For the last month, the words “China” and “India” have floated over and through the House and Senate hearings on energy and climate change.
Why should the United States, members asked, take any action on climate change when China and India weren’t doing anything about their CO2 emissions? With China and India growing so fast, their increasing CO2 emissions would overwhelm whatever cuts the United States was able to make.
Why should we put our industries at an unfavorable disadvantage with their foreign competitors by making them pay more for reducing their CO2 emissions?
On Tuesday, the House Energy and Commerce subcommittee on Energy and Air Quality finally took the China/India issue straight on. (Note that nine times out of ten, subcommittee members only mention China; but India is also a major potential problem.) The hearing was unusually far-ranging, touching on the economy, jobs, international law, the history of Chinese negotiating on international treaties, forest fire policies, tearing down dams, and the unavoidable question of whether a country with very high per capita CO2 emmissions can “wear the white hat” in talks with China and India, where per capita CO2 emissions are so low. There was a blizzard of statistics (see below).
On the one side were the Republicans. In their view of the world, dealing with climate change will cause us to incur terrible expenses for the sake of what Rep. Joe Barton (R-TX) referred to as “some amorphous benefit some time in the future.” Rep. John Shimkus (R-IL) said there was a simple formula: “capping CO2 will restrain output and eliminate jobs.” Rep. Ralph Hall (R-TX) returned to one of his favorite themes, asserting that “There is a war on energy today, an outright war on energy….”
Barton had no patience for any unilateral action by the U.S:
“For us to sit here and somehow think that the USA can do something that will morally challenge the Chinese and to a lesser extent the Indians is just not common sense, I think it’s the opposite of common sense.”
The Democrats at today’s hearings expressed some of the same cautions about China and India that the Republicans were raising, but were open to discussing whether there might be merits in the U.S. taking leadership, regardless of what China and India were pledged to do.
Most of the panelists supported some form of cap-and-trade system for creating a market in carbon and setting a price on carbon emissions. And while the Republicans frequently referred to themselves as supporters of free markets, in their questions to the witnesses, they were remarkably wary, even fearful, of what would happen if the U.S. put a cap-and-trade system to work.
Of the six panelists (see full list below), most were in general agreement that the U.S. should lead, without waiting for China and India to sign on to some international agreement. In fact, as Jeffrey Holzschuh from the investment banking firm Morgan Stanley argued, the U.S. was already a follower, with carbon trading in the European Union market now reaching $25 billion a year.
Professor Edward Steinfeld from the Massachusetts Institute of Technology (MIT), lead author of a major new study on world coal supplies, The Future of Coal, said that we had to understand that there are all kinds of factions within the Chinese government and the Chinese economy, some of whom believe that there are potentially great opportunities for China to become a world leader in manufacturing goods that reduce global warming. In Steinfeld’s view, if the U.S. created its own cap-and-trade market without waiting for a treaty signed by all the major emitters, we would greatly strengthen the hand of those government officials and business people who want China to become part of a global carbon market.
Steinfeld also alluded to the way the Chinese negotiated their entrance to the World Trade Organization (WTO). At first, no one in the developed world thought that China would ever accede to the policy changes required to join the WTO. But after 13 years of negotiation, China ended up making those changes and joined. Steinfeld said that the Chinese government has bound itself to international agreements like the WTO, and then used those agreements as “clubs” to beat back forces opposing the changes mandated in the treaties.
Annie Petsonk, International Counsel for Environmental Defense, acknowledged the difficulty of designing legal frameworks that sovereign nations will want to obey. But she insisted that the Congress “has the tools to engage them [developing countries] or to level the playing field if they don’t engage. We do not have a tool that will make them do what we do. But I can guarantee you that if we don’t take the first step, they will not.”[Emphasis added]
Jonathan Pershing of the World Resources Institute suggested approaching the problem from other directions, where reducing carbon emissions would fall out from programs focused on other goals. He noted that ensuring a stable energy supply was just as much a national security concern for China as it was for the United States, since both countries are big importers from unstable regions of the globe.
Petsonk noted that agriculture and forestry were two more areas where the Chinese government is intensely interested in land use practices, with a major tree planting program already underway. Here again, the U.S. could work with China on land use practices that increase carbon capture, like further reforestation projects.
Several witnesses and members of both parties recognized that there might be significant investment possibilities for U.S. industry if the U.S. moved ahead unilaterally. Petsonk related a recent conversation with the head of wind power at General Electric, who told her, to her surprise, that Denmark was the world’s largest wind turbine producer. India was not far behind in developing its own wind turbine industry.
Petsonk finished with her GE source’s warning: “We’re going to end up buying the low carbon technologies for the future from other nations.”
Ixnay to the Off-Rampway
Rep. Rick Boucher (D-VA), chair of the subcommittee, said that one way to deal with whether China and India were going to cooperate would be to set up “something in the nature of an off-ramp.” The U.S. would announce its targets and begin reducing emissions. But at some point, “if we do not have buy-in from the developing countries, with mandatory programs, then our program would not take effect.”
The witnesses were horrified by Boucher’s suggestion, pointing out that the existence of an off-ramp would create even more uncertainty in the minds of business executives trying to make long-range energy investment decisions.
Petsonk compared the off-ramp to the childhood lament, “Nobody likes me, everybody hates me, I’m going to go and eat some worms.” In her view, American industry would be doing some unnecessary worm-eating because of the “enormous uncertainty” in the marketplace. Morgan Stanley’s Holzschuh noted that the private sector needs to start committing trillions (not billions, trillions) of dollars now. The lack of rules, or the possibility that the rules might change midstream was bad: “the off-ramp is particularly troubling.
CO2 Cap “Political Suicide” in India
Indian journalist Pramit Pal Chaudhuri cast a pall on any hope that India might join an international effort to reduce greenhouse gases:
“The debate in India about global warming barely exists. Very few dispute the issue [that global warming is happening.] The general view is the carbon emission limits do not apply to India. When the IPCC issued its last report, of India’s 26,000 newspapers, barely 1-2% bothered to put it on page one. The overriding consensus, even within the environmental movement, is that the overriding priority is rapid economic growth.”
Chaudhuri said that India has 300 million people living on $1 a day or less, 700 million on $2 a day or less. The economic boom of the last ten years has created hope that India would be able to reach a goal it has been unable to reach for centuries, reducing poverty into single digits.
Chaudhuri referred to a famous statement from Indira Gandhi, a line he said was repeated “again and again, even to this day”:
“The ultimate polluter is poverty.”
India's federal politicians already lead very fragile existences. Chaudhuri pointed out that 50% of the incumbents were defeated in the last election. No politician in his right mind would suggest doing anything in the name of climate change that might lower the economic growth rate. According to a speech by India’s prime minister last year, if the country continues to grow at 8% (slightly below the 9% rate of the last two years) by 2030 the country will need to increase its energy capacity by 4 to 5 times (400-500%).
Who Can Wear the White Hat?
Rep. Jay Inslee (D-WA) brought up the question of whether the United States was really in position to criticize Chinese or Indian energy policy. Americans produce roughly 24 metric tons of GHG per person per year, compared to only 4 metric tons per person per year in China, and 2.5-3 metric tons per person per year in India.
“I don’t feel like I’m wearing totally the moral white hat.”
No one picked up on Inslee’s comment. But the issue of energy equity that he raised is one that haunts the entire discussion of global warming. Looking at the numbers on a per capita basis explains a lot about why the Chinese or the Indians might look askance at any heavy-handed efforts by the U.S. to force them to limit their carbon emissions when the U.S. was producing 6 to 8 times as much GHG per person as their own citizens.
A New Idea--or A Very Old One
There was some discussion of a recent proposal by American Electric Power and the International Union of Electrical Workers to assess the amount of carbon in imported products. If a carbon-intensive product arrives from a country that is not reducing its own carbon emissions, the U.S. would require that country to buy enough carbon credits to cover the carbon difference between the imported product and the domestic product. Several witnesses said this scheme was an interesting one, although it might not pass muster with the World Trade Organization, which might treat it as an illegal trade barrier.
Statistics and More Statistics
Without vouching for the accuracy of any of the statistics below, here are some of the statistics that were bantered about today, in no particular order:
The top 15 emitters in the world produce 80% of the world’s greenhouse gases.
Sine 1990, China’s greenhouse gas (GHG) emissions are up 77%, the U.S. only 17%.
China and India will account for 80% of the increase in the use of coal from now to 2030.
Chinese coal-fired plants are inefficient, using twice as much coal to generate a kilowatt hour of electricity as U.S. plants.
China is projected to overtake the United States as the world’s largest GHG emitter, in a year or two.
China’s coal fired capacity in 7 months will equal the entire coal generation of the state of Texas, which has the largest percentage of base load coal generating plants in the U.S.
India already generates 50% of its electricity from coal, and the percentage is increasing.
On a per capita basis, Americans produce 24 metric tons of greenhouse gases per person per year.
The Chinese produce 4 metric tons per person per year.
Indians produce 2.5-3 metric tons per person per year.
India by the early 2020 will equal US coal consumption.
China is building a new coal plant roughly every 7 days.
Witnesses
Mr. Jonathan Pershing --Director, Climate Energy and Pollution Program, World Resources Institute ,10 G Street, N.E. Washington, D.C. 20002
Mr. Jeffrey Holzschuh --Managing Director, Morgan Stanley Investment Banking - Global Energy and Utilities Group 1585 Broadway New York, NY 10036
Ms. Annie Petsonk --International Counsel, Environmental Defense, 1875 Connecticut Avenue, N.W. Washington, D.C. 20009
Mr. W. Thomas Stephens-- Chairman and Chief Executive Office,r Boise Cascade, LLC 1111 West Jefferson Street Boise, ID 83702
Edward S. Steinfeld--Ph.D. Associate Professor, Department of Political Science, Massachusetts Institute of Technology ,30 Wadsworth Street Cambridge, MA 02139-4307
Mr. Pramit Pal Chaudhuri --Bernard Schwartz Fellow and Foreign Editor, Hindustan Times ,Asia Society, 725 Park Avenue New York, NY 10021
