President Bush, in a much-anticipated speech last Wednesday, laid out a plan to stop the growth of heat-trapping greenhouse gas (GHG) emissions in the United States by 2025.
"To reach our 2025 goal, we'll need to more rapidly slow the growth of power sector greenhouse gas emissions so they peak within 10 to 15 years, and decline thereafter. By doing so, we'll reduce emission levels in the power sector well below where they were projected to be when we first announced our climate strategy in 2002," the president said in the White House Rose Garden. Many were disappointed by Bush's speech, saying his plan did not go far enough to curtail GHG emissions.
"I have put our nation on a path to slow, stop and eventually reverse the growth of our greenhouse gas emissions" in the U.S., and "we're also working internationally on a rational path to addressing global climate change," Bush said.
Senate leaders are expected to begin debate on climate change legislation in early June (see NGI, Feb. 28). "I believe that congressional debate should be guided by certain core principles and a clear appreciation that there is a wrong way and a right way to approach reducing greenhouse gas emission," Bush noted. Without naming any particular climate change bill pending in Congress, he said "bad legislation would impose tremendous costs on our economy and on American families without accomplishing the important climate change goals we share."
The wrong way to approach climate change is to "raise taxes, duplicate mandates or demand sudden and drastic emissions cuts that have no chance of being realized and every chance of hurting our economy," Bush said. "The right way is to set realistic goals for reducing emissions consistent with advances in technology, while increasing our energy security and ensuring our economy can continue to prosper."
And the key to a reduction in GHG emissions is new technologies, Bush noted. "But in the short run, they can be more expensive. And that is why I believe part of any solution means reforming today's complicated mix of incentives to make the commercialization and use of new, lower emission technologies more competitive. Today we have different incentives for different technologies -- from nuclear power to clean coal, to wind and solar energy. What we need to do is consolidate them into a single, expanded program," the president said.
The incentives should be carbon-weighted to make lower emission power sources less expensive relative to higher emissions sources; technology-neutral because the government should not be picking winners and losers in this emerging market; and long lasting, Bush said.
"Our new 2025 goal marks a major step forward in America's efforts to address climate change. Yet even if we reduced our emissions to zero tomorrow, we would not make a meaningful dent in solving the problem without concerted action by all major economies...We're urging each country to develop its own national goals and plans to reduce greenhouse gas emissions."
The U.S. climate change plan "will be a comprehensive blend of market incentives and regulations to reduce emissions by encouraging clean and efficient energy technologies. We're willing to include this plan in a binding international agreement, so long as our fellow major economies are prepared to include their plans in such an agreement," Bush said.
The president's speech came one day before major nations met in Paris to discuss climate change and lay the groundwork for a G8 summit in July. "Our objective is to come together on a common approach that will contribute to the negotiations under the U.N. Framework Convention of global climate once the Kyoto Protocol expires in 2012," he said.
The president's speech "could lead to a positive market response for...clean power generation (wind, solar, geothermal), hybrid vehicles components and U.S. natural gas extraction and to potential selling pressure on coal mining, refining, coal-levered utilities and heavy oil extraction," said Friedman, Billings, Ramsey analyst Kevin Book.
However, Bush's remarks are "unlikely to accelerate congressional passage of cap-and-trade legislation ahead of our base-case time frame of late 2009/early 2010. Nor does this alter our expectations for the initial onset of U.S. regulation in 2012," he said.
The main climate change legislation pending in Congress is sponsored by Sens. Joseph Lieberman (I-CT) and John Warner (R-VA). The bill (S. 2191) proposes to reduce U.S. GHG emissions by as much as 19% below 2005 levels by 2020 and by as much as 63% below 2005 levels by 2050. It would control compliance costs by allowing companies to trade, save and borrow emission allowances, and by allowing them to generate credits when they induce businesses, farms and others to reduce their GHG emissions or capture and store GHG (see NGI, Dec. 10, 2007).
The measure faces stiff opposition. "Multiple energy-user and industrial-emitter constituencies," as well as Republicans in Congress, "share [the] White House opposition to the Warner-Lieberman economywide cap-and-trade proposal," Book said.
Many believe Bush's speech was intended to head off what one White House aide called a "regulatory train...wreck" if Congress should pass mandatory climate change legislation. "We have made our feelings [known] about some of the legislation that's up there now...We don't see anything up there right now that we could support," said White House spokeswoman Dana Perino last Tuesday.
California Gov. Arnold Schwarzenegger returned somewhat to the Republican fold, praising President Bush for acknowledging that the nation and world have a climate change problem. But he reminded the president he has also said the nation has a responsibility to do something to help fix the problem.
Schwarzenegger said the White House needs to go one step farther -- "the time for real action is now."
"Targets for reduction are important, but I'd like to see the federal government follow the lead many states have taken on this issue and approve California's request for a waiver that would enable 17 states to clean their own air of greenhouse gases," the governor said.
Schwarzenegger quibbled with the president's call for goals starting at 2025 levels, noting that his state has set a goal of getting GHG emission levels back to 1990 levels by 2020.
"I am glad that we all recognize the very serious threat in front of us," Schwarzenegger said. "What we need now is the sense of urgency to match that threat."
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