Climate Change Int’l Initiatives and Policy

Good afternoon everybody. I like to just ask you to take your seats. Thank you - thank you very much. I want to first congratulate you on your intellectual stamina. See that here we are for our forth plenary and we still have a four house and I am impressed and I would like to welcome you to that plenary which is entitled “International Initiatives in Policy: what can political leaders doâ€. We have a pleasure of hearing today from the president of Carnegie, Carnegie endowment for international peace Jessica T Mathews. My name is Ann Kenner, I am an adjunct professor at Hastings and a board member here at World Affairs Council. If we were not aware at 9 O’clock this morning, we certainly are aware now that about a 169 countries have ratified the Kyoto protocol to notable exceptions of course being the United states and Australia. China and India are signatories to the protocol and have ratified it but they are not required to reduce carbon emissions under the current agreement. With china projected to overtake the United States in per capita emissions in the near term in fact some scientist believe that China has already done so - already did so in 2006. Many say it is time to move beyond Kyoto and our question today for Ms. Mathews is what is next, what political initials - initiatives are being taken. President Bush of course discussed the questions at the Apex summit in Australia just last week and the secretary general of the United Nations is convening an international meeting on climate change. In this section – err - session I am sorry, we are actually going to be looking at innovative initiatives and policies and we will be discussing what the world’s politicians can do to move this effort forward. Again as I mentioned, to discuss this topic today we are really - truly honored to be joined by Jessica Mathews. Ms. Mathews is the president of the Carnegie endowment, a post she has held since 1997 and well her career has also included positions with the state department and the national security council, Ms. Mathews is founded as the vice president and director research of the World Resources Institute an internationally known centre for policy research on environmental and natural resource management issues. She has also served on the editorial board of the Washington post covering a plethora of highly topical issues including the energy, environment, technologies, science, arms control, health, you name it. Following Ms. Mathews’ presentation, we will be taking questions and again I encourage you to complete the blue question cards that have been distributed to you today and hand them to council staff during the course of Ms. Mathews’ talk and always as many of these questions as are possible during the second half of the plenary and I know we just had a break so if I could just remind you again as a courtesy to both our radio audience and to your fellow audience participants just to turn off your cell phones, your pagers, your beepers and any – any other noise makers that are in the room today. Thank you very much and please now welcome me in joining our speaker Jessica Mathews. Before I start, I want to take the - take advantage of being here to offer an answer to the question from last session about GDP and growth, and to say that GDP is the signal by which the ship of state is steered but there is - GDP isn’t anything more than a methodology and it’s not set in stone. GDP’s problem right now is that if you take a forest that can produce the sustainable income for ever and cut it down and sell the timber, that sale through shows up as black ink but the loss of the asset doesn’t show up in the red ink nor does the loss of the habitat and the ecosystem services that the forest produces, but there is no reason that GDP cannot be revised to include that and that was the answer to the question of how you get growth and – and the right kind of growth. Some day GDP will be revised. By the way its environmental flaws are not its only flaws, it does not count any unpaid labor for example so that the vast amount of labor - unpaid labor done by women in the developing world is not included in GDP as a huge economic distortion. Anyway that’s not our subject but that’s the answer. I have that – I am in an unusual position today for me because I had - I very seldom find myself being much more pessimistic than other speakers but today I have to tell you that I am and I am going to rain a bit on the parade of – of the very positive framing that the – that the – that the organizers have – have chosen for today of what can we do about this. It is true that there is a very long list of things that can be done. The thing I want to address is ‘will it be done?’, ‘How do we get from here to there?’ and there I am afraid the picture is not nearly as encouraging. I also want to - well let me – let me start by saying this. There are now - and I am not going to burden you with the list of them - about a dozen very large international fora that are dealing with one aspect or other of trying to come up with it post Kyoto agreement of some kind and they generally involve a 150 countries in a room. My view is quite radical and that is - that this is right now, ought to be, a bilateral issue, not an international - not a large multilateral one. Let me explain why. I have – I have being dealing my entire working career with global issues since my really first job and it didn’t hit me until about a year ago that there are two very different kinds of global issues. One kind is symbolized by the most important security threat we face, nuclear proliferation and – and it is the one that I had always just sort of assumed about all publishers, in the case of nuclear proliferation the only solution is global. It - because failure is – is hostage to the smallest, weakest, most good for nothing country North Korea for example. Size, wealth, economic power there are nothing to do with it. So you - if you are really gone to have a successful answer to proliferation, you do have to have basically a hundred percent global buy-in. Climate change is actually totally different. In impact, yes it is the ultimate global issue and that’s I think what had confused me or at least let me not to think about it for – for so long but in fact there are only seven political actors who matter for a solution. United States, the EU, Russia, China, India, Japan, Brazil. That’s 85 percent of the problem. So there is no reason to be going into a room with a 160 countries who don’t matter, but who have plenty of power to derail a progress when – when the key actors at this time are the United States and China. The EU is prepared to act, Japan is prepared to act, come back to Russia and India but the key 40 percent of the problem today in the Untied States and China and we know that the Untied States is not going to act unless it is convinced that China is committed to acting behind it and so in my view the answer to what needs to happen next is actually very – very simple. That is going to be easy to do but it’s very simple and that is we have to find a formula, that couples China to follow the United States in some predetermined way assuming the United States acts in a mandatory fashion. John said this morning that he was convinced China would follow us three years behind. I am not nearly so sanguine. China’s – China is two countries on this issue. The energy and scientific community is very aware of the threat. The insurance industry - well not industry because it’s governmental, the insurance commission regulatory thing is terrified of the threat. The financial economic bodies are kind of mixed and the foreign ministry is dead set against any commitment by China to act. China is aware of the problem, they already have a desperate, lot of problem in the north and they have being counting on transporting water from the south to deal with that problem in a huge – hugely expensive set of projects and what they are seeing now is there isn’t going to be any water - excess water in the south in fact there might even not be enough for the south - forget the north. So they are aware of the - they are - they do understand the problem but there is a very - very strong feeling that this was a problem created by the north, there is great fear about any steps that would possibly significantly slow growth because growth is the Communist Party’s only claim to legitimacy and thirdly even if Beijing decides to act, what’s changed in China in recent years is that it doesn’t necessarily translate into action at the provincial and local – local level anymore. So it’s – it’s not so simple and I am – and I am not as - I am not as optimistic I think as – as John but I do believe that such a formula can be found so that the two actions are coupled together the way you couple hounds in a - in a pack of – of fox hounds and – and to my mind, the challenge is simply to develop that formula and that’s not a problem that is beyond the mind of man. Otherwise I do not believe that any legislation or any significance will pass United States congress in this administration or any other. This is just a real sore toe for the United States’ political system and that - this fear of what would happen if China is not committed to act and so I think that the - it – it - I feel this so strongly that I – I do not want to drag you through what I am convinced are a vast number of international enterprises going forward right now which we are not going to lead anywhere as they have not led anywhere for the past 15 years. But there is something more different about this particular moment and that is that the international community can’t find right now the locus of leadership, we have been through a decade of – of controversy and attempts of reforming the United Nations. A good deal was achieved on a management side the United States is paying it dues. We have just being through another failed round of attempts to reform the Security Council to make it more reflect the realities of today’s world, but nobody expects the United Nations to be able to cope with this issue. People have spent a lot of time in my view, wasted a lot of time on the G-8 as the locus of leadership. That’s the industrialized democracies, of course Russia. The G-8 doesn’t do anything but talk so that’s not going to do it. There is a lot of attention being given in recent years to this so called concert of democracies, in lieu of the Cold War arrangements. You just invite all the democracies to come together, but there is a lot of problem with that. One of them is defining what’s a democracy and then – then you know, the edges is such a terrible problem and the other is that the countries you most need to have in the room to solve a problem won’t be there like China so that’s not an - that’s not an answer. There is the so called Coalition Of The Willing. The problem with Coalitions Of The Willing is you have to start from the beginning every single time you start and it’s kind of like the difference between marriage and dating or going - you know you have no set of mutual understandings, of mutual commitments, there is nothing that underpins the relationship, it has to be created, de novo for every problem and it doesn’t work very well and the next option is the United States and the United States has been the locus of international leadership really for the whole post – post war era - post World War II era. Post cold war, we stopped being so willing to spend political capital, financial capital on creating international public goods , international leadership, but now we are in a very different hole and it is the case that one of the great as yet uncounted costs of the war in Iraq has been the loss - the stupendous loss for anybody - and I am sure many of you do travel a lot, of US credibility and of the – the supply side sort to speak of – of international leadership which is others who are willing to follow where you head. I work a lot on nuclear proliferation and I can tell you that even if we had administration willing to go where we need to go, there are very few willing followers out there on – on that issue and so we are at a moment where the supply of international leadership and its – its location, its locus and its institutional being is very hard to find on what is probably the most demanding international issue that we have ever faced, so this is a bad – a bad combination and right now where we are in this bilateral relationship is - what amounts to is sort of a mutual suicide packed. I am not going to act unless you agree to act, but we are not going first until you have created the problem act and so we have good luck and so the search for this formula is – is the challenge that we face and it’s a much easier one than attempting to renegotiate a hundred eighty party international treaty. Let me say one other word about international agreements and particularly on this –on this problem. Those was - I have been working on climate change since - I hate to say this - since 1982 and at every stage along that way up to and including today in most fora not so much here although, we spent the first major part on what is the science. The people who were saying we have got to act spent vastly disproportionate amount of time making that case and that hasn’t changed all that much in the last 25 years. It’s changed, it’s changed there is a much greater understanding because the data has become really irrefutable in – in many cases, but the consequence of that is that the amount of thought that has gone into what you do about it relative to what the problem is – is this – this much on that and you know as supposed to a tower of scientific research and advocacy and that’s I think why the Kyoto to protocol was as flawed as it was because so much less thought even now and you – you just heard some of the debates in the last panel - has gone into – into this question of – of how we act internationally. One other important characteristic of this that determines what we do. The model for international agreements with only one exception is, you start from nothing and you negotiate for a decade or more and then you get to the set of commitments that countries agree to make then and for the indefinite future. So you go from basically nothing to hundred percent and then that nothing changes beyond that. This is a terribly bad model for anything that is – A, changing rapidly and – B, has significant amounts of scientific uncertainty. It’s an awful model, it doesn't - it doesn't match the reality of what’s going on at all and the only real exception to that was the ozone treaty. The Montreal Protocol which did two things, it said we are going to cut CFCs by 50 percent and it said we are going to set up a group of scientists who will tell us if that’s not enough and come back and recommend to the parties to the treaty any further cuts and astonishingly two years after the treaty came into force, that group came back and said and 50 percent is not enough we have to go to zero and the treaty didn’t have to be renegotiated but it - and it happened. So that’s the model, it has to be – it has to be fluid and dynamic and it has to be made responsive to the changing scientific understanding and that also by the way has to be the model for domestic legislation as well and – and there needs to be that seamless boundary between the science and the commitments, the real world commitments to – to side step the politics at the next - at the next step. Now I want to say also then a word and here we are – he is where unfortunately I have to get awfully pessimistic, but I think also realistic and that is – that there is no area of US domestic policy, none that over three decades has been as bad as energy policy in fact over longer than three decades but it’s really only been an issue for us since 1973 and what do I mean by that? We have been through four rides up and down a price demand roller coaster on energy and every time the sequence of events has been identical and identically flawed and so what is happened when energy is cheap, we use all we can use. When the price starts to go up, we respond only in a crisis when the measures that are taken to respond to the crisis work, we abandon them and we go back to the old ways. We forget the long term we never on any account take command of energy availability by managing demand and we leave that by default, first to opaque, now to the whole community of international – foreign suppliers. When supply gets tight again, we pay the foreigners what we might have been paying ourselves, now what are those actions that we have taken because that was - too have been absolutely identical. First thing that happens is we look for a scapegoat abroad, if we can find one. Then when we generally can’t we look for – for a villain at home and we enact a windfall profits tax. Then even though the price is gone way up and we don’t have enough oil, even if the price is doubled, we add some tax incentives to the oil producers. Something that makes absolutely no economic sense because of course by reducing the price we increase the demand and then we look for a silver bullet in some kind of new energy supply, first oil shale then hydrogen and fuel cells, now ethanol and the more remote the silver bullet is, the better everybody likes it. Never have we dealt with the energy supply option that is as John said this morning, the largest, the cheapest, the quickest and that’s energy efficiency improvements – never - and we have done this four times now, we did it in 1973 after the original Arab oil embargo, we did it in '79, '80 again, the huge price raise, we did it in 86 when - you may remember we sent the Vice-President of the United States to ask the Saudis to cut oil production because the price had gone down too low and we did it again with the price back in '96. Three of those four times, we observed staggering economic shocks. Without ever seriously reexamining the notion, the belief, the understanding that adequate energy is the balance of supply and demand. It isn’t inexplicable and hideously costly national blind spot on energy and I will tell you that for all the change that’s happened in the last two years, understanding climate and it is very significant. It hasn’t changed on energy. We are pouring – pouring money into corn based ethanol. Pouring subsidies into an energy - a new energy supply which is going to have nothing but bad results, whether you are talking about climate or energy demand or food cost for the poor worldwide. We have gone through some tougher times than now, 1990 huge budget crisis where we really did look for a few weeks that we are finally going to solve that budget crisis with a serious energy tax and then what happened in the first Bush administration, the administration spent two years internally producing a – a draft energy policy and what the departments produced was actually not –not bad. It went to the Whitehouse and the Whitehouse removed all offending taxes and regulations and sent it up to the hill - arrived basically as nothing. The congress then spent 20 months, another tow years debating that and produced an 800 page bill. Most of that time was spent fighting over Anwar, the last Alaskan wildlife reserve which has a trivial amount of oil, but which is a article of religious faith of the Republican Party. At the last minute nobody could agree on Anwar nobody could agree on updating the automobile efficiency standards café and so what did they do? They made a deal and what was the deal? Drop both of them. So we got an 800 page bill that had some few good things in it, but basically four years of national effort back to nothing and a return really to the fantasy that we can have both adequate energy supply at low prices in a country that has three percent of global reserves. Without extensive - without excessive foreign - dependence on foreign sources or –or excessive damage to the trade deficit. So for 20 years and actually you heard it on the prior panel, we have debated in Congress - the debate in Congress has been price or regulation, when the answer is that it has to be both because when you try to just do it with regulation and low prices, what happens is that the regulatory signal and the price signal clash, so with café which is by far the most effective measure, we have ever taken, what happened starting around 1980 was that the regulation was telling drivers the amount of gasoline you use matters and the price was saying it doesn’t matter at all and when that gap got wide enough, the regulation looked economic - and was economically inefficient on why its burdensome and Reagan was able to just basically do away with it and it stayed flat for 17 year whatever it was. So most of this you can’t do unless you move price and regulation together and for some reason that concept seems to be – or sort of beyond our political system. Winston Churchill said – he said at one point, “Occasionally we stumble over the truth, but usually we pick ourselves up and walk off as if nothing had happenedâ€. This is happened with energy over and over and over again. My guess is the – what will happen with climate is – is a repeat of what happened with the only other really effective energy policy measure that we have taken on efficiency side and that’s appliance efficiency standards and somebody mentioned it this morning, I guess John did - the story there was NGOs lobbied and lobbied and lobbied and lobbied for years for appliance efficiency standards. They were vetoed by President Reagan again and then the states started passing them. And by the time that I think 32 states had passed the appliance efficiency standards all different, the industry came back to congress and said please pass a national standard. Now we got away with that, with appliance efficiency standards because it’s pretty discrete, but you can imagine what the mess is going to be if we try to do that on climate. My guess is just from what I have seen of congress in the last 27 years, that’s probably what’s going to happen, it’s going to be ugly, it’s going to be economically a mess but I think that it’s probably - unless we really have a terrible scare with climate and something like the discovery of the Antarctic ozone hole which catapulted that treaty to - legislation to Congress and then the treaty because everybody was so frightened by that – that surprise. So I – I apologize for – for sounding a note of pessimism about how fast we are going to act, but I have – I have not yet seen even in these recent years anything that suggests to me that this awful national blockage on energy policy and – and lack of understanding that demand - energy demand is this very malleable thing within our control and so I thank you for your patience and – and look forward for your questions.