The Heat Is Online

CLEAN ENERGY TRANSITION

The increasing instability of the global climate, driven by the buildup of human-generated greenhouse gases in the atmosphere, poses profound perils to our habitat, our public health and safety, and the stability of our economic and political systems. The costs of "business-as-usual" are manifesting themselves in the global increase in extreme weather events, while there is significant inertia in the current dependency on fossil fuels.

At the same time, the climate crisis provides a unique historical opportunity to embark on a new worldwide industrial revolution.

Preamble

Highlights of Plan

Introduction

Body of Plan

We propose a worldwide project to modernize the global energy infrastructure over the next 15-25 years. We believe the project would involve the willing participation of every country. It would restore an environment of security for future generations. It would raise living standards by contributing to increased economic growth in developing nations without compromising the continuing economic achievements of industrial nations. It would substantially expand the total wealth, stability and equity of the global economy while, at the same time, significantly reducing atmospheric carbon concentrations. And it would enhance the human prospect by creating a heightened sense of civic purpose.

We believe a set of interactive and mutually-reinforcing strategies based on an international fund combined with fossil fuel efficiency and renewable energy standards can help accelerate a global energy transition, the benefits of which would reverberate through our social and economic systems.

Highlights of Clean Energy Transition:

I. The elimination of national subsidies in industrial countries for fossil fuels and the provision of equivalent subsidies to develop and deploy renewable and highly efficient energy technologies and job retraining for displaced workers in the fossil fuel industries.

II. The adoption internationally of progressively more stringent Fossil Fuel Efficiency and Renewable Content Standards as a complement to the emissions "cap-and-trade" system embodied in the Kyoto Protocol. This strategy could be of use to individual nations as well.

III. The elimination of regulatory barriers which impede competition and support wasteful, inefficient high-carbon technologies in order to create freer competition in energy according to the criteria of cost, efficiency and low-carbon content.

IV. The creation of a Clean Energy Transition Fund using the revenues from a tax on international currency transactions or other comparable revenue sources to finance the development and transfer of climate-friendly (renewable, high-efficiency and low-carbon) technologies to developing nations.

V. The creation of a new agency or the authorization of an existing agency under the Kyoto Protocol to facilitate a rapid transition to climate-friendly (renewable, high-efficiency and low carbon) energy facilities worldwide through transfer of technologies and expertise according to principles of equity, sustainability and competitive energy markets.

The 1997 Kyoto Protocol represents an important first step toward the goal of "stabilizing atmospheric greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system." However, the Protocol's emission reduction goal of 5.2 percent below 1990 levels for the industrialized countries is inadequate compared to the 60 to 70 percent reductions required to stabilize the global climate system. Even the implementation of these modest reductions is in doubt due to lack of political will, international conflicts, and what we believe are misguided concerns about economic impacts.

The inadequacy of the Protocol is compounded by difficulties of monitoring and enforcement inherent in an emissions "cap and trade" system. Moreover, the unlimited use of the various flexibility mechanisms embodied in the protocol-emissions cap-and-trade, joint implementation, offsets from sinks and other gases, and the current structure of the current Clean Development Mechanism-permits industrial countries to evade or substantially postpone reducing carbon emissions by altering their national energy diets.

While these flexibility mechanisms could play an increasingly important role over time, their use should be limited in the near term to ensure that industrialized countries achieve significant reductions of their domestic greenhouse gas emissions and that developing countries are afforded an equitable opportunity to participate meaningfully in averting the threat of intensified climate change.

The Clean Energy Transition project envisions a coordinated effort between industrialized nations, developing nations and private-sector multi-national energy and financial institutions and Non-Governmental Organizations, to create a new institution or develop an existing institution under Kyoto Protocol, to establish and oversee a Clean Energy Transition Fund to facilitate a global energy transition.

We urge the Conferences of the Parties to consider:

I. The elimination of national subsidies in industrial countries for fossil fuels and the provision of equivalent subsidies to develop and deploy renewable and highly efficient energy technologies and job retraining for displaced workers in the fossil fuel industries.

National subsidies for fossil fuels should be eliminated. The U.S. federal government provides $20-$25 billion in direct and indirect subsidies to the fossil fuel industry every year. The amount of fossil fuel subsidies globally is estimated at $300 billion annually. The elimination of these subsidies would remove the unfair and artificial price advantage currently provided for carbon-intensive fuels.

The establishment of subsidies for renewable energy technologies is intended to promote the development and commercialization of renewable technologies in the near term by providing incentives for fossil fuel companies to diversify their energy supplies with increasing proportions of non-carbon energy sources. A portion of these subsidies should be used to ensure job retraining for displaced workers in the fossil fuel industry. Another portion should be earmarked for research and development of emerging renewable technologies to ensure their availability and commercialization as the global energy transition proceeds.

II. The adoption internationally of progressively more stringent Fossil Fuel Efficiency and Renewable Content Standards as a complement to the emissions "cap-and-trade" system embodied in the Kyoto Protocol. This strategy could be of use to individual nations as well.

The adoption of progressively more stringent Fossil Fuel Efficiency Standards for both supplies and end-uses in each energy sector would reduce emissions while creating a domestic market for renewable and highly efficient energy sources. For example, in the electrical generating sector in the U.S., most generating facilities achieve efficiency rates of about 35 percent. By contrast, gas-fired co-generation now achieves efficiencies of from 70 to 90 percent. Thus the U.S. (and any country that adopted progressive fossil fuel efficiency standards) could significantly reduce emissions while maintaining or increasing current levels of electricity generation. Each energy sector - electrical generation, transportation, industrial use and thermal - should be subject to progressively more stringent, sector-specific, carbon-weighted efficiency standards over time.

Quantifiable efficiencies may be attained at both the supply and end use phases of the energy cycle. In the transportation sector, for example, efficiencies could be attained through fuel switching (e.g., fuel cells, natural gas) as well as from more stringent auto mileage standards for conventional fuels.

A progressive Renewable Content Standard in tandem with a progressive FFE standard would ensure a supply of renewable energy technologies to enable the country to reduce carbon consumption in each energy sector without compromising its energy requirements.

The adoption of progressive FFE and RC Standards by other countries could complement the emissions "cap-and-trade" regime embodied in the Kyoto Protocol and accelerate the process of emission reductions. The adoption of aggregate national Efficiency and Renewable Standards (with each country increasing its aggregate fossil fuel efficiency and renewable content by a determined percentage at specified intervals), could defuse equity controversies over the allocation of emission-trading rights between parties to the negotiations. All energy facilities transferred through the Clean Energy Transition Fund must advance the overall energy efficiency of recipient nations.

III. The elimination of regulatory barriers which impede competition and support wasteful, inefficient high-carbon technologies in order to create freer competition in energy according to the criteria of cost, efficiency and low-carbon content.

Many energy and environmental regulatory structures were initially designed to address important social, economic and environmental goals. But, with changes in technologies and market structures, some regulations have become major barriers to the delivery of low-cost, environmentally sound, efficient energy sources.

In the U.S., these barriers to efficiency include, among others: the regulated monopoly of electrical generation and distribution; regulatory protection of inefficient, high-carbon generating facilities; input-based, rather than output-based, pollution standards; siting laws which bias regulators in favor of large, centralized generating facilities; and rate structures which fail to account for efficiencies and external costs.

The modernization of certain regulations and the elimination of others, in conjunction with a regime of progressive Fossil Fuel Efficiency and Renewable Content Standards, can create freer markets for competing energy sources based on the criteria of efficiency, cost and low carbon content. Such energy competition holds the promise of significant economic growth for innovative energy technology companies.

We recognize, however, that price competition alone will not ensure climate protection or social equity without well-designed complementary mechanisms, standards and investments to achieve these goals.1.

IV. The creation of a Clean Energy Transition  Fund using the revenues from a tax on international currency transactions or other comparable revenue sources to finance the development and transfer of climate-friendly (renewable, high-efficiency and low-carbon) technologies to developing nations.

We propose the establishment of a Clean Energy Transition  Fund to finance the development, capitalization and diffusion of renewable and low-emission technologies. The fund would enable developing countries to develop economically along a low carbon path. It would provide opportunities for significant economic growth for innovative producers of low-carbon and renewable energy technologies. It would promote the commercialization of renewable and highly-efficient energy technologies by creating a global infrastructure for these technologies and related businesses and institutions.

To achieve the desired impact, this fund needs to be substantial. A tax of 0.25% (one-quarter of one percent) on international currency transactions estimated at $1.5 trillion per day, for one example, would yield $150 - $200 billion annually. In addition to funding the transfer of renewable, efficient and low-carbon technologies to developing nations, the fund should be used for employment and technical training to deploy and implement these climate-friendly technologies.

We cite the tax on international currency transactions -- first conceived by Dr. James Tobin -- because we believe it is equitable, non-discriminatory and broad-based. We expect that it could provide sufficient revenues for the energy transition in developing countries without a large effect on the activities supporting the base itself. But other funding sources with substantial revenue-raising potential exist. They include taxes on carbon-based fuels, diversion of those portions of defense budgets dedicated to protecting the security of oil commerce, and other revenue-raising mechanisms.

All energy facilities transferred through the WEMF must meet the criterion of enhanced sustainability by advancing the overall energy efficiency of recipient nations.

V: The creation of a new agency or the authorization of an existing agency under the Kyoto Protocol to facilitate a rapid transition to climate-friendly energy facilities worldwide through transfer of technologies and expertise according to principles of equity, sustainability and competitive energy markets.

A new institution should be created or an existing institution (e.g., the Global Environmental Facility, the Clean Development Mechanism, etc.) should be authorized to monitor the collection, allocation and disposition of the Clean Energy Transition Fund. It should certify that all energy technologies transferred under the fund result in increased rates of fossil fuel efficiency and low-carbon-based energy sources in recipient nations. It should monitor Clean Energy Transition  Fund transactions to prevent corruption and ensure fair access to all technology providers. It should ensure that the Clean Energy Transition Fund be administered transparently by both public and private-sector entities who are financially accountable and who have expertise in energy efficiency promotion and carbon abatement. The monitoring and auditing role envisioned for this entity does not imply an unduly large or unwieldy bureaucracy.

1. Footnote: In the U.S. higher fossil fuel efficiency rates and fuel switching to lower carbon levels could be expedited by the use of state or federal tax-switching policies in which taxes are diverted from labor to carbon. These "tax switching" policies could be revenue-neutral. Alternatively, they could provide allocations of revenues for job re-training, transition assistance to affected communities and carbon-reducing infrastructure improvements, such as mass-transit, land-use planning and efficiency and conservation investments.

Participants in discussions of the Clean Energy Transition  Plan:

Dr. Frank Ackerman, Global Development and Environment Institute, Tufts University, Medford, Ma.

Dr. Steven Bernow, vice president, Tellus Institute, Boston, Ma. Thomas R. Casten, CEO, Trigen Energy Corporation, White Plains, N.Y.

Dr. Michael Charney, Cambridge, Ma.

Stephen Cowell CEO, Conservation Services Group Boston, Ma.

* Dr. Paul Epstein, Associate Director, Center for Health and the Global Environment, Harvard Medical School, Boston, Ma.

* Ross Gelbspan, author, The Heat Is On, Brookline, Ma.

Dr. Jonathan Harris, Global Development and Environment Institute, Tufts University, Medford, Ma.

Ted Halstead, founder, Redefining Progress, Washington, D.C.

Sivan Kartha, Stockholm Environment Institute, Boston, Ma.

Dr. David Levy, School of Management, University of Massachusetts, Boston, Ma.

Dr. William Moomaw, director, International Environmental Research Program,

Tufts University, Medford, Ma.

Dr. Irene Peters, economist, Zurich, Switzerland.

Dr. Kilaparti Ramakrishna, Woods Hole Research Organization, Woods Hole, Ma.

Kelly Sims, Ozone Action, Washington, D.C.

Please respond to:

Ross Gelbspan Paul Epstein, M.D., M.P.H.

247 Kent St. Center for Health and the Global environment

Brookline, Ma. 02446 Harvard Medical School

(617) 738-5564 Oliver Wendell Holmes Society, Room 263

260 Longwood Ave., Boston, Ma. 02115

(617) 432-0493

E-address: E-address:

Worldemp@hotmail.com paul_epstein@hms.harvard.edu

* Convenors, Clean Energy Transition Group

Selected Bibliography:

The Tobin Tax: Coping With Financial Volatility, Oxford University Press, Inc., 1996, Editors: Mahbub ul Haq, Inge Kaul, Isabelle Grunberg.

Fueling Global Warming: Federal Subsidies to Oil in the United States, a report by Douglas Koplow and Aaron Martin, Industrial Economics, Inc., prepared for Greenpeace, Intl.

Perverse Subsidies: Tax Dollars Undercutting Our Economies and Environments Alike, International Institute for Sustainable Development, 1998, by Norman Myers with Jennifer Kent.

The Heat Is On (Updated Edition), Perseus Books, 1998, Reading, Ma., by Ross Gelbspan

Turning Off The Heat, Prometheus Books, 1998, Amherst, N.Y. by Thomas R. Casten