Boston Athenaeum; WGBH Forum Network; Impact of Global Warming on the US Economy

Thank you Richard. And on behalf of the Board of Trustees I'd like to welcome you to the Athenaeum. This evening This year marks in fact the two hundred and verse three of the founding of the Athenaeum and from our inception in eighteen hundred seven the Athenaeum has provided. A substantial resources for important historical research. But as part of our mission from the very beginning we have continually sought to provide insight on the most pressing issues of the day as they have evolved over 20 decades. And as John Kirkland who went on to become president of Harvard wrote in 1907 the Athenaeum may be recommended as a place of social intercourse but it will principally be useful as a source of information and as a means of intellectual improvement and pleasure. It is to be a fountain of which all who choose to make gratify their thirst for knowledge. Tonight we are privileged to join in the conversation about global warming. Which I believe is the most critical issue of our day and

arguably for decades to come. Permit me to give a personal example. As a volunteer in a different arm of the environmental movement for two years I've been honored to be a board member of both the Appalachian Mountain Club down the street from here and up the coast of Maine coast Heritage Trust and each of these organizations has done and will continue to do enormous important deeds in the preservation of large land scale scape projects. Four years ago the Appalachian Mountain Club purchased 60 square miles in the north woods of Maine and with the generous help of donors some of whom are here this evening. We are in the process of building what we believe can be the premier outdoor wilderness. Area in the East Coast of the United States nothing until you get to the Rockies compares with what we plan to do in Maine. Similarly at Maine coast Heritage Trust over the last 30 years

we have invested countless amounts of generous donor dollars to preserve 250 entire coastal islands and over one hundred twenty five thousand acres of coastal waterfront and these are remarkable deeds. But if we as a civilization don't take the steps necessary and these steps need to be taken now not 20 years from now to change the way that business is done with respect to the environment not only here in New England but around the world. These philanthropic achievements may have been futile. The 60 square miles in Maine that the Appalachian Mountain Club wants to be the premier ski resort on the East Coast the United States may have no snow. And the 250 islands along the coast of Maine may largely be under water. The effects of global warming are revealing themselves all around the world at an enormous pace. Just this week I read that in South America for the first time we're seeing mosquitoes flies and even butterflies at the base of

glaciers in the high end and many of the cities of South America the capital cities which rely in large part on melt water from these glaciers are running short of water at a time when their populations are growing at 5 percent per year. Today as well the lowland disease of malaria has been reported at elevations as high as two and a half miles above sea level. These impacts of global warming are so enormous that they often give me a headache and the normal human survival response is to say it's so difficult and so enormous that I must put this off and think about something more pleasant and think about that unpleasant thing later. And it is easy to assume here in the comfortable temperate climate of New England sitting comfortably at the Athenaeum a full 75 feet above sea level that global warming is not something that concerns us. But perhaps that's right for now. But as our children and our grandchildren

inherit the problems that we have not solved. I believe that they will bear these costs and they will turn out to be an indictment of our generation. If we do not act. Tonight we are privileged to be able to hear from one person who has dedicated his life and his organization's being to dealing with the global climate change problem. The format for this evening calls for our guest speaker to present for about half an hour and thereafter we will have 15 or so minutes for questions and answers followed by an intermission. So I am delighted to provide a brief introduction for Fred Krupp president of Environmental Defense. Fred comes to this task with the best possible educational training having been graduated from an eminent University in New Haven which is also my alma mater and having graduated from law school at the University of Michigan for nearly 25 years. He has been the leader of Environmental Defense which has approached the enormous problem of

global warming with a unique perspective. Fred will tell you all about this approach in his talk but I want to just mention four of its successes. The first. Is that he has worked with corporations to completely transform the way in which they do business. For example by convincing McDonald's to drastically reduce their production of waste products to working with Wal-Mart to become a major seller of compact fluorescent bulbs working with Duke Energy to invest in wind power and working with Federal Express to operate with hybrid fueled the fuel operated delivery vehicles. Secondly working to win in California a statewide cap emissions from global greenhouse gases. Third launching an unprecedented coalition in this country called the US Climate Change partnership including as members such unusual participants as Alcoa British Petroleum Caterpillar Dupont General Motors

G.E. and others. And finally most recently brokering the biggest buyout in history when the Texas Utility TXU and its new private equity owners insisted that Fred had to sign on their environmental plan before they would agree to buy the company. So these successes come with their admirers and their detractors. And I've chosen is the best summary from an independent source of Fred and Environmental Defense. An article from this year's New Republic a periodical which the Athenaeum probably carries in the room next door talking as follows I will quote two passages The first is Fred Krupp has imported the culture of the deal. To the green movement. He'll work with the GOP oilmen persistent wrongdoing polluters and any other stock environmental bet more are open to sitting down and negotiating. And unlike most

environmentalists he shares their reverence for the marketplace. The author goes on to quote Fred what environmental defense is trying to do is to create markets that give companies the incentive to do the right thing to harness greed. And he says he goes on to explain capitalism is a very powerful thing and in the second quote the article goes on whether supporter or critic. No one denies that in his 23 years at the helm of Environmental Defense Krupp has changed American environmentalism enormously. The question is. The article goes on whether his pragmatic market friendly approach will help to solve to save the planet or just help companies save their skins. I encourage each of you in the audience this evening as a learning experience to use this as an opportunity to form your own point of view which is precisely the kind of dialogue which the Athenaeum has fostered for 200 years. So

ladies and gentlemen please join me and get extending a warm welcome to Fred Krupp. Thank you. Of the. Thank you. HVAC you. Good evening. My message to you tonight is very simple. We are witnessing now an awakening from coast to coast on the issue of global warming. In awakening people are beginning to speak at the same time. We are seeing the greatest opportunity we have ever had to harness the power of our own markets to save

ourselves. I've been at that at this business now as you just heard from Forrest for. Almost 30 years and I can tell you I have never been as optimistic as I am today. Climate change is coming at us faster and stronger than anyone anticipated. And yet I'm optimistic because a powerful approach to solving these problems the use of market forces is gaining strength in Congress. When governments use market forces as they're now beginning to we can alter the dangerous course that we're traveling on. Of hoar of course with all that is at stake. The whole earth. We have simply got to make the right decisions. Right now we are experiencing real political momentum in the fight

on global warming. These issues are front and center on the world stage. All you need to do is go next door into the newsstand and you'll see issue after issue. Cover Stories touting the great green feature story or how to become green. And you know. That these issues are at the top of public mind. But as with anything where a big policy change is necessary. The push is starting in this country at the state level and that's also on global warming where we've seen the most dramatic shift. Consider for instance the change in the political climate in our nation's fourth largest state. Florida before last year's gubernatorial election we were able to get a briefing with then

Governor Jeb Bush. We had two scientists go in to brief him on hurricanes the relationship between hurricanes and climate change and on climate change science more generally. Governor Bush walked away from the briefing noncommittal. And we considered that a big victory. Now insert one election and the transfer of power from one conservative governor to another conservative governor the new leader is Charlie Crist. And the difference is striking. Governor Crist has figured out that swing voters care about climate change and he's made climate change his signature issue. He has issued executive orders to cut greenhouse gas emissions by 80 percent.

He is pushing Washington to act. He's even hanging around at rock concerts with Sheryl Crow. Now you might say well is Chris just an isolated case. Well how about the head of the National Governors Association the Republican governor of Minnesota Tim Pawlenty who is sought to be a contender for the vice presidential nomination on the Republican side. He was elected in a highly competitive state of Minnesota and he recently said this about climate change. We have a federal government that doesn't seem to want to move as fast or as bold as many of us would like. It turns out that pushing Washington to act on climate change right now in this country is just good

politics. And that's true whether you're a Republican or Democrat. And I could go on to mention and I guess I will. Governor Otter of Idaho lingo of Hawaii rel in my state of Connecticut or Arnold Schwarzenegger all Republican governors who have figured out which way the public is heading and who are also impatient for Washington to finally act. Now how about the Republican conservative Republican governor of Utah Jon Huntsman. He's recently finished filming a TV commercial for Environmental Defense calling on Congress to go ahead and cap set a mandatory legal limit on greenhouse gas pollution. I'd like to show you the ad if we can get the technology here to work.

Of course that's my computer waking up. You know when you. Get rid of that right well with any luck. Climate change. It's a test of leadership. Solve it. And we help free America from its addiction to foreign oil. Bring new jobs and exports. And clean our. Ignored. And we're in real trouble. In state after state. We are taking action. Now it's time for Congress to act. By capping greenhouse gas pollution we're leading. Now it's their turn. Elaine. You all.

Now there are many Democrats who want Congress to act too such as governor Brian Schweitzer who you just saw there and is waiters the governor of Montana. But I've chosen to emphasize the Republicans because for me it's the real evidence of how far this issue has moved in the last year. Now in Congress though the conventional wisdom has been that climate change liberal Democratic issue. And I think we've turned that wisdom if not quite yet on its head it at least on its side. There are now more than 50 senators supporting some type of economy wide national cap and reduction of greenhouse gases. We are finally within reach of a filibuster proof 60 votes. So why are people like Senator Liddy Dole the pity me of mainstream conservative thinking in this

country. Beginning to sign on to a very serious global warming bill. I think part of the answer lies in the fact that Senator Dole just finished serving as a term leading the campaign effort for the Republicans in the Senate. And in addition to her thoughts on the merits of the issue I think she knows some of the same things that we at Environmental Defense have found out from a recent poll that we did. We asked voters in the forty nine most hotly contested House of Representatives swing districts how they felt about global warming. Three quarters of independent voters surveyed say Congress should pass legislation that cuts carbon emissions. A majority said they would be more likely to vote for a candidate that supports strong green climate legislation. Big majorities do not accept the

excuse that America should wait for China to lead. And most are afraid that Congress will be to do too little on this issue rather than afraid that Congress will do too much. Those are not the results for the Democrats. Those are the results for the independents swing voters in the most closely divided districts which by the way represent the old 11 swing states in the presidential sweepstakes as well. In short being against action on climate change now is not good politics. I'm not going to stand here in front of you and say that we're quite at the point where it's the climate stupid. But I don't think any more it's very smart to be against action on climate change. I think lawmakers also realize that the next generation of voters care

deeply about the environment. They were straight this I'd like to tell you a story about Congressman Bob Inglis Bob is a very conservative congressman from perhaps the most conservative district in the state of South Carolina which is arguably the most conservative state in our country. And he is now a passionate convert for strong action on climate change. And asking him how did this happen. He tells the story of his son in college aged son who after the last election. Said Dad I voted for you this time. But you're going to have to be first strong environmental action if you want my vote next time. And the congressman got the same warning from his teenage daughter.

Talk about needing to protect your base. So what kind of policy is bringing the left and the right together a policy that guarantees environmental results of a strict cap on greenhouse pollution but achieves those results with flexible market means of implementation. And using the market is not just a way toward conservative support. It actually is a very effective way to solve environmental problems. A cap and trade system used to reduce acid rain produced results faster and cheaper than anyone imagined. In 1900 environmental defense essentially wrote to Congress President Bush Bush 41 proposed and Congress enacted the clean air amendments of 1990. Those amendments have cut Sofer dioxide pollution in our country and half

what the law did is it set a declining cap on hundreds of power plants. But instead of saying that they all needed to use one method it gave companies the choice about how to reduce pollution. They could install scrubbers. Pay customers to become more energy efficient use less electricity. They can switch fuels. Or even pay another company to reduce its emissions by more than the are required. So long as there were no local effects of the emissions trade just weeks after the bill became law the head of our nation's largest public utility Richard Carr came to me and he said Fred you know when you were we were on the same council advising Bush 41 he said when you were suggesting to me

and suggesting to the president that he adopt this proposal. Frankly I I thought you'd lost it. But now just a couple of months after the law's been acted I've got dozens of proposals on my desk for how we can cut Sofer emissions by more than the law requires. Why. Because this law for the first time made cutting pollution profitable. Now as consumers look for green products and even green companies there's another market force at work. ETF has worked with Fedex for example to open up a competition for truck suppliers that will produce that delivery truck that's cleaner. Twenty bids came forward when we did this four years ago and the result is a delivery truck that reduces pollution particulates pollution by 90 percent nitrogen pollution

by 70 percent and the trucks go 50 percent further on every mile a few diesel fuel their Queen and their efficient FedEx has bought hundreds of them and they've said that they plan to convert their entire fleet of 35000. Incentives have been the engine of our economy for ever now. I think we can learn something by looking at prizes which are one form of incentives. Consider the offer that Richard Branson made He's the head of the Virgin Group where he's now offered a 25 million dollar prize to anyone who can would move a significant amount of greenhouse gas pollution from the atmosphere defined as a billion tons of carbon dioxide every year for a decade. Like the 10 million dollar X Prize that was awarded for space travel in

2004 Branson surprise was inspired by the British Parliament in the 18th century. Now the British Parliament offered a £20000 prize for whoever could solve one of the great technological challenges of that day which was for a ship at sea to be able to figure out how far east or west it was what what its position was in terms of a longitude. The experts all decided that the answer was in more precise measurements of the constellations. The winner of the prize was a clockmaker named John Harrison. What he did was he invented the first cock that was able to work in the middle of the rough ocean with all its salt and humidity. So the captain could now tell what time it was when the sun was straight

overhead at noon. He would know what the time was back in Greenwich and the time difference unable the calculation Harrison's triumph to me shows that innovation can come from unexpected sources. And that is exactly what the market does. It unleashes innovation and that is why to solve a problem as big as climate change we have to use the market. Branson has 25 million dollar gambit is just a start. The real money is going to come when we place a legal limit a declining cap on greenhouse gas emissions. In two thousand and six. Netflix offered a million dollar prize to anyone who could devise an algorithm to a better algorithm for their company to find out what movie their customers would

enjoy based on the customer's past film passions. Within days a whole array of people from all around the globe jumped into the competition producing spectacular results for Netflix. New York Times economics columnist David wee in Art wrote at that time that there are two essential advantages of prizes. They reward nothing but performance and they ensure that anyone with a good idea not just the usual experts can take a crack at a tough problem. We an art says that a cap on carbon will be like offering a stream of mega prizes to those who can come up with innovations that we need to curb global warming. Yes incentives have been the engine of our economy for ever and it's about time we re tune that engine so it produces not just economic prosperity but also environmental

prosperity. And that's exactly what we were in Warner bill pending in from the Senate would do. But with all this momentum why haven't we already passed a bill on climate. And I guess the answer is that passing a climate change bill is such a fundamental policy change in Washington that it's in historic task. The economic forces at work opposing change make this a very tough and complicated effort. There is no shortage of voices right now counseling the way some on the left want to wait. Feeling that a better Congress will be here in a couple of years. And some on the right are wary of the costs of putting a law in place. I think both objections are based on bad math. Hoping for a better Congress ignores the

scientific and political realities that we face on the politics. I know of no commentator that expects we're going to end up with a 60 liberal environmental votes after the next election and whatever the current political winds are the United States will remain a closely divided nation in the Senate where you need 60 votes to even open debate. It's going to take an approach that appeals to stakeholders in order to win the day and to risk losing the current momentum we have by holding out for another two years. I think it is very dangerous. Consider this if the Lieberman-Warner bill were enacted in 2000 and next year then it would put us on a course to lower emissions by about two percent a year. If we wait just two years and enact a bill in

2010 to see to achieve the same level of reduction by 2020 the relatively near term that I think is most important to achieve the same web over adoptions we would need to reduce emissions by four and a half percent a year. Because of the delay I think that will be a much harder lift. The worst thing we can do for our economy and our environment is do nothing. But the second worst thing we can do is to do weigh the costs and danger the possibilities of losing momentum. All mean we should act now. But that brings us to the objections of the conservatives. They're concerned that a cap on greenhouse gas emissions will harm our economy. I think the facts though weed us in precisely the opposite direction.

If we kept greenhouse gases we have a chance of having the United States selling products around the world selling products to the Chinese and the Europeans rather than ultimately ending up in the reverse situation. Of course the complaints from the right also ignore the fact. That it will cost an enormous amount if we do nothing climate change will be incredibly costly to our economy. We're going to soon release a groundbreaking study on the economic cost that was managed by an economist named Dr. Nat Cohan on our staff. He synthesized all the models that predict these things and they tend to be very conservative models. And he's looked at what the costs of something like that we've been Warner bill would be based on this overly conservative models and found that not just one model but the consensus of the models is the

cost would be less than 1 percent of the GDP by 2030. Even household electric bills where the impact would be greatest would increase by less than $10 a month. Put another way under business as usual without passing a law. Our GDP will double to about twenty six trillion dollars by 2030. By January of 2030 if we pass a law like this the GDP is projected still to double. But instead of January we'd have to wait till February or March or maybe early summer. That analysis doesn't even consider all the savings that will come from acting. Now Paul Volcker the former chairman of the Federal Reserve I think put it best he said first of all I do not think taking action on climate change is going to have that much of an impact on the economy overall. Second of all if you don't do it

you can be sure that the economy will go down the drain in 30 years. What may happen to the dollar what may happen to growth in China or whatever pale into insignificance compared with the question of what happens to this planet over the next 30 or 40 years if no action is taken. For me though the most convincing evidence is the companies who are voting with their wallets. I can assure you that major companies like General Electric John Deere BP and others who have joined the coalition to fight for a cap on greenhouse gas pollution and declining capital would not be doing so if they thought it would harm the economy. So the next time someone says to you that global warming bill will hurt the economy I suggest you ask them if they think they know more than the head of General Electric. I believe we are they truly fortunate moment in our history

just as science has alerted us to the unprecedented environmental consequences of our actions. There's been an international awakening of environmental responsibility and a practical realization of the power of market forces to solve big problems. This timely new awareness I think will as I've said help us use our own markets to save ourselves. And I invite you to join with me in working on this whether it's by calling your senator or your congressman whether it's by becoming financially involved. We need all your help and it really is a way as Peter Goldmark said recently a way to connect yourself with something of historic importance. This is one of those moments in life when action can not only make a difference. It can

change the world. In ways that are more valuable than any fortune on earth. And each of you here in this room is blessed because that power that I'm talking about that power is in your hands. Thank you so much. Of. Thank you Fred for that exposition on this important problem. At this point as I mentioned we would be delighted to spend 15 more minutes taking questions for Fred to answer on this particular topic I don't know if we have microphones to pass around the room and if not I would ask you to raise your hand to be

prepared to speak loudly in this large hall. So why let your body in the bar. Yes. A. Or. Oh.

Sure. Well first of all we have all the technologies we need in the car arena. We can make cars today that go 50 60 miles per hour all we need is the. The regulations and the will and get the prices right. I'm happy to tell you that I think we are going to have action on that issue in Congress maybe maybe even as early as next week. Nancy Pelosi's talked about passing an energy bill which will raise fuel efficiency standards not enough. I don't think anywhere near enough for what needs to happen but at least there will be action. In terms of the specific question you asked about diesel. There have been those in the car industry that have lobbied for a relaxation of our air pollution rules on fine particulates so for nitrogen in order to get more fuel efficient diesels. We have said no. We don't have to trade off air quality for fuel efficiency

and now finally we are seeing diesels enter the market that meet all of our modern air pollution standards. So that may be one of the answers but there are many technologies that cars could be way more fuel efficient. And I'm happy to see that Congress is about to act on that. A lot. But. Up. Up. Here. Yeah. But. But. But. The question is can I compare the effect of the Department of Defense to everyone turning their thermostat down or driving a little car. Is that it. Yeah well we need the Department of Defense and for that matter every unit of government to be more responsible and more fuel efficient and use less fuel

there's no question about that. But it turns out that everyone driving cars is you know roughly about 30 percent of our total nations and missions so it does dwarf the emissions from the Department of Defense. So if we doubled the fuel efficiency is very possible in our. The cars we use it it would have a huge impact but we need to do it all the thing about global warming is we need 80 percent reductions by 2050 from America. We need 50 percent reductions at least globally that's what the scientists are telling us. So we're going to have to harvest those reductions everywhere we can including tropical rain forest. Which Today emit 20 percent of the current emissions of greenhouse gases to our atmosphere through deforestation. So we have to get policies that will effectively convince Indonesia and Brazil the Congo to reduce their deforestation and emissions by the way not many people know so maybe you'll be interested to know that China and

the United States now are numbers one or two or two in one. China is in the process of passing the United States is the biggest emitter of global warming pollution. Number three is in fact Indonesia. Number four is Brazil predominantly in both of the latter two cases from deforestation. Oh. The article in The question is that the emissions from ships in the Wall Street Journal were said to be greater than that from vehicles. The Wall Street Journal reported that in Europe and some other places where sulfur emissions in particular have come under control that the sulfur emissions from the cheap residual oil bunker fuels that ship's burn are soon going to pass that of all sources and you are not even just cars.

And this is been something that environmental defense has been on the forefront of campaigning for much cleaner standards for trains and locomotives for ships. In our own ports and for international ships and recently I think yesterday I wrote Steve Johnson the head of our. U.S. EPA a letter urging him to act right now. To put standards in place that ships from anywhere in the world that want to use our ports. Have to clean up. It's really an outrage that ships at sea have not yet. Cleaned up theirs. There is no excuse. No I do not believe that ethanol fuels are today's ethanol fuels made

from corn in this country are really a good answer to cleaning up the environment. It's kind of a shell game in that it takes almost as much fuel to grow the corn as it does to. As you would use if you just burn that fuel so. There's little gains and we convert crop land that could be used to grow food instead. For that purpose. However if instead of just blindly requiring more and more conventional ethanol I think Congress could help by instead putting into place a system that moved biofuels to become much more efficient. Low carbon fuels and so you Assoc ethanol and other forms of a new generation of biofuels could actually make a significant contribution so I think we need to paint with a little bit of a finer brush that what Congress has proposed so far is

not particularly helpful in terms of global warming what they could do if they got the policy right could be helpful. Me. I. I. I. Well you're absolutely right. Population is tremendous part of the problem and it's just part of the math. The more people you have you have to multiply that by the pollution each of each one of us is responsible for and that gives you the total emissions. I don't farm on defense from time to time we have foundations and donors who have asked us to get involved even dangled significant sums of money in front of us. And. We have not by and large because it's not our special expertise there's other

groups working on these issues that I think I have more confidence in so rather than take someone's money I've directed them in other directions. I will say though that the hopeful news on the population front is that in many countries. The birth rate has gone way way down. And while we still will add billions of more people to the world it's the result of that of the people that have already been born kind of growing up and having one or two children themselves and that's I think probably going to be built into the system. But a lot of the tough work that's been done to educate people about choices and population has been successful so now I truly believe the bigger challenge is to get the consumption that each of us is responsible for to be cleaned up. I think we can consume. But it's got to be a much cleaner form of energy that we're using. Yeah.

Why. The. Us. Yes we have a hundred for nuclear power plants in this country and they produce 19 percent of our electricity. And you are right as I heard Bill McKibben say the other night. While. The risks of global warming are known. The risks of nuclear power are risks a little more uncertain and the risks from global warming are pretty certain. But Bill was not advocating Bill McKibben was not advocating we build a lot more nuclear power plants because in his mind they are costly and more reductions could come from other sources. I would say for Environmental Defense that the problem of global warming is so serious we need every option on the table

including nuclear power. I personally would like to see some of the remaining problems with nuclear power. What do we do with the waste. Solved before I'm going to go out and say we should be building more of them. But I would be willing to be constructively involved. And have my organization constructively involved in actually trying to solve that problem rather than just saying No never. Yeah. It. Now. The. Al Gore. I don't think Al is going to run but he has made a substantial. Contribution on this issue there's no question about that. The the question is which of the declared presidential analysis has the best

presidential candidates has the best thought out environmental policy and viral defense is very nonpartisan and we are not going to endorse any candidate. We're going to work with whoever gets elected. I would say though that as this election goes on I would expect. All of the candidates will be enunciating more specific global warming policies. And we have been able to spend hours with almost all the candidates. And I am hopeful. That we're going to basically be like a hedge fund here. And no matter who wins. We will be in a lot better shape. Than we've been for the last six years where sadly President Bush has not shown the leadership this country is needed on the global warming issue. I. Mean.

Each. Year. But you know. I. Just. Oh yeah. You. Know. What. Peter Goldmark he's been a lot of years in this city and was the head of the New York New Jersey Port Authority in the head of the Rockefeller Foundation he is now the head of environmental defenses climate change program I'm sorry for not giving you his identification he's been working with us for a few years and he's a wonderful leader for us. You. Know. Oh. So. The.

So the question is what is the accounting profession doing about recognizing cos on financial statements. I would say that thanks to the work of Ceres and other organizations the Carbon Disclosure Project companies are more and more being gaining to disclose if they have big emissions of carbon because there's a financial viability that their shareholders should be aware of. We don't think they've gone far enough under current S.E.C. rules we think this is a real financial liability. So with Ceres Environmental Defense has recently filed a petition with the Securities and Exchange Commission asking the FCC to clarify the law. And to make more specific the requirements that companies do disclose what their emissions are and what their plans to deal with this financial liability as well as obviously environmental liability are. So I agree with you and we are working to make it happen with.

With series. Yes. Oh. It. Is. But. Why. I know. So the questioner has started by. Congratulating me for some work I'm not to repeat all that but I thank you for it. And also.

Asked whether we can get the accounting profession. To stop recognizing the validity of the oil depletion allowance. And second of all whether we can get a governor elect Schwarzenegger to put into place a long term gasoline tax. Depletion allowances is something that I think accountants will recognize as long as Congresses allows them to. And we absolutely should try to level the playing field for all different sources of energy. Actually that's what a cap on carbon would do in part. But there's many other subsidies too as you point out in terms of a gasoline tax. I would say this that we do need to get the prices right. A cap on carbon net declines over time and makes the oil companies pay for permission to for their products to be burned and sell those permission slips with their product would have an effect to

raise prices or at least get the oil companies to be buying offsets for. Of carbon reductions equivalent to the amount that the cap would need to decline. I think it's a more practical. Way. In our country for you to get the price signal that you want and hopefully by having a market signal as opposed to a government tax that price rise would end up being modest because it would inspire innovation. There's a company I am writing a finishing a book now that come out in March. And in it we to tell the story of a company called amorous which is making it. Proposes to make jet fuel. Bigger and there was a lot of innovation that happens if you cap. The carbon content. Yeah.

I. Woke. Up. Oh. I. Hope. I've said in my talk that we should. The questioner asks Why does Environmental Defense believe that the Warner when we were in Warner bill is sufficient to the problem when the scientists tell us we need very strong reductions by 2080 at the essence. So by 2050 by 2050 the scientists tell us in the United States we're going to need to reduce by 80 percent the Lieberman-Warner bill calls for a reduction in

2050 of somewhere closer to 65 or 70 percent. Clearly less than 80 percent. Why would Environmental Defense be for that. Who Lieberman-Warner bill calls for 20 percent reductions by 20 20 which is relatively good. Good amount of reductions in the early years since right now were gaining 1 2 percent every year. So instead of gaining perhaps 15 percent between now and 2020 we would if we passed this bill cut by 20 percent. A difference of 35 percent. That's what we focus on the long term signal is important but frankly between you and me between now and 2050 Congress is going to amend whatever we pass 18 times. So I focus on what's going to happen here between now and 2020. But it's not just environmental defense which is said this is a good bill and a good

start. The Natural Resources Defense Council the National Wildlife Federation the Union of Concerned Scientists. And many other major environmental groups the National Wildlife Federation have all said let's get this bill out of committee and I'm happy to say this morning. The new chairman's mark was released. The hearings will start next Wednesday. We think we have the votes to get this bill out of committee and onto the Senate floor next Wednesday night or next Thursday. Here to work. I. Know. You. Are. I would say that the question is what. What price will be necessary in order to achieve the goals and we've been Warner a lot of people who have looked at this problem believe that

we're going to need a fairly high price in Europe now the prices up to 30 euros which is well with the price of the dollar it's quite a lot of dollars isn't it. But I am not one who thinks that message is necessarily true. I think once it when asked in the case of acid rain that 50 percent cut. Was achieved it 10 percent of the cost that people predicted because we unleashed the forces of innovation. So once we say we're going to have a legal limit on how much of this waste gas you can throw into the sky a legal limit that the Quine does every year. I think we can unleash the forces to reduce the cost and I'm not sure it's going to be anywhere near as high as even with the current prices in euros. The trick is to have the political will to enact a legal

limit. Nowhere in the world have we ever solved an air pollution problem. Without having a legal limit on how much of this waste we can throw into the sky. And that is why we absolutely need to cap carbon and when these bills start flying in the Senate and Congress and it's all complicated remember this if it's not a real legal limit it's not good enough. Oh. Yeah. Yes. The question is are there responsible elements in the Chinese government to have a dialogue. Yes China is moving a long way. China is has you know caught up to us in its greenhouse gas emissions will pass ours. There's no question about that they are dedicated to economic growth they still have hundreds of millions of people in poverty and there's no question they're going to achieve more

economic growth. But there are many forces within the Chinese government Chinese society that run the country who we are in serious dialogue our chief economist is a fellow named Dan Dudek and he was the real brilliance behind the whole emissions trading system on acid rain. And he's now spending six months a year in China. But we have a team of 10 Chinese nationals working with us in China. We've been asked by the Chinese government. To set up the same limits on sulfur dioxide in cap and reduction program there that we worked here on with both the Bush and Clinton administrations. So they not only get that they have to control their emissions they also get that. Using market forces to reduce the cost because they don't have money to waste is a good idea they understand markets by the way in China. The Bali meeting is coming up in just the first and second week of December. Every year the

nations of the world get together and the question is what it what will happen. I don't have a crystal ball but I can tell you that we're hopeful that there will be a nother step in constructive progress to get us closer to an agreement. I don't think internationally the world is going to agree. Until the United States acts because to ask your up in these other nations to go very far very fast without the United States right now the only industrialized nation in the world not acting is the United States we used to we used to say Australia wasn't acting with They've had a change in government and the new government is going to put in place a cap on greenhouse gas emissions we are the last outlaws. We have. We are the linchpin that is why we are blessed to live in the United States because we can help get Congress to move on this. We can help do it we can do it next year. It won't happen without

everyone deciding it has to happen but it can happen. And it needs to happen because without the United States will make a little step forward in Bali I'm sure of it but there won't be a new international agreement on the Kyoto Accord ends in 2012 there's no obligations under Kyoto after 2012. So to renew that international agreement. Let's all work together to get Congress off its duff. One was of the.