This is an archived USAID document retained on this web site as a matter of public record.

Prepared Remarks of Administrator J. Brian Atwood
Address to World Policy Institute
New York, New York, September 12, 1997
U.S. Agency for International Development

I want to thank the World Policy Institute for inviting me here today. I am particularly pleased to have the opportunity to visit with my old friend Steve Schlesinger.

Only infrequently does a public policy issue come along that cannot be ignored or put off. I would submit that one of the most important domestic and international challenges we now face is the compelling need to address global climate change. I would go even further and suggest that this phenomenon -- this warming of the earth's surface, the rising of the seas and the disruption of the globe's ecosystems -- is a national security issue of the first order.

How then will we address this threat? Our first challenge is to speak truthfully and persuasively to the American people. In this century, America stepped up to the challenge of fascism and communism because we collectively believed these ideological systems were repressive and contrary to our interests.

Climate change, however, is a very different type of public policy issue. It is a phenomenon rather than an enemy. For many years we conducted a debate over the science. While that debate has not entirely ended, it has become less a debate over whether the earth's surface is warming and more a debate over how fast. Two years ago, the Intergovernmental Panel on Climate Change, a group of 2,000 eminent scientists including many Nobel laureates, concluded that "the balance of evidence suggests that there is a discernable human influence on global climate."

For those of us who have been frustrated for years over the inconclusiveness of this debate, this statement was welcomed. But in a peculiar way, the consensus among scientists underscored another difficult aspect of this issue. In effect, the scientists did not identify some evil foreign enemy, they were telling us that we were to blame. They were telling us that economic progress built on modern machines powered by fossil fuels was the chief cause of climate change. They not only took some time to reach strong consensus over the evidence, when they got there, they told us, to borrow the line from the "Pogo" cartoon strip, "we have met the enemy and he is us."

This presents policy makers with a very difficult challenge. It is a challenge to our political system, our economy, and to our society as a whole. How do we mobilize support for the defense of our society when the tools available to us require modifying our own behavior?

The biggest fear of many who oppose the President's commitment to negotiate international carbon emissions targets and specific timetables is that our very healthy economy would suffer. Numerous economic simulations have been run demonstrating that future economic growth could be hampered if the United States agrees to limit the use of carbon-producing fuels. However, the economic models that predict a negative impact fail to consider the tremendous cost we are already incurring because of climate change -- costs due to weather-related disasters, damage to agricultural capacity, fisheries and human health.

These models also fail to assume that enhanced international collaboration to solve this global problem could actually spur economic growth as new technology is developed and shared.

In sharp contrast to those who argue that we cannot afford to address climate change, a recent study by the World Resources Institute (WRI) found that a reduction of carbon dioxide emissions could well lead to a net increase in the U.S. gross domestic product if we make a few broad assumptions: (1) that our economy will respond with innovation and efficiency; (2) that we will implement our commitments using market mechanisms; and (3) that we include as part of the equation the damage to the economy that would be caused by global climate change. The Administration is working assiduously to examine the economic affect emissions reductions would have on the economy.

WRI also concluded that over ninety percent of U.S. industries expend less than two percent of their budgets for energy. They found that the profit motive has already led to major savings through more energy efficient systems. And with the introduction of the new "clean technologies" we can expect to save even more while lowering emissions. With additional incentives, perhaps we will see alternative energy sources come on stream more quickly.

Motivated by concerns about U.S. trade competitiveness and angry that prior negotiations did not obligate developing countries to achieve specific reductions in emissions, the U.S. Senate recently passed a resolution sponsored by Robert Byrd of West Virginia. The Byrd resolution states that the Senate would not support a treaty that excludes 130 developing nations from binding commitments, or that would cause serious economic harm to the United States.

This resolution passed by a 95-0 vote. There is no doubt about the advice it conveys, and the Clinton Administration has heard it loud and clear. I was also impressed by Senator Byrd's very personal remarks in his floor address. The Senator acknowledged the potential damage of climate change when he said: "... I begin with the premise that there's something going on that's very serious that's already having an impact on my life, your life and the lives of all Americans and peoples around the world. And I also begin with the premise that if we recognize that fact and agree that there's something going on, we need to work together in dealing with this problem...."

Senator Byrd performed a real service in advancing the public debate on this issue in that his resolution was premised on an acceptance of the problem all Americans face. Still, the Senate's admonition presents us with a real dilemma: progress to date in reaching international agreement has been based upon the assumption that industrialized nations -- including in particular the United States -- would take action first, to be followed by the developing world.

In fact, the Berlin Mandate, which created the framework for the Kyoto negotiation states that "...Parties [to the Convention on climate change] should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combatting climate change and the adverse effects thereof."

Since the climate change convention was first drafted, developing countries have taken the view that they will not be willing to take on commitments until and unless we do first. Their position has received support from many developed nations. Their attitude seems to be that because we have achieved economic progress, and are the biggest cause of the problem, we must take action first.

It is clear that what we need is some give on all sides. The world cannot address this problem without U.S. leadership and that is exactly what the President is providing. Beginning with his speech to the United Nations in June, his East Room seminar with scientists in July, and his planned White House conference on climate change in October, the President joined by Vice President Gore is attempting to lead us away from a dilemma and toward a creative solution.

Part of that solution is a commitment on the part of the United States to provide $1 billion to help the developing world to address climate change over the next five years. USAID is currently working on an action plan for the use of those funds, a plan that will be the focus of dialogue with developing countries, the private sector, the World Bank and others.

Though it is largely an untold story, we have made great progress since 1990, working on climate change issues with the developing world. We have done so by focusing on those interventions that make economic and development sense -- actions that increased energy efficiency, facilitate the transfer of clean technologies, foster the use of renewable energy, and promote forest preservation and low impact logging. By pursuing such common sense approaches, countries are not only reducing the rate of growth in their greenhouse gas emissions, they are also enhancing their competitiveness, reducing imports of fossil energy and decreasing local air pollution. Let me give you a few examples:

*    In Indonesia and the Philippines, USAID has supported feasibility studies and trade missions for the U.S. renewable energy industry that have successfully fostered the use of alternative energy sources and leveraged tens of millions of dollars in trade and investment opportunities;

*    In Mexico, USAID has helped develop state-of-the art power plant retrofits and energy efficiency audits using U.S. technologies that are reducing emissions of harmful pollutants and greenhouse gases;

*    In India, USAID is working with the Indian National Thermal Power Corporation, the U.S. Department of Energy, the Tennessee Valley Authority and the Electric Power Research Institute to improve the operating efficiency of existing coal-fired power plants and reduce pollution. Already improvements have decreased carbon dioxide emissions by 18,000 tons, and saved power plants money;
    
*    In the Newly Independent States and Eastern Europe, privatization and market-reform initiatives are helping to reduce emissions and increase economic stability by providing assistance for efficiency improvements in energy production and consumption.

Perhaps the most critical way in which developing countries have been addressing the threat of climate change has been the sweeping policy reforms in the energy sector that have taken place in Asia and Latin America. Energy price subsidies in developing nations have been cut by 40 percent since 1990 as countries have moved towards market mechanisms and a broader role for the private sector. Energy sector privatization is dramatically increasing the efficiency of operations.

Much of USAID's work has been done in partnership with U.S. electrical utilities--one of the industry groups that will be most affected by the outcome of the negotiations. These utilities have already introduced significant environmental improvements, and have expertise and technologies to share. They see collaboration with USAID as an opportunity to create new markets. We see the partnership as a chance to leverage private sector involvement and transfer lessons learned.

The progress we have made, however, does not alter the fact that by the year 2020, the developing world will account for half the greenhouse gas emissions generated by humans worldwide. Emerging markets such as China, India and Brazil will be major sources of damaging emissions if concerted action is not taken soon to encourage energy efficient systems, clean technologies and the protection of forests that absorb and retain the earth's carbon.

How do we convince these developing countries to go beyond current efforts and join an international regime that will set targets and monitor emissions? The first step must be for the United States to agree to its own binding targets and timetables. When we begin implementing a program at home, we will have removed the biggest obstacle to a truly international system.

The second step must be to engage in a partnership with developing countries today to cooperate in disseminating clean energy technology. By providing advice and expertise on the economic and environmental benefits of a shift to less carbon intensive development, we can help developing nations prepare to take on commitments. We can also help demonstrate that combatting climate change can help stimulate private investment.

The potential markets for "climate friendly" technologies is enormous. For example, the world market for energy efficiency technologies has been calculated at almost $1.8 trillion over the next 40 years; and that is without the added incentive of a global greenhouse gas emissions cap. Likewise, the potential market for renewable energy is also vast -- incentives for cleaner production will only help to increase the promise of new markets overseas in an area where the U.S. is highly competitive.

We are making some progress in fostering investment now, but we will be able to stimulate major flows of private capital to the developing world if a dollar value can be placed on carbon emissions. In other words, if a company in the developed world can calculate how it could benefit financially from helping a company in the developing world reduce greenhouse gas emissions, projects that would not have been profitable might become viable. Similarly, if a developing nation could expect to receive credit for reducing its carbon emissions, the incentives for efficiency would increase substantially.

Introducing the concept that carbon has value and then developing the regulatory framework to enforce an international system will take time. In the meantime, developing nations need help in understanding these new concepts and in surveying their own needs. This is something the entire donor community should engage in.

Implementing President Clinton's commitment of $1 billion for developing countries gives USAID a unique opportunity to help lead the donor community on the climate change agenda. We look forward to the opportunity to work closely with the World Bank, UNDP and other bilateral donors. And we fully intend to work in close partnership with the U.S. private sector to achieve our shared objectives. By forming effective partnerships with multilateral lending institutions and the private sector, we will be able to have an impact on greenhouse gas emissions, as we move developing nations away from rigid negotiating positions by demonstrating that they will benefit from targets for reducing greenhouse gas emissions.

We cannot afford delay or denial. The world is already beginning to feel the impact of climate change. This has been the warmest century in about 600 years, and all of the warmest years recorded in the past 135 years have occurred since 1979. The frequency and scope of great natural disasters has increased from 14 worldwide in the 1960s to 70 in the 1980s; a fivefold increase in three decades. As the concentration of greenhouse gases rises, trapping solar hear in the atmosphere, the surface of the planet will further warm, and these trends will accelerate.

The impact on infrastructure is already being felt by the insurance industry. In the first half of the 1990s, insurers paid out $57 billion for weather-related losses worldwide compared with $17 billion for the entire decade of the 1980s.

The dilemma that is posed by the position of the U.S. Senate and the reluctance of the developing countries to set targets can only be managed by increased engagement. The world is not being affected by climate change in geographically distinct areas. The best analogy I have heard is that of a giant ocean liner steaming ahead full speed toward a reef. Scientists may argue about how fast the ship is moving or how far away the reef is, but there is no serious debate about the direction we are headed. Whether we are a developed economy or a developing one, we are all in the same boat heading toward the same reef.

Climate change is an issue from which no one can walk away. We owe it to ourselves and to the next generation to begin to redirect the global ocean liner. If we are honest about the economic projections and if we employ ingenuity and technology, we will not need major sacrifice. But we have to start today or, as Senator Byrd said, "my children and grandchildren... will have an intensified problem... even more costly in its resolution."

Thank you.

This is an archived USAID document retained on this web site as a matter of public record.

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