THE BLOG
12/23/2008 05:12 am ET | Updated May 25, 2011

A Federal Cap-And-Trade System: More From The Summit

The Governors' recent Climate Summit afforded many opportunities to hear directly from the decision makers and thought leaders in finance, industry, NGO's and government as they relate to the environmental well-being of our planet and people. Below are a few firsthand interviews as recorded by Paige Donner at the Govs' Summit in Beverly Hills.
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Cap-And-Trade: From Patchwork to a Federal System

Paige Donner: What can the U.S. learn from Europe as we move towards a Federal Cap-And-Trade system?

Henry Derwent, CEO, International Emissions Trading Association, (based in Geneva): I think there is a great deal that the U.S. can learn from the steps that have been taken towards the creation of trading systems in Europe and also elsewhere in the world.

Europe has made a lot of mistakes. The UK, which started an emissions trading system before the European Union got folded in, made mistakes as well. The good thing about the U.S. is that it can learn from those mistakes and avoid them. It's not just the EU, either. There's a really impressive emissions trading system at the national level which has been put together in double-quick time in Australia.

There's a very interesting, rather radical system, which has been put together in New Zealand and the New Zealand Prime Minister will probably make some amendments to that.

In Japan and Canada they've got loads of emissions trading systems. You will be able to watch how the patchworks that are there are coming together into Federal systems, perhaps a little in advance of what's going to happen here. In the U.S. you've got systems already in operation, of course in the form of RGGI [Regional Greenhouse Gas Initiative], the Northeastern states' system and indeed the Chicago Climate Exchange which is a voluntary but very effective private sector system.

It's good to see that at both a public and private level, you've got organizations developing -- people who just sit down and sort of say, well, why is it done like that or why did that happen? Is that just market circumstances or was there a design fault there? That's where we're all going.

PD: What hurdles do you foresee for the U.S. as we take our patchwork system to a Federal Cap-And-Trade system?

Henry Derwent: Firstly, I think the timing is going to be really quite tricky. It's great to see that California is moving ahead very fast. It's great to see that the N. Eastern states, the RGGI system, has already got past its first auction and is trading there. It's great to see that the Western Climate Initiative, in particular, is moving pretty fast and maybe taking some of Canada and Mexico with it.

All these are a little bit different and a task for a Federal system, for which there was a very clear indication from Pres.-Elect Obama today [Nov. 18th] that a Federal Cap-And-Trade system is one of his priorities, the task is going to be made rather more difficult when it's a matter of trying to take existing systems which are all a bit different and blend them together.

So, I think there's going to have to be some careful and diplomatic consideration of how things might come together down the track, even while people are preparing to make state-level and multi-state-level systems work for the next two or three years.

The other way of looking at the question is at features of the design of trading systems which are being experimented with or talked about here, which make some of us a little bit nervous, and which may make it more difficult in time to bring together a U.S. system with other emission trading regimes across the world. And that's the ultimate objective, is to get a global market here, because that's the most efficient provided it's well-structured and well-regulated.

There are some features that are being put into design manuals here which are definitely not in the Europeans' minds, and may give pause for thought. The action of price caps and the possibilities they actually create for players in the market to play the system. The decisions that are being taken about allowing banking, borrowing, and the size of the free allocations and therefore the shifts within the economies of the costs that's imposed in one direction rather than another. All these are things that you have to think about from the perspective of a final outcome that is fair and is also capable of being extended on a global basis.

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Regional Leadership To Combat Global Crises

Paige Donner: How can a focus on regional leadership help solve the Climate Change Crisis?

Dan Pellissier, Deputy Secretary for Energy Policy, California Environmental Protection Agency: Regional leaders are able to have conversations that national level governments may not be ready or willing to have.

You get folks who are smart, are concerned and have a good handle on the issue set and you can bring them together and try to get people to work together in ways that their national governments are either unable or unwilling to do as part of the broader Kyoto-imposed process.

It's easy for California to talk to a Mexican state about making improvements or partnering than it is for the United States to talk to Mexico about doing it because there's a whole other layer of diplomatic complication at the national level.

This has been a big group effort. The Governor asked Linda Adams [Secretary for Environmental Protection, California] and her team to put this conference together and it has been about two months of furious effort, and long hours. It's quite an effort when you have attendees from dozens of countries.

We focused on the key emerging countries. That's why we have China, Mexico, Indonesia, India and Brazil. We have economies that are just starting to pick up. Those are the ones that are going to have the most impact in the near and medium term. There are smaller countries that are further behind in the development cycle where the issues aren't so burning how they make their investments.

This is really all about making investments in the next level of infrastructure and certainly in energy. Such as what kind of power plants are we going to build? Are we going to build ones that have lots of emissions? Or are we going to build ones that have no emissions? It's really about how we make public investments. And a cap-and-trade system is essential to making this all work.

Here, in the United States, are we going to continue to invest in roads that have single or maybe two passengers in a car that you drive yourself or are we, in the next generation or two, going to be making investments in rail? Are we going to be making investments in buses and things where we can collectivize people? So while we talk about individuals buying CFL lightbulbs and higher-mileage vehicles and that kind of thing, at this level we're really talking about how do we spend billions and billions of dollars, not tomorrow but over the next two generations?

PD: How attractive was the fact that California is such a leader in environmental issues and our Governor as well?

Dan Pellissier: For decades California has been a leader in a whole range of cultural, political and economic ways. This is just the latest version of it, how people look to California for leadership. Governor Schwarzenegger has done a great job of seizing that mantle. He's working hard to make sure that Climate Change is part of his legacy as California's Governor.

We had a situation where you had folks looking at California and then when they looked here they saw a great leader like the Governor who is talking about an issue that is of importance at a time when there was a vacuum of leadership at the national level.

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Natalia Anderle, Miss Brazil 2008, Ambassador for Sustainable Development, United Nations Association, Brazil

Paige Donner: Why is Climate Change such a pressing global issue?

Natalia Anderle: Climate change is reaching an unacceptable level. Not just for the poorest populations but for the world in general. This is why I'm happy to be here at the Global Climate Summit that has gathered the world. It's important for us to take responsibility. Politics is necessary but so is pragmatism. We all have to make some changes. CO2 emissions are getting higher. Nature isn't liking it and is responding with violence against humanity.

Brazil's Biofuels and Energy Independence

Paige Donner: On our path towards energy independence, how can the U.S. emulate what Brazil has achieved in this regard?

Mario Garnero, Chairman, BrasilInvest Group and President, United Nations Association, Brazil [Brazil's "Godfather" of Ethanol] I'm the dinosaur of ethanol. Of course there are two very different realities between Brazil and the States. It proves that biofuels are viable and could very well represent not a substitution for oil but a sort of compensation for the oil problems caused by the oil emissions and by the oil civilization. Ethanol can extend oil; It will be a solution that in Brazil is definite but in the States will be only an ancillary one.

So even though the situation between Brazil and the U.S. is quite different, California can be similar to certain states in Brazil. Our land is not competing for food production. Only 2% of our arable land is used for ethanol production from sugarcane and other derivatives. We are using the byproducts to improve the quality of production. Ethanol is not a substitute for oil. The government must take the lead. The private sector can be led but can't take the lead.

Read More: Energy Victory by Zubrin

Read CNN Article Here
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Deforestation = CO2 Emissions

About World Wildlife Fund

Carter Roberts, CEO, WWF: Our logo is a Panda. We're the largest conservation group in the world. We work in a hundred countries around the world. We started looking at nature through the lens of saving specific species like Pandas. We realized really quickly that you can't save pandas without saving their habitat. And then we realized quickly that the habitat is also important for people.

And now in the 21st c. we're realizing that we're ultimately going to fail if we don't deal with these big global issues, like climate change which is destroying these places we care about.

WWF is working in capitals in Europe, and on the ground in 100 countries including in the heart of the Congo, in the Amazon, in Indonesia... we're working with Heads of States and Governors. We're working with The World Bank, working with multi-national corporations, working with all the major players around the world to solve this problem because Tom Friedman is right, the world is flat, and it's all connected. And if you don't combine on-the-ground work with policy work, with economics and work on markets with these players, we're probably going to fail.

So WWF's mission is to build a future in which people live in harmony with nature. Climate change is a big part of that. And a particular area that we care about is the hidden secret of Climate Change which is that 20% of CO2 emissions come from deforestation. So when you include that, Brazil and Indonesia rank in the top five emitters in the world because of the cutting down in Amazon and the cutting down in the heart of Borneo. We're working to make sure that forests are included in the global agreement in Copenhagen and that the markets that develop recognize credible forest conservation projects around the world.

We are working closely with the Nature Conservancy and other players on advancing these models and bringing them into the Cap-And-Trade system.

Paige Donner: How would you describe this Summit convening regional leaders of emerging nations from around the globe?

Carter Roberts: This meeting is quite extraordinary [Govs' Summit]. You've got Governors, not heads of state, but Governors, from different countries from around the world including California, which is obviously a leader, but, from the Amazon, from Indonesia, from China, from Mexico, who are beginning to work together and make the type of transitions we need to make to solve the Climate Change Crisis.

What's interesting about it is that you normally would think that international negotiations or international solutions are all about Heads of State talking to each another. It's a sign of the increasing devolution of power to local levels in emerging democracies around the world and in other countries. You've now got Governor Schwarzenegger and his colleagues talking directly to Governors. It's also a sign of the role that these regional players are playing in innovating solutions to climate change but also the type of exchange of money, technology, credit, the creation of markets, and beginning to invent the right way to do that, so that these international negotiations can learn from that, incorporate that into the international agreements we end up with. So it's an important conference.

It's the Dream Team when you've got Governor Schwarzenegger who has set the standard for how states can pull every lever, legislative levers, investment levers, public policy levers, to move California in the right direction. And now you've got a new leader on a national stage who wants to do exactly the same thing.

What we saw this morning symbolized what we're going to see in the United States -- what has been action at the state level, moved to the Federal level. And the Federal level is going to learn from the state level new models of how to approach the problem.

The standing ovation that President-Elect Obama received, said it all. There's an enormous sense of promise, in spite of the hard times that we face. But he gets it that climate change is an economic issue. And it needs to be a cornerstone of the economic stimulus package that he's going to create.

PD: If this were to be convened in another 6 months, what other countries might be included?

Carter Roberts: Certainly countries from Europe, Asia, Africa, Latin America... they're all part of the solution. So, if you repeated this conference in six months, you'd want even broader representation of the big emitters around the world. And you'd want those governors whose states or provinces are hotspots to making the transition to a low-carbon economy. It's cement in China, it's manufacturing in India, it's energy production in China, it's forest management in Indonesia and Brazil.

This conference is a great first step. The Dream Team is not just President-Elect Obama and Governor Schwarzenegger, it's also the Governors of the states in the Amazon, in Borneo, in China.

And from a later press release, Carter Roberts: "President-elect Obama's emphasis on the central role that federal cap-and-trade legislation will play is particularly important. U.S. leadership on climate and our success in combating climate change will rely on smart, effective cap-and-trade legislation, and it is very encouraging to know that the President-Elect plans to make it a top priority."