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US Climate Change Policy Options
US Climate Change Policy Options
C that most
scientists believed would damage local ecosystems around the world. John Grace writes that
effective CO
2
reduction policies are urgently needed because, At best, a 5.2% reduction would
merely mark the start of a large-scale and long-running set of international negotiations aimed at
stabilizing the atmospheric greenhouse gas content. In principle, to bring the carbon cycle back
to equilibrium the world needs to reduce its emissions to match the natural sink strength.
7
Since the worlds wealthier, more industrialized nations like the US also bore the
responsibility for emitting the majority of the atmospheres existing CO
2
gases, it was also
agreed that these nations would agree to take the lead in reducing their GHG emissions and agree
to meet specific GHG emission reduction targets. Paul Harris writes that this agreement was
based on the international legal principle of Common but Differentiated Responsibility. As
5
United Nations. Article 2. The United Nations Framework Convention on Climate Change. (1997)
6
Nicholas Stern What is the Economics of Climate Change? World Economics (Vol. 7, No. 2, 2006): 2
7
John Grace Presidential Address: Understanding and Managing the Global Carbon Cycle Journal of Ecology, (Vol. 92, No. 2
,2004):197
4
such Harris says that; while all countries must join in efforts to reduce emissions of greenhouse
gases that contribute to climate change, the developed countries are required by the Climate
Convention to take the lead.
8
Furthermore, the economic development needs of developing
countries necessitated some increase in GHG emissions and their historical GHG emissions, as
well as their per capita GHG emissions, were also much lower than those of more industrialized
countries. Therefore, in contrast to the GHG emissions reductions mandated for the US and the
other industrialized nations of the OECD, developing countries like Brazil, Russia, India and
China were allowed to wait to set their own GHG emissions reduction targets in conjunction
with negotiations for a 2012 successor treaty to the Kyoto Protocol.
However, since China, India and Brazil were among the worlds largest emitters of GHG
gases but were not required to set reduction targets, the then newly elected US President,
Republican George Bush (the US at the time was also the OECDs largest GHG emitter),
subsequently refused to agree to the Kyoto Protocols 7% GHG emission reduction target for the
US even though the US at the time was the worlds largest GHG emitter.
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The US President and
US Senates subsequent refusal to ratify the Kyoto Protocol underscores the fact that, in contrast
to the political challenge of dealing with atmospheric ozone depletion, the political complexity of
the problem of climate change (caused primarily by fossil fuel CO
2
emissions) poses a profound
challenge to contemporary forms of both national and international political governance.
Effectively dealing with climate change will also entail the use of new environmental
policy instruments (NEPI) and different types of economic decision making criteria by
governments, as well as the inclusion of non-state actors like businesses and third sector
organizations in the policy making process with the objective of achieving environmental
outcomes that are both economical and sustainable. The complexity of the network of potential
stakeholders in any decision and the absence of a set of prior decisions and policies in this area
has also meant that initial policy-making was quite varied in its outputs. Since the US is the
worlds largest emitter of CO
2
that is why the Obama administrations environmental policy
team, as well as members of the US Congress and their staff, need to urgently consider
implementing new policies and making changes to the USs existing GHG emissions policies.
8
Paul Harris Common But Differentiated Responsibility: The Kyoto Protocol and United States Policy New York University
Environmental Law Journal (Vol. 7, 1999):30
9
Diana M. Liverman. Conventions of climate change: constructions of danger and the dispossession of the atmosphere Journal
of Historical Geography (Vol. 35, 2009): 291-192
5
Overview of Current US Climate Change Policies
Over the past thirty years the US has implemented some policies designed to mitigate the
negative effects of GHG emissions. Following is a brief summary of the direct regulation and
other types of policies that are currently being utilized to address the issue of climate change.
Direct Regulation
Restrictions followed by a ban on the production of CFCs that lead to ozone depletion
and an increase of global GHG emissions.
Increasing fuel economy standards for cars & trucks.
Regulations mandating the percentage of ethanol mixed in gasoline.
EPA regulation of air pollution standards and the types of gasoline mixtures required for
all of the USs major urban regions.
EPA regulation of pollutants (i.e. soot and nitrous oxides that lead to acid rain) produced
by US factories and electricity providers.
Government Grants, Subsidies and Import Tariffs
Subsidies for US corn farmers and ethanol producers to encourage the production and use
of low CO
2
emissions ethanol made from corn.
Import tariffs on ethanol made from less energy intensive sources such as sugar cane.
Subsidies to encourage the development of alternative sources of non-CO
2
emitting
energy sources (i.e. solar panels & wind turbines).
Subsidies for mass transit systems in various urban areas throughout the US.
Grants for research on carbon sequestration (i.e. clean coal), hydrogen fuel cells & other
types of clean energy technologies.
But of all of these climate change related policies, the most prominent public policy
specifically designed to reduce CO
2
emissions in the US as well as many other OECD nations is
encouraging the production and use of ethanol and other biofuels made from agricultural corn,
soybeans, palm oil, rapeseed, and sugar cane. US government support for the production and use
of biofuels has included direct regulation by mandating the percentage of ethanol mixed in
gasoline as well as government subsidies for US corn farmers and import tariffs to protect US
ethanol producers. However, in a world with almost one billion undernourished inhabitants, is
the use of food crops and agricultural land to provide the raw materials for biofuels also the best
use of scarce arable land and water resources?
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Although the concept of turning food crops into atmosphere friendly biofuels such as
ethanol initially appeared to have some positive effect on reducing CO
2
emissions, many climate
scientists have now concluded that increasing the production of biofuels is more harmful to the
earths atmosphere than the continued burning of fossil fuels like coal and oil is. Climate
scientist Joe Fargione explains how this misconception came to pass by noting that; Previous
conclusions that biofuels reduce greenhouse gases were based on incomplete analyses. They did
not include the effect that biofuels can have on the conversion of natural ecosystems to crops.
Adding energy production to our current and growing demand for food production inevitably
requires more land to be converted to agriculture, whether or not the biofuel is grown directly on
that land. Some of this land comes from natural ecosystems, and the conversion of these natural
ecosystems to cropland releases carbon to the atmosphere and contributes to global warming.
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The current controversy surrounding the production and use of biofuels and its impact on
the worlds food supplies is pertinent because until fairly recently this was the only policy
designed to reduce CO
2
emissions that had gained wide acceptance in the US and other
developed countries. However as a recent article in the Economist notes, According to William
Cline of the Peterson Institute for International Economics in Washington, DC, at least 4% of the
worlds grain is used to make ethanol for fuel. Most of this is doing little good for the global
environment, and stopping subsidies for such fuels would boost the supply of grain for feeding
people on a scale similar to the hit that the past three decades of warming have provided.
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Yet
in spite of the abundant evidence that shows using grain to produce biofuels has at best a
marginal impact on reductions in overall CO
2
emissions and a decidedly negative impact on food
supplies and prices, biofuel policies persist. However, although some OECD members have now
changed their biofuel policies, other OECD countries like the US continue to embrace them.
Regardless of the environmental efficacy of producing biofuels as an alternative to
burning fossil fuels, in and of themselves, biofuels were never going to lead to substantial
reductions in CO
2
emissions because they were really only viable as a substitute for oil as a
transportation fuel. Biofuels were never envisaged as a substitute for the much more substantial
CO
2
emissions that result from coal used in generating electricity, natural gas used for heating or
as a replacement for oil as a source of petrochemicals and plastics. The rapid increase in grain
10
Joe Fargione Interview with nature.org (February 2008)
11
Hindering Harvests.The Economist. (Vol. 399 No. 8732, 7 May 2011): 74
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prices and food shortages experienced in many developing countries between 2007 and 2008 was
fueled by droughts in grain producing countries in 2006 as well as a spike in oil prices. But these
events also underscored the fragility of the worlds food supplies and called into question the
wisdom of using agricultural land and food crops to develop biofuels. As a consequence, since
most of the US and other OECD nations had initially promoted and even subsidized the
production of biofuels as a way to reduce their CO
2
carbon emissions, their political leaders and
policy makers have now been forced to face the fact that achieving reductions in their CO
2
emissions is actually going to be a much more complex, difficult and costly undertaking than
they had at first believed. Figure 1illustrates the complexity of the problem of reducing GHG
emissions due to the numerous different economic sectors and end user activities that are both
dependent on fossil fuels and are also the sources of almost all of the worlds GHG emissions.
Figure 1
Given the negative impacts the production of biofuels has on food supplies, many
environmental organizations such as the Sierra Club have now started to argue that a more
sensible course of action is for national governments to levy carbon taxes on the goods and
services produced by the use of fossil fuels. Carl Pope, Sierra Club executive director says [a
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carbon tax] will be more effective [than a cap-and-trade system] if people know that in year X
they will pay this much.
12
Many economists also agree saying that carbon taxes would increase
the costs of fossil fuel energy, thus providing an economic incentive for both businesses and
consumers to reduce their use of fossil fuels in favor of alternative energy sources that reduce the
earths uptake of CO
2
gases. For instance Marc Chupka, a leading energy economist, notes that a
carbon tax would provide; a continual incentive to reduce the costs of carbon abatement,
13
Jonathan Zasloff also notes that a carbon tax is precisely the policy instrument that many
economists say is the best form of regulation, but is routinely dismissed as politically
unfeasible.
14
Advocates of carbon taxes also point out that an additional benefit governments
could realize through the imposition of carbon taxes, is that these taxes could also provide more
tax revenues national governments could then use to fund climate change mitigation and
adaptation strategies.
But unlike their counterparts in Europe, most US political leaders as well as the US
general public have thus far been reluctant to embrace the use of carbon taxes to address climate
changes national and global negative externalities; i.e. the concept that ecological damage (i.e.
climate change due to man-made fossil fuel CO
2
emissions) that results from the way something
is produced (i.e. energy and fuel), but is not taken into account in establishing the market prices
of the goods and services involved (i.e. plastic products, electricity and transportation). Elected
politicians in the US are justifiably concerned about adverse voter reactions from both businesses
and consumers towards CO
2
emissions reduction policies that raise the costs of the goods
produced through the use of fossil fuels and or the prices businesses and consumers currently pay
for fossil fuel derived energy (electricity, heat, petrol, etc.) as well as the thousands of other
carbon based products they use such as agricultural fertilizers, petro-chemicals and plastics.
Furthermore some business lobbies in the US have argued that carbon taxes will put them
at a competitive disadvantage, compared to producers in emerging economies that are not subject
to Kyoto targets, such as Brazil Russia, India, Indonesia and China. With respect to exports,
Harry Clarke writes that similar arguments by businesses in Australia were not without merit and
that these companies exports face a competitive disadvantage in international markets simply
12
Juliet Eilperin and Steven Mufson Tax on Carbon Emissions Gains Support Washington Post (April 1, 2007)
13
Marc Chupka, Carbon Taxes and Climate Change, Encyclopedia of Energy, (Volume 1, 2001).
14
Jonathan Zasloff. Judicial Carbon Tax: Reconstructing Public Nuisance and Climate Change. The Symposium: Changing
Climates: Adapting Law and Policy to a Transforming World UCLA Law Review (Vol. 55 No.1 October 2007): 1829
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because globally desirable carbon mitigation objectives are being pursued.
15
Consequently, given the concerns of the industrialized democracies of the OECD, as well
as the concerns of poorer developing countries about climate change policies adversely affecting
their parochial economic development interests, formulating politically acceptable national, as
well as international environmental policies that account for domestic economic interests, is a
complicated task for public policy practitioners. As a result, climate policies that balance global
environmental and national economic interests, present a unique political conundrum for all
government policymakers, but particularly for the policy makers of the OECD member states
democratic political governance regimes. Although some OECD political leaders and policy
makers may have initially been confused about the effectiveness of biofuels in reducing global
CO
2
emissions, there is no such confusion about a variety of other policies that would be much
more effective than biofuels in reducing CO
2
emissions. So why has the US failed to embrace
other climate change policies such as nuclear power, or the use of New Environmental Policy
Instruments (NEPI) like eco-carbon taxes, eco labeling, tradable CO
2
emission permits and
industry wide environmental management systems? Furthermore, why does the US continue to
promote and subsidize the production of coal, oil and gas and, in some cases, the continued
production of biofuels at the expense of the global food supply as well as the environment?
Since most
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of the Kyoto Protocols Annex 1 nations (which are committed to reduce
their CO
2
emissions) including the US are also members of the OECD, the wealthier more
technologically developed nations of the OECD were expected to take the lead in reducing their
CO
2
emissions. Therefore, in contrast to the CO
2
emission policies of China, India and other
large developing nations with high levels of GHG emissions, the vast majority of the OECDs
member nations (except the US and Canada) also agreed to meet specific GHG emission
reduction targets agreed to in the Kyoto Protocol by 2012. While there were no financial
penalties for Annex 1 nations that failed to meet their 2012 emission reduction targets, there was
still widespread acceptance on the part of these OECD nations, that their failure to meet these
CO
2
reduction targets would undermine their bargaining position with respect to future
UNFCCC negotiations over the CO
2
emission reductions targets that they would want faster
15
Harry Clarke Some Basic Economics of Carbon Taxes CCEP working paper 4.(10, October 2010): 8-9
16
Mexico, South Korea, Chile and Israel are the only OECD nations that are not Annex 1 nations while the former Communist
nations of Belarus, Bulgaria, Croatia, Latvia, Lithuania, Romania, Ukraine and the Russian Federation as well as the European
principalities of Liechtenstein and Monaco are the only Annex 1 nations that are not members of the OECD.
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growing developing countries like Brazil, Russia, India and China (BRICs) to adopt.
The extent of divergence between the US and other OECD members policies and the
explanation for the policy divergence in climate change related environmental policies is a
puzzle because the self-declared aim of the OECD states is to cooperate and harmonize policies
among its members in order to help governments foster prosperity and fight poverty through
economic growth and financial stability. We (also) help ensure the environmental implications of
economic and social development are taken into account.
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The US and other members of the OECD also share many characteristics as a group,
which are widely seen in the literature as variables leading towards policy convergence in a
range of policy areas. They are all high-income, economically developed, democratic nations
that have relatively (compared to wider global comparators) similar socio-economic profiles. In
contrast, the G77 group of developing countries varies much more significantly in their socio-
economic profiles and they also vary widely in terms of their consumer cultures, levels of
income inequality, education levels, as well as the structure of their economic systems.
Finally, it should be noted that it was climate scientists residing in the US and the more
technologically advanced OECD nations who were the first to raise the alarm about the
damaging impact man made chlorofluorocarbons were having on the earths ozone, and to
discover the role man-made GHG emissions were playing in raising global air and water
temperatures, thus leading to adverse climate changes in ecosystems worldwide.
US critics of implementing new CO
2
emission reduction policies have cited the lack of
CO
2
emission reduction targets for China, the worlds largest GHG emitter and second largest
economy, as a justification for not ratifying the emission reduction targets set for the US in the
Kyoto Protocol. While more economically advanced countries like China are unlikely to be
granted the same exemption from GHG emission reductions as the poorer developing countries
in Africa and Asia in future climate change treaty negotiations, China and Indias counter-
argument that their per capita CO
2
emissions are still a fraction of those in countries like the US
is not without merit. Setting aside the ethical argument that the US and more developed nations
are also the nations most responsible for the excessive levels of GHG emissions that are already
in the earths atmosphere, the US cannot realistically expect developing countries to reduce their
own carbon emissions until after the US takes the lead in doing so and shows the developing
17
Organization for Economic Development and Co-operation. What We Do and How. Online at www.oecd.org
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countries how to reduce carbon emissions without hurting their own economic development.
The aforementioned arguments were repeated many times during negotiations between
the US, European nations and members of the G77 group of developing countries in the months
leading up to the 2009 Copenhagen Climate Change Conference. The lack of substantive
progress in Copenhagen as regards a successor agreement to the Kyoto Protocol, has resulted in
an impasse for now, but there is also little argument by the nations of Europe or the developing
worlds G77, that it is still the responsibility of the more technologically advanced nations like
the US to lead the way in reducing GHG emissions.
The lack of tangible progress at the 2009 Copenhagen Climate Conference was also due
to several factors which were years in the making. The 2008 financial crises has had a deeper
and longer lasting effect on the economies of the US and Europe than it had on the economies of
developing countries. As a result, the US and many OECD states in Europe had economies that
were still suffering from the effects of the global economic recession in 2009, 2010 and 2011. So
in addition to the US, with some of their economies still in shambles many European nations are
less willing to sign up for the deeper and more difficult to achieve cuts in their carbon emissions
envisaged as a part of a new climate change treaty that would succeed the Kyoto Protocol.
As a result, the terms of the debate shifted noticeably in the months following the 2009
Copenhagen Climate Conference. Whereas the initial goal of the carbon reduction strategies of
the OECD countries had been to prevent a global temperature rise of more than 1.5-2
C; the lack
of any real progress during the preceding decade by many OECD nations in meeting their 2012
Kyoto Protocol targets led to the tacit abandonment of this objective at the 2010 Cancun Climate
Conference. Furthermore, instead of adopting 2