Environmental Trends to Watch in 2008

Trends to Watch is WRI's annual forecast of emerging issues that will have major impacts on environmental coverage in 2008. On climate change: what will happen between COP-13 in Bali, and COP-14 in Poznan? What role will China play? Will we see new legislation and regulations from Congress or the EPA? Where will biofuels and technology go? Where will the water come from? WRI President Jonathan Lash makes his predictions at the National Press Club.

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TRANSCRIPT

World Resources Institute. Journalist Briefing On Environment Trends For 2008

Participants

Jonathan Lash (Moderator),
President, World Resources Institute

Dr. Jonathan Pershing, Director
Climate And Energy Program
World Resources Institute

Dr. Nancy Kete,
Director, Embarq Center On Sustainable Transportation
World Resources Institute

Transcript by National Press Club, Washington, D.C.

JONATHAN LASH: Good morning. I’m Jonathan Lash. I’m the president of the World Resources Institute, which is a nonprofit policy research institute that looks at global environmental problems, puts ideas into action to change the course of policies and institutions on issues ranging from global climate change to the capacity of ecosystems to provide for human well-being.

For the – this is now the fourth year that we have taken a little time at the end of December to talk about what we think will be the issues to watch in the coming year. This year, the conversation is going to be dominated by climate change because if you’re thinking about the issues to watch, I think climate will dominate the agenda. We’ll try to connect the climate change issue in several places to some other environmental issues.

In past years, we have talked about the rising importance of the private sector in driving the politics of climate change. We predicted last year that a set of companies would recommend to Congress mandatory cap-and-trade legislation, and in fact, a month later that happened. The year before, we said that the key to watch was the action of the states. That was the time at which the Northeast states were getting to sign an agreement to limit their own emissions and impose a cap-and-trade system, and of course, as you know, that process is underway.

This year, I want to talk about seven issues quickly. The first is from Bali to Poznan. So Bali is just over. The next meeting of the parties will be in Poznan in Poland. The question is what is going to happen in the coming year between now and next December. The second, what will Congress do during 2008. The third, does the Environmental Protection Agency have some surprises that we may see in 2008 on the climate issue. The fourth looking at where we are going to go with biofuels. The fifth at some questions about how China is going to play in this debate during 2008. The sixth, some developments that I think will emerge in the technology field. And finally, is the weather going to play a role in the U.S. elections next November.

Two of my colleagues are with me today who will help out in this process, Dr. Jonathan Pershing, sitting in the front row, who is the director of our Climate and Energy Program and was a long-time negotiator in the process building up to Bali; and at the back, Dr. Nancy Kete, who is the director of our EMBARQ Center on Sustainable Transportation, who may or may not add something when I’m talking about where EPA is going.

So let’s go to the events at Bali. For me, the crucial question is will the lame duck U.S. administration choose to play offense, defense, or to heckle during the coming year as the negotiators get together. There are four planned meetings, Jonathan, between now and Poznan.

The question that was before the parties to the framework convention on climate change in Bali was essentially a question of political will. Are we going to agree to negotiate an agreement to reduce emissions? And the answer, barely, was, yes. This is the preamble to the so-called Bali roadmap that was issued, and it did in fact call on countries going forward between now and 2009 when the parties meet in Copenhagen to negotiate a global agreement to reduce greenhouse gas emissions consistent with the goals set in the convention, which all countries have signed and ratified, including the United States, to avoid dangerous human-caused buildup of greenhouse gases in the atmosphere.

The Bali agreement does in fact commit nations to conduct that negotiation; however, it leaves so many questions unanswered, it had to leave so many questions unanswered because of the conflicts among the delegates there that the road laid out by the roadmap is going to be a very rough and long one, and the agreement itself doesn’t tell us where it’s going to end up.

I want to make four observations about what happened at Bali, and then ask my colleague, Jonathan Pershing to talk about what will happen over the coming 12 months.

First observation is about the role of the private sector at Bali. There were 10,000 people at these meetings, and there was a significant group who represented the private sector. At past meetings, the role of the private sector would have been largely to explain to negotiators how difficult it would be to reduce greenhouse gas emissions. At this meeting, this group which we’re part of and helped to organize, the United States Climate Action Partnership, staged an event calling on the negotiators to move as quickly as possible in noting that in the United States, we have asked Congress to impose mandatory economy-wide cap-and-trade legislation.

A similar group from Europe was also present there, also asking the negotiators to move as quickly as possible saying that certainty and predictability and rapid action to create a level playing field is far more important to them than the potential cost of having to act on climate. That was a very new development in these negotiations and will only grow stronger in the coming year.

The second observation is that the one very, very hopeful note in the Bali declaration was that both developed countries and developing countries will negotiate about the kinds of commitments they will make to reduce emissions. It is clear that developing countries may make different kinds of commitments from developed countries, but both are committed in this roadmap to take apart in the process of reducing emissions.

Third observation, Europe led in these negotiations in a way that they never have before, particularly the Germany of Chancellor Angela Merkel was very strong. They led both by the commitments they have made to reduce their own emissions and by what they called for in the negotiations.

And fourthly, the United States suffered an unprecedented public defeat, humiliation in the ultimate negotiations in which our negotiators were basically alone in resisting an agreement and forced to back down.

I want to make clear that the United States also played in a couple of areas a useful role. The reason that there is language in the roadmap that opens the door to developing country commitments is because of the U.S. insistence on that language. The unfortunate thing was that the U.S. continued as it has for the past seven years to fail to offer positive alternatives for the agreements for the issues on which they resisted.

Jonathan Pershing, do you want to add something about the Bali to Poznan process?

DR. JONATHAN PERSHING: Thanks very much. Just kind of to reiterate two things that Jonathan said, the first one is that we have got now four meetings leading up to the session in Poznan in Poland. The first will be in March or April. The final data has not yet been selected. That is the first intercessional meeting. The second one will be in June. Then we have one in August or September, and then finally we come to Poznan in December of 2008.

So the issue then is what do you over the course of these four meetings, and what kind of a process might we imagine going forward? I would say that there are going to be three key issues that we’ll be debating. The first one is going to be overall what the commitments for Annex One countries, or the developed countries, look like. And if we think about the guidance that has been provided, albeit limited in the context of this decision, two things emerge. The first is we don’t really know, and the second is that there is a lot on the table.

So what kinds of things, sectoral targets? That could mean a structure that is not comprehensive for all of the economies of all nations but might focus on individual sectors. We’ll have clearly additional guidance and direction on technology, agreements that might promote particular technologies like capture and storage. We’ll also have areas in which there will be a focus on the enhancement and the furthering of the market. So we look at the structure now of the European emission trading system. That will certainly continue. The open question is what is the extent of the market, what kind of prices might we see on carbon and other greenhouse gases, and whether that market will go beyond the framework now in Europe to incorporate Canada, Australia, the United States, outside of Europe.

The second – the next piece that I want to focus on is the forestry question. This was a huge issue that came up not surprisingly in Indonesia, which has got enormous focus on its forests. The open issue now is what kind of resources will be provided to the world, to the forested world, to try to offset their deforestation or to lead to reductions in deforestation. At the moment, there is to be a fund. What kind of subscription and how much money provided for this fund remains unclear; stay tuned for that negotiation this year as well.

And then lastly, we have the issue of adaptation, which, in the last five years has had an increasingly high profile in these negotiations. I think more and more as the world looks at existing impacts, we’re coming to the conclusion that we will not avoid them; we’ll have to manage them. And the kinds of funds that are being set aside are now measured in the hundreds of millions if not billions of dollars and we’ll look forward this year additionally to the discussions about how that money will be spent, who will have the authority to disperse it, and whether or not there will be additional funding forthcoming with those resources.

MR. LASH: So just to go back and talk about my initial question about the lame duck. The U.S. will be a participant in each of these meetings coming up. What will the instructions of our delegation be? Will they be help the parties find an agreement? Will they be – insist on the U.S. position and don’t commit the U.S. government to anything pending a new administration? Or will they be to lay landmines for succeeding administration?

I don’t know what is most – what is going to happen. I would say the most likely will be that the U.S. plays a largely passive role in the coming year, and that a huge set of decisions are pending for a new administration when they come in. The first meeting – the meeting in Poznan will take place after the election, but before the inauguration, and then there will be a set of meetings leading up to Copenhagen, which will present urgent questions for a new administration, which will have a tough time in dealing with them.

Of course a piece of that will be the question of whether Congress has acted in the interim. The question is really whether Congress acts in 2008. It will act. Congress will enact national legislation to limit greenhouse gas emissions in the foreseeable future. This is Washington; you’re all here; you read the papers; you know that legislation is moving, that a very strong bill, the Lieberman-Warner bill, was voted out of committee a few weeks ago, that it probably has more than 50 votes on the floor of the Senate now, but not yet 60.

So will Congress act in 2008? If it does, will it act on a bill that sets a strong target for emissions reductions? And if it does, will that legislation include a so-called safety valve, or cost cap that says we’ll make reductions only up to the point that it costs a certain number of dollars per ton, and then we’ll stop making reductions.

I’ll make the case of why it’s possible that Congress will act, but let me first go back over some of the drivers. We talked to you three years ago about the fact that the states were becoming increasingly active in developing their own approaches to reducing emissions because of the failure of the federal government to take action.

There are now three groups of states. They include 21 states, more than 50 percent of the U.S. population, more than 50 percent of the U.S. economic output, and about 37 percent of U.S. emissions. The number of states has grown each year. And they present a significant problem even to those countries that want to make reduction because the companies now face the prospect of having to deal with one system in the West, another system in the Midwest, a third one in the Northeast, still another one in the states that haven’t taken action, and still another one in Europe.

That begins to become untenable for companies trying to figure out how to manage their own emissions and how to make investments in plant and equipment that will continue to operate for 25, 30, or 40 years, whether to invest in low carbon or conventional equipment.

Key states to watch in the coming year will be Alaska, which has been an observer in the Western process, but has been strongly affected by the rapid melting of the permafrost and serious erosion problems they are facing; Florida; Illinois, a big corn – a big coal state, but also a big corner producer; and Utah, another big coal state.

I showed you this, those of you who were here last year, last year. This was a chart of the legislation that had been proposed at that time and the reductions that that legislation would make. So business as usual, the Bingaman legislation, McCain-Lieberman, all the way down here, a bill proposed by Senator Jeffords and Senator Boxer, so a range of targets in the legislation.

This is what it looks like this year in terms of the legislation that has been proposed. You don’t even have to discriminate among the bills and understand why some go in steps and what this shaded area means. Everything points downward now. There has been a significant change in legislative goals in that every bill that is out there now makes significant reductions, and several of the most important bills are quite consistent with both the targets set by the United States climate action partnership, that industry group, and by the goal of trying to keep the U.S. to an emissions path that would be consistent with stopping the buildup of greenhouse gases before we reach two degrees centigrade of warming.

Here is the case for Congress acting in 2008. First of all, most of the major environmental legislation in the United States has passed in the two months before a national election. Second of all, most of the major environmental legislation in the United States was signed by Republican presidents who were not necessarily avid sponsors of it but who acknowledged the politics of the legislation that was moving. Third of all, Senator Reid is signaling that he’ll schedule a vote in the Senate on the Lieberman-Warner bill probably next summer. I’ll talk at the end of my presentation about the possibility that weather events will shape politics on this set of issues, but my guess is that Senator Reid is calculating that the political support for action, which has built significantly over the past year will continue to build over the coming year.

I think the key thing to watch is whether the House begins to move. There is no major bill pending in the House yet. Congressman Dingell and Congressman Boucher have said they will propose legislation. They have begun to issue white papers but they really haven’t outlined the key components of a bill. If they start early in 2008, to do that, that will signal an intention to bring something before the Congress before the end of 2008. If that pace is relatively relaxed they will be acknowledging that there is no possibility of getting action on the floor of the House, and then a conference committee that reaches agreement and puts the bill before the president.

My guess is if Congress passed a global warming bill next summer and sent it to President Bush, he would sign it. And he would do so in part because of the politics of the presidential election, in part because of his own sense of legacy. But my guess is, he will not face that test. Even, however, if Congress doesn’t pass legislation, what’s happening this year is laying a floor for what will happen in 2009 under the pressure of the upcoming negotiations in Copenhagen, which will be a critical test for a new administration.

And, even if Congress doesn’t act, the EPA is going to. This is something that is very much worth watching. The Supreme Court in April of 2007 in Massachusetts against EPA held that carbon dioxide and the other greenhouse gases are pollutants and that they are, therefore, within the scope of the Clean Air Act, under which EPA has an obligation to protect public health and welfare. After that decision, about a month later, President Bush issued Executive Order 13432, which authorized the Environmental Protection Agency to move ahead with regulatory proceedings in response to the Supreme Court’s decision.

I think you will see two things during 2008. Within the next four weeks, you will see EPA issue a decision granting a waiver to the state of California, which is proceeding with its own fuel-economy standards for automobiles. At the end of the year, in December 2008, I think you’ll see EPA issuing a program in response to the Supreme Court decision. And that will be very significant because, unlike the energy legislation which Congress just passed, which tightened fuel-economy standards, and unlike the provisions of the energy legislation which require increased production of biofuels, the EPA’s approach will be based not on a focus on fuel economy, but a focus on health and welfare. And it will be an integrated approach dealing with automobile emissions that affect climate and both the car itself and the fuels. I actually think that what EPA comes out with is going to be a blockbuster and significantly increase the pressure on Congress to act in 2009 if it has not acted in 2008.

That EPA decision will also bring into focus a set of questions about biofuels, about how do you identify a biofuel whose overall impact is positive, both in terms of reducing emissions and in terms of its impact on pollution and land use and food and how do you identify one that is negative. There is very, very rapid growth in global production of biofuels. And it’s going to accelerate in the coming years. There are strong mandates in the 2007 energy bill for rapid increases in biofuel production. There are strong mandates in European policies for increases in biofuel production.

And while we were in Bali, we all heard constant stories about the pace at which deforestation was taking place, being driven by the demand to plant oil palms, which are an excellent source of feedstock for biodiesel. We heard about a major new deal that China had made with the Congo to cut hundreds of thousands of acres, replace them with oil palm to produce biofuels for China. This is a global process that’s going on. It’s clearly having an impact on food prices. I don’t know if you remembered, but last year, in January and February, there were tortilla riots in Mexico because the price of corn had gone up so rapidly. It’s only continued up since then. There were cooking-oil riots in China. Of course, energy prices have contributed to the rise in food costs, but the competition between fuel manufacturers and food sellers for supplies of corn, grain, and soy is creating significant pressures that will continue to grow in the coming year and become a more acute issue.

The issue is particularly important for the poorest countries in the world. This is just a map that superimposes poverty, food, and water scarcity. And the darker-colored countries are the ones where the three come together most sharply. As biofuels drive up food prices, as water regimes change because of climate change, this is where you see the impact play out most sharply.

Another way of looking at that is one that the British foreign office developed with their military leaders starting with looking at water scarcity the same way we did in the previous map, adding into that the question of rapidly growing populations, and where climate change was driving crop declines. This is not just biofuels pressure, but climate-driven crop declines where there is existing hunger, where there are high risks of damage from largest storms because of low-lying coast, and where there are recent military conflicts.

Climate change is going to play out in 2008 increasingly as a security issue. And the interaction of biofuels with all of these in 2008 is going to lead to rapidly rising pressures to develop a sustainable biofuels standard. That could be in the EPA process; the California legislation calls for such a process; the Europeans have called for such a process. The drive to increase the size of this industry and the drive to control its impact are going to come together during 2008.

China, either last year – either this year or next year or in 2009, my guess would be 2008, China will become the largest source of greenhouse-gas emissions on Earth. China and the U.S., two countries which have not yet taken on any specific emissions-reduction commitment, together account for close to half of all global greenhouse gas emissions. China was a big topic in Bali. China will be a big topic in any congressional debate. The question is, how is China going to play in this process over the next year?

It’s interesting to look at how climate and environmental issues have begun to increase pressures on China over the years. They knew five years ago they faced energy-security problems. They’re not a major oil producer. Their energy needs are increasing rapidly. You all know the story that they’re building 100 major coal-fired power plants a year now. They are also building nuclear power plants. They also have very vigorous energy-efficiency program. They are seeing increasing domestic pressures because of localized pollution which they have acknowledged and are trying to address. They are very aware of the extent that climate change will directly affect them.

The supply of water in China per person is about one-eighth or one-ninth what it is, what the average is for the world. So they face acute water issues. They’ve begun a significant afforestation program. They will increasingly, in the coming year because they have become a major emitter, because they’re a major seller into world markets, face international pressures, particularly supply-chain pressures where large entities that purchase products from China will insist that the manufacturing process take CO2 emissions into account.

And finally, they certainly recognize that tomorrow’s markets will be carbon-constrained markets, that there will be a huge and growing demand for low-carbon products. I’ll come back to that in a moment.

And then, there are the Olympics, three weeks during which the focus of the world will be on Beijing. The Chinese are taking extraordinary steps to control air pollution for that period, negotiating agreements with surrounding industries to close down in order to assure that the air is clean because close to 50 percent of the air pollution in Beijing at some points is due to construction; it’s a very fast-growing city. They’ve already imposed a construction slow-down, which will take effect in the spring in order to have time to clean the air for the Olympics. But it will draw attention to China and how China is playing on international issues.

And the Chinese will face an important choice. They are a great power. They are a great power economically; they are a great power militarily; they are a major world player. And they will have to decide whether, in the negotiations and in their approach to climate change, they want to take the lead, help solve the problem, or wait to see what the United States does and what kind of deal they can get from a new administration in the United States. I think that will play out in particular around the time of the Olympics, when one of these negotiating sessions will take place.

Going on to technology, last year I suggested the key to this was follow the money. And the money is going into clean technology. The figure for 2007 is a little lower than 2006 only because that’s only three-quarters; that’s not the whole of 2007. Clean technology has gone from 3 percent of venture-capital investments to over 17 percent of venture-capital investments in five years. And in 2008, we’re going to see some of the first results.

But I actually think there’s a bigger story here that’s hidden by those figures I just showed you. And by these figures, these go through 2006 and show an enormous rate of investment in both Europe and the United States. This goes just beyond venture capital and also includes private equity and deals that are financed on Wall Street. But it cannot cover the internal investments made by big corporations in their own research on these technologies. And at least anecdotally, from my experience in dealing with these companies, those investments are growing enormously.

The one company which does publicly report them as part of a public commitment is GE. GE is now, essentially, spending more money than the United States government on clean technology research, close to $2 billion. I think that this hidden part is going to drive a remarkable competition between the United States, Europe, and China about who is going to be the supplier to the world for the new technologies. And here are some of the technologies that we’ll see playing out this year.

You often hear about how solar technology is not yet economic. But central-station solar power, concentrating solar-power technologies, are now competitive with competitive with conventional electricity plants in areas with significant sun: Spain, the Southwestern United States. There are now 5,800 megawatts of concentrating solar in place and here are the investment pipelines just as of 2007. These are not declining over time; these are just different companies, different projects. Spain and the U.S. are the leaders. The concentrating solar is now growing almost as fast as wind and will be sharply accelerated in 2008.

Another technology that’s going to begin to emerge in 2008 is second-generation biofuels technology. Range Fuels, a project that’s one of the pets of venture capitalist Vinod Khosla will begin to produce cellulosic ethanol in 2008. Five other projects are in the pipeline with U.S. DOE participation. Three of them are thermal-chemical processes and three of them are fermentation processes. DuPont and BP will break ground either in late 2008 or early 2009 on a biobutenol plant. These are all second-generation technologies which will produce far more CO2 reduction per gallon of biofuel than the current corn-based ethanol.

Some of the companies that it’s worth watching in terms of their participation in this area, beyond DuPont and GP and Range Fuels are Syngenta; Delphi, which is playing a role in creating the engine technology necessary for U.S. autos to burn 85 percent ethanol; General Motors and Ford, who are building the cars; Siemens, who was competing with Delphi; TIAX and Vestion, which are both trying to create new engine technologies that will use biofuels as efficiently as possible, green fuel technologies.

There is a mass of companies moving into this field, a mass of young engineers who want to play a role in this, young venture capitalists who see this as the future. And in 2008, this Chinese company, Suntech, is likely to become the largest manufacturer of solar PV in the world. Suntech didn’t exist 10 years ago. Suntech has driven the improvement in the efficiency of solar cells faster than any other company. They went through their initial public offering three years ago; their stock shot up. They are trading, the last I checked, at 63 times earning, which is an absurd price. It means there is a bubble in Suntech stock, but they are going to become the biggest in the world. They are going to become the leader of what I hope will become a competition between China, the U.S., and Europe to drive these technologies forward.

I think someplace in this building, a little later this morning, FutureGen is going to announce the site for their new carbon-capture and storage facility. That will be the first demonstration plant in the United States. It’s an interesting partnership with companies from four countries and eight U.S. states. Several more projects are in the pipeline in the U.S., but there’s going to be a very interesting competition between the U.S., Australia, and the United Kingdom who breaks ground on the first plant.

By 2010, there will be at least four CCS demonstrations in construction. My colleague Pershing and I disagreed on the metro over here this morning whether they’d be in operation by 2012 or 2013, but that’s the right area. This is the beginning of the introduction of the polio vaccine for global warming. If only we had it in place already.

In 2008, you’ll see cost estimates for carbon-capture and storage going up and up and up as the reality of designing and constructing these plants plays out. I hope that after 2012, as we get to plant number five and six and seven and eight and 10, you’ll see the costs coming down and down and down. But carbon-capture is a key part of the strategy for the world to use coal without accelerating warming. And by the way, if you could do carbon-capture for biofuels, you then have one energy source which actually reduces the atmospheric burden of CO2. Since the plant pulls CO2 out of the atmosphere to make the cellulose, if you can then use some of that cellulose to make energy and get rid of the CO2 from that process, you could actually, theoretically, have a CO2-reduction machine. Nobody is proposing this commercially; it’s just the idea appeals to me in the current atmosphere.

Okay, so last subject, the price of beer – Australia is suffering, as everybody knows, from an unprecedented drought: six years, they lost 60 percent of the wheat crop, power plants have had to shut down because there wasn’t enough water to cool them, and Kevin Rudd defeated John Howard in significant part because John Howard had refused to deal with the climate problem and Kevin Rudd said he would. Indeed, his first act in office was to sign the Kyoto Protocol. He was the hero of the Bali negotiations when he arrived having turned Australia on a dime.

This is not an easy challenge for Australia. They are the largest user of coal per capita of any country in the world; they are an exporter of aluminum, which is the most energy-intensive metal in the world. But it was the weather that drove this turnaround in Australian public opinion. So the question is, can that happen in the U.S.?

The Southeastern drought was relieved a little bit by rain over this past weekend, but the Southeastern states are meeting today to discuss their conflict over how much of the water in its reservoirs Georgia can keep and how much it must release to go downstream, particularly to Florida. And Atlanta is negotiating with Tennessee about whether they can build a pipeline for a couple of hundred miles to move massive amounts of water from the Tennessee River down to Atlanta and what the price would be. Tennessee has passed a law explicitly forbidding that. So we could actually see this summer, if this drought takes hold again in the spring and summer as the forecasters are now saying it will, intense conflicts over where Atlanta is going to get the water, not only to assure that there’s water coming out of people’s taps, but they have the water to run their power plants.

That could actually get public attention for this issue. I want to make clear, you can’t attribute any specific drought to climate change, but it’s what the models predict. And the public won’t be troubled by the scientific niceties when there is an unprecedented drought going on and tanker trucks are pulling into downtown Atlanta full of water. So it’s not inconceivable that the weather, be it drought, heat waves, or major cyclonic storms, could play a role not only in the congressional debate in the summer, but in the elections in the fall.

If you consider the range of the presidential candidates, all of the Democrats recognize climate change as a significant problem; all have recommended mandatory federal action. Only Richardson, Edwards, and Obama regularly talk about climate change on the stump. Senator Clinton, a few weeks ago, issued a major policy statement on energy and climate change. You all probably saw when Diane Sawyer had the candidates on to talk to them each about climate issues.

The Democrats were consistently strong on the issue. Senator McCain who has been a leader for seven or eight years was again very strong on the need for action. But most of the Republicans either have doubts about the importance of climate change or resist any call for mandatory action in the United States. So if the issue becomes politically more important in the fall, it is likely to play to the benefit of the Democratic candidate rather than the Republican, and it’s likely to drive that vote in the Senate.

We have one other thing we’d like to do this morning. We also each year pull together a summary of that year’s climate science, and I’ve asked Jonathan Pershing to talk about that.

DR. PERSHING: So I just want to give you four quick vignettes to give you some flavor of the science that’s come out in the last year. I think stay tuned for similar kinds of stories next year. This is more of a retrospective than a prospective assessment. What you’ve got here is a new analysis that was done by the National Oceanic and Atmospheric Administration and NCAR, the National Center for Atmospheric Research, in which what they have done is they’ve begun to plot long-term trends on climate. And what you see here is going back to the 1850s.

The blue and the black line in the background represents temperature. And we’ve done some long-term trend analysis where they did some long-term trend analysis looking at 150-year cycle in the red – so that’s that red line – looking at 100-year cycle – that’s in the purple, steeper – looking in the orange at a 50-year trend, and looking at the last 25 years in yellow. And what you end up seeing is a consistent and significant and regular increase in the rate of change and the kind of temperatures we’re seeing. I think we’ll see more of that. The most recent data available only through the end of November for this year suggests that 2007 will be the third-hottest year on record. It might fall to number four, but only if it’s an unusually cold December, which no one is currently thinking about.

A second story which came out this year – you probably all have seen some of this as well – this was reported from the sea ice data. This particular information comes from the National Snow and Ice Data Center at Boulder, Colorado, also part of the National Oceanic and Atmospheric Administration, and what you see in the orange line is the median average ice cover around the North Pole. You get a sense for the decline here. This is September 25th, 2007, so very, very recently. This is the most significant decline in sea ice that we’ve seen at any point in the historical recordkeeping. Current estimates suggest that we will have ice-free Arctic Ocean as early as 2025. So a staggering rate of change here seems to be projected. As little as three years ago, it was 2050. And as little as eight years ago, it was 2100. So you’re seeing this incredibly rapid increase in the change.

This is a paper that came out of the proceedings of the National Academies of Sciences, reported here in the BBC, which kind of picks up a lot of these stories. And what you see here is that the rate of absorption of carbon dioxide by the atmosphere has begun to decline, we’re not seeing the same uptake from the biosphere – in other words from ecosystems, from trees, from the ocean systems. It’s somewhat more slow than we thought. And consistent with that previous story, we are seeing an increasing rate of concentration growth in the atmosphere. So it’s getting bigger faster and the ecosystems are just not taking as much out. That balance being distorted more than we used to see. This is another new story from this past year.

And then, one last one, just to pick up the comments that Jonathan was making about water, this is a story coming out of the projection from the Colorado River Basin. A series of scientists did an analysis in which what they established the upper river basin. The upper river basin is projected to have a 17 percent decline in water flow with a two-degrees rise in temperature. Two degrees is likely to happen within the course of the next 50 to 100 years.

Interestingly enough, just to take it in the context of the same conversation we’re having in the Tennessee River Valley, what you’ve got here is the water allocation there was made in 1922. In 1922, we had one of the wettest years on record. So if you kind of think about these projections going forward, and you think about your water damages, and the context in the West, which is already facing significant drought, I think the context of Australia may not be too far away to imagine.

We’ll release this particular study early in January, which will have a whole series of stories on the order of 50 of these kinds of things that are significant new events that came out in the last year of the scientific research.

MR. LASH: The reason we did this, this year, despite the fact that the IPCC report came out only a few months ago, is IPCC is a survey of the existing peer-reviewed literature, so it doesn’t cover any of the 2007 science. So this is all since –

MR. PERSHING: Since 2005.

MR. LASH: Since 2005, so I’m sorry; I was wrong. It covers only up to 2005. This is all new science compared to the IPCC. There’ll be, of course, more in the coming months. So questions for me, for Jonathan Pershing, or my colleague Nancy Kete, in the back, please.

PAUL MACKIE: This is being recorded so please just state your name and media affiliation.

Q: Gerald Kerry (sp) with Platts. A couple of things – the U.S. at the plenary session in Bali was booed, which was unprecedented. And I think it’s a reflection that among the delegates that it is a lame-duck administration. Do you think the administration acknowledges and recognizes that it’s a lame duck, and will in fact sort of back away and let the others take the course?

And this is the second question, which I usually hate, is are you guys optimistic or pessimistic about this outcome?

MR. LASH: Let me take the second question first. And I may give Pershing a chance to also answer your first one, because he and I take a slightly different view on this. We were both in Bali, and I came home with a little more negative view than he did.

I remain optimistic because I think there is an astonishing avalanche of technology coming. I think that what’s going to be produced by all that investment we saw will make the digital revolution look like nothing. And the key question for us is not going to be how can we produce energy with less CO2 emissions, but how can we get those technologies deployed fast enough to all the places they have to go? And that’s a pragmatic question. That is not an absolute broad action, and the climate is going to continue to increase the pressure on us to act. So I’m basically optimistic; it’s just is it going to be soon enough.

I think the U.S. will probably sit back and not be a significant player in the upcoming negotiations. That moment in Bali has to have been enormously difficult for the U.S. representatives there. Jim Connaughton had, after all, been out in public saying the United States is a leader. We’re playing a very positive role. And he got the unanimous reaction of the other delegates basically saying get out of our way so we can get on to deal with this problem. Anything to add?

Other question, yeah?

Q: Hi, Carla Davenport at CQ. You’re talking about water shortages in the West and the drought in the Southeast. Do you see sort of that becoming more widespread throughout the U.S.? I mean, areas where normally there wouldn’t be significant drought – what do you see as sort of the water scenario for the U.S.?

MR. LASH: I’ll leave that to Pershing.

DR. PERSHING: The current science is a little bit ambiguous with regard to that. If you take a look at most of the projections, you get some parts of the country in which you’ve got an increase in water, and some which you’ve got a decrease. But I do note that areas that we historically think of as being very wet are preparing for some of the worst.

I was in Minnesota yesterday, which is in the process as part of this Midwest Governors’ Accord in looking at a climate change structure. And one of the things that they’re worrying about is actually inadequate water supply for the farm communities there. You think of the Minnesota region with all the thousand – 10,000 lakes is on the license plate – you get a very different vision than the fact that they might be under water duress.

Clearly, the case is the same in Arizona. The West Coast Initiative, which is this group of Western states, held one of its recent meetings in Tempe, just outside of Phoenix. And the concern there is evident. Water is driving a lot of the debate there. But it’s also driving it in places that you wouldn’t expect quite the same way, like New York City. So you’re getting this phenomenal increase in water stress around the country. I think it will be a big issue this coming year.

Q: Alan Schaeffer (sp), Resort Trades. Do you see any effort to have more water recycling? And do you see anything in terms of population limits or six-and-a-half billion people in the world projected to grow to 8 or 9 billion? Isn’t that all adding to the stress too? What’s going to be done about that?

MR. LASH: Well, it’s certainly correct that one of the reasons that even relatively small reductions in available water are creating incredible stress is because our populations and our economies have grown so fast, whether it’s here or in China, creating enormous new demands. Many cities in the country, as part of their climate policies, are looking at water issues. Atlanta, of course, is looking closely. If you see Australia as sort of a model process, because they’re five years ahead in this issue, virtually all of the major cities in Australia have established alert levels, which restrict more and more uses of water. No watering of lawns; no watering of golf courses; increasing reuse and recycling of gray water and so forth. We’re certainly on our way to that.

To answer your second question, there is no discussion in the climate change negotiations about population issues and I think any effort to raise that would lead to a rapid explosion from countries who would say, we didn’t create this problem; you created this problem. And we have a right to grow in order to improve the lives of our people.

Q: A separate question: What do you see in terms of various economic sectors that are having a major impact on this situation? One would be transportation, and a related one, travel; huge increase in the amount of travel going on worldwide. Transportation has a huge impact. Secondly would be construction and real estate, and third would be any other sectors that are having a major impact in these areas.

MR. LASH: I’ll ask Nancy Kete to answer the travel question. While she’s on her way up here, there is very rapid change in the building sector. There is a premium now being paid in a number of large cities for green space. Energy efficiency in new buildings is just a huge win-win-win opportunity. The energy bill, in fact, had significant new incentives and programs for that. I’ll leave the travel question to Nancy.

DR. NANCY KETE: Thank you. I think the big untapped resource in terms of ways to reduce greenhouse gases and slow the growth in greenhouse gases is thinking about the built environment, particularly in cities and the travel within cities. And a lot of the U.S. cities, European cities, and increasingly developing country cities, are starting to focus on all the ways to reduce the amount of travel that people have to do to move people around and goods around. Now, we’re a long way from this being a ubiquitous set of strategies.

But there’s a whole set of design principles that are becoming the cutting edge in cities in Europe. And believe it or not, right here in Arlington County, it’s a model for transit-oriented corridors. And then Portland, Oregon, and of course, New York City is really the model, because more people don’t use cars there than any other place in the U.S. And European cities are going in that direction. Developers, cutting-edge real estate developers know that if they build along transit corridors. So in terms of travel, it’s actually commuting travel, and local travel that is so energy-intensive.

Then, of course, there’s the air travel for business and for tourism. And I’m going to have to leave it to Jonathan, because I haven’t followed enough where that is going to come under the regulatory regime of the international system.

DR. PERSHING: Two very brief comments on that: The aviation industry is the most rapid-growing sector in the transport of the emissions. The only group to have regulated aviation emissions or to even be proposing it is the European Union. My sense is that that will not pass through the International Aviation Transportation Association meetings, or through the discussions that are held through the international forum that has those negotiations, largely because the U.S. continues to block it, and because developing countries are also blocking it. My sense is, however, that there will be restrictions, which will translate into higher prices into and out of Europe, probably this year.

MR. LASH: A couple of other observations: The biggest short-term opportunity with respect to air travel is actually on the ground – better management of the planes on the ground. The second biggest is better air traffic control. Then, you get to technology changes. The most interesting thing I’ve heard recently is that there are in the laboratories now the gasification technologies for creating liquid fuels from cellulose that would actually allow you to create jet fuels from cellulose. I don’t think we’re going to see that in the next five years. But in a decade, we might actually be talking about a biofuels mix for jet fuels.

Q: Hi, Laura – (inaudible). I’m a freelance for Deutsche Welle. And I’m just wondering if you looked ahead, looking beyond next year. Next year is a political year. Even if you were to elect – they were to elect a Democrat as president, if all you need is a certain number of senators to block action, then nothing would happen from the U.S. And if we look ahead, even though you have this faith in new technologies, how many years does the world have before the system does become self-perpetuating and it’s impossible to really do anything at that point? How many years does the world really have?

MR. LASH: Of course, I don’t know the answer to that question. I’m going to say one thing and then I’m going to ask Jonathan Pershing to talk a little bit about some of the symptoms that we’re seeing that we’ve actually just about run out of time. We’re getting singles that we’re already into the positive feedback mechanisms. I’m just going back to the U.S. map here. There it is.

So you could also make this map dividing up the coal-dependent states from the non-coal-dependent states. And that’s our political problem. The political problem in the Senate is you need 60 votes and it’s very hard to get 60 votes without any votes from senators who are from states that are totally coal-dependent. So the negotiation over the legislation is going to have to provide some assurance to coal-dependent states that they’ll not be complete losers in the process of trying to reduce emissions.

How can you do that? You can do that by allocating some portion of the emissions rights to existing facilities producing electricity – that is, reducing the cost to them of meeting the cap-and-trade. There are a number of environmental disadvantages to doing that, but I feel certain that Congress will use that instrument to reduce the costs for some of the Southeast, and some of the Western states that are highly coal-dependent.

You can also do that by accelerating the construction of carbon capture-and-storage demonstrations, and doing that in the regions that are highly coal-dependent. You can also do that by assuring major investments in energy efficiency that essentially say as electricity prices go up, electricity use goes down, and the impact on the consumer is basically negligible. I think all those things will happen in the legislation. Each piece will be designed to gain one or two more votes. The legislation now is probably only six or eight votes short of what is necessary? But to talk about whether we’ve hit the critical point.

DR. PERSHING: I’d just say one more thing about Jonathan’s comment. Take a look at the orange on this particular map. That’s the Midwest group. Interestingly enough, there are a couple of observers to that group, one of which is Ohio – major producer – one of which is Indiana – major coal consumer and user. I just got a note during the course of this meeting that Illinois has been awarded the future-gen project. That puts us right in the middle now of that orange space. Stay tuned for what that looks like.

I want to come to the second part of your question though, which was very much about what’s too much. There is an interesting debate that has been, I think, raging in the last couple of years around whether or not and at what point we would know if we reached the tipping point. And that, from the scientific perspective, means we end up seeing a very rapid acceleration in the kinds of changes that would be associated to the point where you couldn’t easily slide back. It’s no longer this steady growth. At some point, it just ramps up exponentially.

My own personal sense about this is that we may be in the middle of it. It’s very hard for me to imagine a shift such as the one I showed in the Arctic ice cover, which in one year goes up 30 percent – or cover goes down 30 percent – without suggesting we pass some kind of a threshold. It’s very hard for me to imagine that the kinds of droughts we’re seeing in the Southeast are not a step change as opposed to some small, incremental shift. There is a discussion that’s underway now in Australia that in fact the aberration was not the drought; the aberration was the wet period. And we are now back into a long-term dry period for most of the continent.

Those kinds of things are consistent with what you might see if we were to have shifted. The problem with a shift is you can’t know until after the fact. You can’t tell if you’ve got a distinction between some steady progression and some series of events, or you’ve got some rapid and unprecedented change. My own background is in geology. If you look at the geologic record, it is fraught and full of these intermittent but very rapid changes. Knowing whether those are natural or human-induced is one question. The odds are good that we’re going to see one if we keep going in this direction, whether we’re already there, whether’ it’s at two degrees, whether it’s at one-and-a-half degrees is probably still unknown.

MR. LASH: We probably have time for one more question, if there are any. If not –

MR. : There’s one over here.

Q: Just a quick question. You mentioned – you mentioned a deal that China had with the Congo, was it, to clear some land to grow oil palm. What kind of land are they clearing? It’s not rainforest, is it?

MR. LASH: Yeah.

Q: Does that make a whole lot of sense?

MR. LASH: Well, to an environmentalist, no, it doesn’t. In terms of the climate consequences, no, it looks like a really bad deal. Obviously, economically, to the Chinese, who see oil prices going up and increasing competition for supplies, having supply of biodiesel looks like a good deal. You can’t criticize them too much. Europe has set a biodiesel standard, and that is resulting in clearing of rainforest in Indonesia. And there is a good deal of controversy in Brazil over whether Brazil is going to be able to continue to meet its ethanol targets without Amazon clearing. This is a competition for land use as we grow more biofuels.

So thanks very much for joining us and we’ll see you next year.

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