Financial Markets

President Bush today announced  in the Rose Garden new national goals: to stop the growth of U.S. greenhouse gas emission by 2025.

He said :

I have put our nation on a path to slow, stop, and eventually reverse the growth of our greenhouse gas emissions. In 2002, I announced our first step: to reduce America’s greenhouse gas intensity by 18 percent through 2012. I’m pleased to say that we remain on track to meet this goal even as our economy has grown 17 percent.

As we take these steps here at home, we’re also working internationally on a rational path to addressing global climate change. When I took office seven years ago, we faced a problem. A number of nations around the world were preparing to implement the flawed approach of Kyoto Protocol. In 1997, the United States Senate took a look at the Kyoto approach and passed a resolution opposing this approach by a 95 to nothing vote.

The Kyoto Protocol would have required the United States to drastically reduce greenhouse gas emissions. The impact of this agreement, however, would have been to limit our economic growth and to shift American jobs to other countries — while allowing major developing nations to increase their emissions. Countries like China and India are experiencing rapid economic growth — and that’s good for their people and it’s good for the world. This also means that they are emitting increasingly large quantities of greenhouse gases — which has consequences for the entire global climate.

So the United States has launched — and the G8 has embraced — a new process that brings together the countries responsible for most of the world’s emissions. We’re working toward a climate agreement that includes the meaningful participation of every major economy — and gives none a free ride.

Then he discussed several related issues :

To reach this goal, we will pursue an economy-wide strategy that builds on the solid foundation that we have in place. As part of this strategy, we worked with Congress to pass energy legislation that specifies a new fuel economy standard of 35 miles per gallon by 2020, and requires fuel producers to supply at least 36 billion gallons of renewable fuel by 2022. This should provide an incentive for shifting to a new generation of fuels like cellulosic ethanol that will reduce concerns about food prices and the environment.

We also mandated new objectives for the coming decade to increase the efficiency of lighting and appliances. We’re helping states achieve their goals for increasing renewable power and building code efficiency by sharing new technologies and providing tax incentives. We’re working to implement a new international agreement that will accelerate cuts in potent HCFC emissions. Taken together, these landmark actions will prevent billions of metric tons of greenhouse gas emissions from entering the atmosphere.

The crucial role of new technologies in addressing climate change  :

We must all recognize that in the long run, new technologies are the key to addressing climate change. But in the short run, they can be more expensive. And that is why I believe part of any solution means reforming today’s complicated mix of incentives to make the commercialization and use of new, lower emission technologies more competitive. Today we have different incentives for different technologies — from nuclear power, to clean coal, to wind and solar energy. What we need to do is consolidate them into a single, expanded program with the following features.

First, the incentive should be carbon-weighted to make lower emission power sources less expensive relative to higher emissions sources — and it should take into account our nation’s energy security needs.

Second, the incentive should be technology-neutral because the government should not be picking winners and losers in this emerging market.

Third, the incentive should be long-lasting. It should provide a positive and reliable market signal not only for the investment in a technology, but also for the investments in domestic manufacturing capacity and infrastructure that will help lower costs and scale up availability.

 

And the unique contribution of the American people :

The strategy I have laid out today shows faith in the ingenuity and enterprise of the American people — and that’s a resource that will never run out.

 You can read the full announcement  with related background materials here.