Remaks to the Business Roundtable CEOs Members Meeting on Climate Change
*** As Prepared for Delivery ***
"Thank you Mike for that kind introduction. I appreciate the opportunity to be here today to speak with you about global climate change and the state of the debate over what to do about it.
"I know this is an important issue for everyone in this room. Whatever solution we ultimately enact, it has to work for America's business community, especially now when so many Americans are struggling to find work and businesses are having a difficult time keeping their doors open.
"I believe we can, and should, take action to reduce greenhouse gas emissions. But I also believe we must address this issue without harming the economy. Congress is capable of accomplishing this, but it will not be done this year. It will take months, not a couple of weeks, to draft and refine any measure that would have such an enormous impact on our country.
"One thing we can do today is enact the bipartisan energy bill that Senator Bingaman and I moved through the Senate Energy Committee this summer. That bill, while not perfect, provides substantial support for developing the new technologies we're going to need to meet our carbon-reduction goals in the future. Providing a price signal for carbon might be part of the policy decisions we make as well, but we must also provide incentives for technological innovation. The energy bill does that without threatening our economic recovery - and just as importantly it's a bill that is written, has been reported from the committee of jurisdiction, and is supported by a bipartisan group of Senators.
"The Energy Committee has also been holding hearings on different policy options for reducing greenhouse gas emissions. It may come as a surprise that we are just now looking at the broader range of options available to us, but at this point, I believe Congress has little choice but to do just that.
"For the past year, and really throughout the history of this debate, we have focused on an economy-wide, cap-and-trade approach to greenhouse gas reductions. And once again, Congress now finds itself in a familiar position: the debate has stalled, and the bills being considered have almost no chance of being signed into law.
"All of us know that bipartisan support is required to pass a bill, but instead of bridging the divide, the current efforts are actually making it worse. And it's becoming apparent that the policy itself is at least partly to blame.
"The main argument for cap-and-trade is that it would create a new market in which economically-efficient and environmentally-compliant decisions could be made. Despite this, the existing House and Senate bills display a clear lack of faith in the ability of a ‘carbon market' to function on its own. Both bills fail to fully pre-empt EPA regulation and include a mountain of new regulations to be imposed on top of a cap.
"If a given policy purports to reduce emissions, it should be allowed to do just that. Additional layers of bureaucratic regulation - which are duplicative, inefficient, or counterproductive - should be taken off the table. And if a policy is not up to the task, either in theory or in practice, then we need to consider alternatives.
"We need to dispense with the blind loyalty to cap-and-trade, or at least not be afraid to question whether it's warranted. We should objectively review the strengths and weaknesses of our policy options and develop a measure that protects both our economy and the environment. The importance of both of these factors is made clear not only by the recession, but also the renewed uncertainty raised by emails, documents and faulty data that have been released to the public.
"Promoting cleaner energy is a laudable goal, but measures to make it a reality must provide a net benefit to our economy. Unfortunately, the bills considered thus far will harm the economy rather than help it.
"I think it's worth our time to broaden the conversation and re-examine some proposals that are habitually left out. I believe it's important to act quickly on climate change - but it's more important to find the right policy. I have discussed my desire to start with a clean sheet of paper, and assuming certain criteria are met, I am prepared to do just that. Clearly it is going to take time to figure these things out, but many of us are trying to do just that.
"This is no easy task when you're confronted with a sense that some don't want this to be an affordable transition - that we must somehow punish polluters. But the challenge presented by global climate change isn't a storybook tale of good versus evil. These so-called polluters are utilities providing electricity to homes and businesses, manufacturers that provide jobs and strengthen our economy, and people driving to work and to school and on family vacations.
"Americans are trying to do these things in the midst of the worst economic situation since the Great Depression. So it makes sense that they're questioning the wisdom of enacting legislation that will, on a net basis, destroy jobs and GDP. Every government analysis conducted on the cap-and-trade bills considered thus far finds these harmful results as a direct consequence. It should be as unacceptable that we would reduce employment and economic strength in 2030, as it would be now.
"But it doesn't have to be this way. Perhaps the most worrisome trend in the climate debate is the view that progress must come at the expense of what Americans are concerned about most -- and it is clear that fixing the economy is their number one concern at this point. This isn't to say that the American people don't care about the environment, but at this point there are things they understandably care about more. Unless our climate policies actually facilitate economic growth, rather than discourage it, they won't become law.
"So how do you reconcile the two objectives of environmental progress and economic growth? What should we put down on our blank piece of paper? One avenue worth exploring is pairing a substantial tax cut with a price on emissions. Academics and economists suggest that climate policy offers an opportunity to improve the efficiency of our tax code and benefit our economy. Instituting a tax on something we want less of - greenhouse gas emissions - would allow us to reduce or eliminate taxes on the things we wish to promote - work, savings, and investment. Rather than increasing taxes, we could change how and why they are paid. Some have called this approach a "net zero tax" or a "tax shift."
"A poll released earlier this month by Hart Research Associates suggests that Americans would prefer a carbon tax over cap-and-trade, by a wide margin. It's not hard to understand why. The respondents were merely choosing the option that promises greater simplicity, efficiency, certainty, and transparency.
"The advantages of relying on the existing tax code -- instead of trying to create a new ‘carbon market' -- are clear. Such an approach could greatly reduce new bureaucracy and administrative expenses. A specific and predictable price on carbon could minimize volatile price fluctuations and could even facilitate greater international cooperation.
"A program that provides net benefits to our economy regardless of what other countries do could solve one of the more vexing problems in climate bill design, which is what to do if we adopt a program and other countries don't follow suit.
"And to the extent that we do seek to link these programs internationally, reconciling a specific price on carbon is far more straightforward than the more complicated task of aligning disparate cap-and-trade regimes.
"Now, let me be clear: I'm not suggesting that cap-and-trade, or any other approach, should be taken off of the table, nor am I introducing a tax reform bill at this point. It's incredibly important, though, that we consider all of our options. A more inclusive debate will allow us to recognize the risks associated with policies that don't match the preferences of the American people or that fail to attain what's in their best interests, and then act accordingly.
"By all accounts, it will be months before climate legislation is brought up on the Senate floor. I believe we should make the most of this interval to ensure that we are developing the best possible climate policy.
"The business community has an important role to play in this discussion. Everyone, I think, agrees that what is needed is certainty. I encourage you to prioritize regulatory and price certainty over the short-term benefits of obtaining free permits. The truth is that there simply aren't enough free allowances to go around. And we know that, ultimately, those allocations will be phased out entirely. If we take the long view, and focus on providing a stable environment for businesses while making progress on clean technology and the environment, I suspect we can find some significant middle ground.
"Thank you for inviting me here today. I'm happy to spend a few more minutes with you answering any questions you might have."
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