that results in sufficient ambition without giving industry the feeling that this is tightening their survival. And that goes to two issues. One is, to what degree will emission rights be auctioned as opposed to given away? The second critical question will be what happens to the auctioning revenue? Does that go back to the industries that are having to buy the rights or does it go to consumers who are having to pay high electricity prices?

Poland and Germany received some concessions for the EU’s initiative to have 20 percent emissions reduction by2020, which they said they needed because of the economic constraints right now. What are the consequences of these types of concessions? Some environmentalists have pegged it as backpedaling.

It is reflective of a political reality. Without some concessions, it would have been impossible to get the package agreed politically. It made political sense to make those concessions. Having said that, those concessions will, of course, make it more difficult for the European Union to meet that 20 percent [emissions] reduction target. So they may have to put in additional policies.

Coal has been in the news, both in the United States and in Europe. What is your take on coal power in the short term, say the next two decades? Particularly, what signals should the developed world be sending to China, India, South Africa, places that have a huge reliance on coal?

Coal is going to be an inevitable part of the mix for years to come because it is a very cheap source of energy. It is abundant in the countries that you mentioned, and those countries will therefore want to use that source of energy. The question then becomes how can you deploy clean coal technology? Can you think about how we have been capturing and storing in order to make the use of coal cleaner? And secondly, can you put a bigger emphasis on  renewable sources of energy that make it necessary to use less coal going into the future? But the key there is to begin to build the cost of pollution into the price of products, because as long as there is no financial penalty on the use of coal, it becomes very difficult for relatively expensive renewable energy technologies to make it into the market. So we need a market that reflects the full societal cost of generating electricity or producing a certain product.

Discussions tend to focus on mitigating greenhouse gases but there is another side--adaptation policies needed to address climate change impacts--which require massive amounts of long-term planning and might require huge infrastructure investment.  Where do you see adaptation planning right now?

It is not getting enough attention. It is the issue on the agenda that has really come to fruition last. We have a system in place already under the climate convention whereby least-developed countries receive financial support to prepare so-called National Adaptation Programs of Action that allow them to map out how they are threatened by climate change, and then to begin to design responses to that threat. That is a facility that needs to be extended to all developing countries so that they can begin to asses risk and plan for impacts. And then, of course, the real work begins. You need to make investments in infrastructure and different agricultural practices in order to ensure that impact can be coped with.

With the economic downturn, developing nations are experiencing constraints either through development aid or because their own economic growth is curtailed. How do you make the case for adaptation planning given that there are so many short-term fires that need to be put out right now, and the ongoing political tussle over the mitigation side?

There was a report a year and a half ago that pointed to the risk that a large part if not all the investments that have been made to achieve the Millennium Development Goals could be undone by the impacts of climate change. And there is a big recognition now that we need to avoid that happening. ODA [overseas development assistance] is not where it is supposed to be. But to see ODA going down the drain because we haven’t sufficiently responded to the impacts of climate change would be a huge waste. So there is a willingness to look at two things.  First of all, to what extent is existing infrastructure  threatened by the impacts of climate change? But secondly, even more importantly, to make sure that any new investment decision that is taken is impact proof [and] takes into account potential consequences of climate change going into future.

Should climate policy be separated from general economic stimulus or is there  a role it can play?

It absolutely has to be integrated. What President [Barack] Obama is doing is exactly right. By using some of the economic recovery money to put in place more renewable sources of energy, he is addressing climate change. He is creating jobs and he is decreasing energy dependence. Similarly, if--and he is doing this--if he is setting aside money for Detroit to make Americans build hybrid vehicles, then he is investing in the technology of tomorrow. China, I believe, has allocated in its economic recovery package ten billion dollars in order to move towards a low-carbon economy. So  it’s in fact essential to integrate climate policy into broader economic policy, and by doing that you actually create win-wins as opposed to working in different areas towards individual goals.

Is there anything that happened in the last year that you see as a setback to progress on an international framework? Or the other side is there something that has changed fundamentally that you think will make such progress easier?

On the negative side, clearly the financial crisis is having an impact, low [oil] prices are not good for investments of renewable energy; investment capital, especially for slightly more risky ventures, is difficult to come by; politicians are focused on short-term concerns.  So that has made things more difficult. Yes, I am happy that climate and energy is finding its way into the economic recovery packages but of course the economic crisis has had a negative impact as well. On the positive side, I would point to the elections in [the United States]. That has sent a huge signal of encouragement to the international community that there is now a global sense of urgency and willingness to really come to grips with it.