ACCF Statement on Climate Change Forum with Major Economies

Energy Security And Environmental Protection Go Hand In Hand With Economic Growth

American Council for Capital Formation (ACCF) Senior Vice President and Chief Economist Dr. Margo Thorning is an expert economist on energy and environmental policy. This week she participated in the two-day forum on climate change with major economies in Washington and has released the following statement:

“The administration’s climate change meeting could mark a historical path to a truly effective global curb on greenhouse gas emissions.  Bringing China, who has now surpassed the United States in CO2 emissions, and India to the table as active participants with the other major emitters is a very positive step.

“Secretary of State Rice is correct in her assessment that addressing climate change must not starve economies of the energy that they need to grow and that does not widen the income gap between developed and developing nations.  These would be the unfortunate economic consequences if the major economies of the world committed to an internationally fixed cap on emissions comparable to the EU’s emission trading system (ETS).

“An international cap and trade scheme would inevitably collide with population growth in many countries. The EU-15 countries are having extreme difficulty meeting their Kyoto targets under negligible population growth.  Furthermore, current governments cannot bind future governments to emissions targets agreed to today.  It would be difficult if not impossible to ensure that countries were not engaged in fraud or abuse on their emissions reductions.

“Without regulatory mandates, the United States is already taking the lead in seeing dramatic reductions in both energy use and energy intensity.  U.S. CO2 emissions fell 1.3 percent in 2006 compared to 2005 in spite of strong economic and population growth and energy use fell by 1.0 percent.   Energy intensity has fallen by 20 percent over the 1992-2004 period in the U.S. compared to only 12 percent in the EU with its mandatory approach to emission reductions.

“Energy security and environmental protection go hand in hand with economic growth.  To be successful on both fronts, international partnerships encouraging investment with profit potential in clean fossil energy, nuclear power for electricity, renewable energy and distributed generation and transmission will provide the necessary incentives to reduce greenhouse gas emissions.”