Climate Change Policy Landscape

1. Climate Change Policy Landscape Brief to the APPA CEO Roundtable March 19, 2007 Dave Conover, Counsel National Commission on Energy Policy

2. The National Commission on Energy Policy • Launched in 2002, Commission met a dozen times; sponsored over 35 independent research analyses • $10 million effort over 3 years • Privately funded, principally by the William and Flora Hewlett Foundation along with its funding partners • Funding extended; revised recommendations soon

3. John Holdren (co-chair), Harvard University; Director of the Woods Hole Research Center William K. Reilly (co-chair) Founding Partner, Aqua International US EPA Administrator, Bush I John W. Rowe (co-chair) Chairman and CEO, Exelon Corporation Philip Sharp (congressional chair) President, Resources for the Future; Former Congressman, Indiana Marilyn Brown Georgia Tech University; former Director, Oak Ridge National Lab Ralph Cavanagh Co-Director, Energy Program, NRDC Erroll B. Davis, Jr. Chancellor, University System of Georgia Rodney Ellis State Senator, Texas Leo W. Gerard International President, United Steelworkers of America Robert E. Grady Managing Partner, Carlyle Venture Partners, former Executive Associate Director of the Office of Management and Budget (OMB) F. Henry Habicht CEO, GETF; Deputy Administrator , US EPA (Bush I)  Frank Keating CEO of the American Council of Life Insurers; former governor of Oklahoma Richard A. Meserve President of the Carnegie Institution; former Chairman of the U.S. Nuclear Regulatory Commission (NRC) Mario Molina Professor, University of California, San Diego Sharon L. Nelson Board of Directors, Consumers Union Richard L. Schmalensee Dean, Professor of Economics and Management, MIT Susan Tierney Managing Principal, The Analysis Group; former Assistant Secretary of Energy R. James Woolsey Vice President, Booz, Allen, Hamilton; former Director of Central Intelligence Martin Zimmerman Clinical Professor of Business, Ross School of Business, University of Michigan; Group Vice President, Corporate Affairs, Ford Motor Company (2001 - 2004) The Commissioners

4. Science Informs IPCC AR-4, February 2007: • “Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global mean sea level. • There is a 90% probability that human activities have contributed to this warming • The main ingredients for global climate change, increases in the concentration of carbon dioxide, methane, and nitrous oxide are “due primarily to fossil fuel use . . . land-use change” and “agriculture.”

5. Science Predicts Scientific Expert Group, Confronting Climate Change: Avoiding the Unmanageable and Managing the Unavoidable, February 2007 • “Global climate change . . . is a growing threat to human well-being in developing and industrialized nations alike. Significant harm from climate change is already occurring, and further damages are a certainty. The challenge now is to keep climate change from becoming a catastrophe.”

6. Science Warns Stern Review, October 2006: • Stern review: • The evidence shows that ignoring climate change will eventually damage economic growth. • Our actions over the coming few decades could createrisks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century .

7. Political System Responds • The stage is set • House in Democratic hands for first time since 1994 • Senate in Democratic hands • As long as Senator Johnson (D-SD) stays healthy • Lame Duck President looking for a legacy

8. House of Representatives • Pelosi, Markey, Waxman • Dingell, Boucher, Blue Dogs • House Select Committee on Climate Change • “Feathers on a fish” • “Committee on press releases and junkets” • Legislative markers: • Waxman • Gilchrest-Olver • Udall-Petri

9. United States Senate • Boxer, Bingaman, Carper, Lieberman, McCain • Domenici, Inhofe, McConnell, Lott • EPW versus ENR or EPW + ENR? • Legislative Markers: • (Sanders)-Boxer – 1990 GHG levels by 2020 • McCain-Lieberman – 2004 levels by 2012 • Bingaman-Specter – Slow, stop, reverse w/ safety-valve

10. Senate Whip Count • Sanders-Boxer • ~29 votes • McCain-Lieberman • ~45 votes • Bingaman-Specter • 60+ votes?

11. Whip Count Principles • Don’t support Boxer or Mc-L • 53 for 2005 SOS assumed for Bingaman • Assume additive, not retributive • Assume good faith, not holdout • Assume favorable vote structure, i.e., • Up or down on Boxer, then Mc-L, then Bingaman • Any change in above changes result

12. Baucus Byrd Casey Conrad Dorgan Johnson Landrieu Levin Tester Alexander Brownback Coleman Domenici Murkowski Specter Smith Stevens Sununu Vitter Warner Key Targets – No, No, Yes?

13. How and when, not whether • Carbon tax? • Economists “yes” • Politicians “NO” • Cap and trade? • 1990 Acid Rain program – pro • European experience - con • Clean energy portfolio standards + CAFE • ?

14. Can we get there from here? 13 GtC/Year in 2100 Avoided Emissions = 500 GtC Cumulative Emissions = 780 GtC GTC = Giga-Tonnes Carbon

15. Source: Placet M; Humphreys, KK; Mahasenan, NM. Climate Change Technology Scenarios: Energy, Emissions and Economic Implications. Pacific Northwest Nation Laboratory, PNL-14800, August 2004. Available at: http://www.pnl.gov/energy/climatetechnology.stm 15

16. Expected Benefits of Advanced Climate Change Technology Development 178 1050 950 780 470 73 66 47 30 16 13 7 11 3 4 2 0 0 16

17. Technology can get us there from here • Double Federal $$ for energy R&D • Expand cooperative domestic & international RD3 • ↑ incentives for private sector energy RD3 • Coal gasification and carbon sequestration • Domestically produced efficient vehicles • Domestically produced alternative transportation fuels • Advanced nuclear reactors • Increased renewables and enabling infrastructure