The United States and the Future of Global Governance: Tackling Climate Change

This session was part of the CFR Symposium on the United States and the Future of Global Governance, which was made possible by the generous support of the Robina Foundation.

JESSICA MATHEWS: Welcome, everyone, to the fourth session of the CFR conference on the United States and the future of global governance. My name is Jessica Mathews. I have the pleasure of being the moderator for this session. I'm president of the Carnegie Endowment for International Peace in Washington.

Could I ask all of those who haven't heard this already before, who have just joined us, to turn actually all the way off all of your devices because the emanations interfere with the sound system.

I have a distinguished panel here. We're going to talk for half an hour and then turn the discussion over to you. On my far left, Bill Antholis, managing director of the Brookings Institution; next to Bill, Paula Dobriansky, senior internal affairs and trade adviser at Baker & Hostetler and former undersecretary of state for Democracy and Global Affairs; and next to me, Michael Levi, David M. Rubenstein senior fellow for Energy and the Environment here at the council.

If I can, I want to take two minutes to frame this discussion, as I see it. There are, I think, two or three things that make climate a unique kind of international problem, a unique sort of difficulty. The first is not just international but for any kind of policymaking is the fact that because of the long lifetime of many greenhouse gases in the atmosphere -- particularly carbon, but others as well -- and because there is so much inertia in the climate system so that it takes a long time to re-equilibrate as greenhouse gases are added to the atmosphere, there is always a lot more change in the pipeline already committed to than the system is experiencing at any given moment. And that problem is also a terrible problem for national policymaking. It defines a class of problems which the policymakers are singularly ill-equipped to deal with. It means that they always have to be casting their minds several decades ahead and asking their constituents to cast their minds several decades ahead. This is really hard to do. And when you're trying to do it internationally, even harder.

Secondly, this is a mostly unique problem where the past contributions as almost entirely a result of one set of countries and the future contributions is almost entirely the set of another set of countries. Very rare division of problems. And as a complicating factor, it's obviously a huge one.

And finally, and this is the thing I think is least understood about this issue and is really quite interesting and should be for our discussion, in particular, this is an issue, a very rare kind of global issue, which is absolutely global in its consequences but in its causes, 75 percent of it, roughly, plus or minus, is due to eight political actors. We've got 186 countries that are going to be affected, but really only eight of them matter in a large sense in terms of causation, so the U.S., China, the EU, Japan, India, Russia, Indonesia, Brazil.

And there are 100-odd countries whose contribution is probably really negligible. And that obviously raises what will deeply affected by it. So that obviously also raises questions about the kind of forum in which this issue should be tackled and the kind of mechanisms for tackling it. And those are the kinds of issues, I think, that this conference was designed to try to tease out.

So let me start by asking the panel this question. Because I'd like, if we can, to at least stay out of the weeds of U.S. domestic policymaking -- who is for the Waxman-Markey bill and when is the Senate going to act (and stuff ?) -- as our focus should be international.

But I want to ask the panel this. Is there anyone on the panel that disagrees with the assertion that it will take concrete evidence of U.S. action on this issue, not declaratory, not R&D and not a future commitment, but a present commitment to act to reduce emissions as a prerequisite for meaningful international agreements?

Everybody agrees we need U.S. action? I mean, that's a really important -- it seems obvious, but it's a really important statement about where we are and --

MR. : (Inaudible) -- elaborate a bit. Weak but clear legislated action in the United States is vastly preferable to ambitious hortatory action in the United States. In other words, a joint resolution of Congress that's just a resolution that has a very high level of ambition is not nearly as good as a troglodyte piece of legislation that's passed.

MATHEWS: Okay.

PAULA J. DOBRIANSKY: I'd also, Jessica, I'd add, though, to what you said. I think that what the United States does matters greatly. But I also think, if you look at what our members of Congress are saying, they also, they're looking at the broader picture. The broader picture meaning we will move forward, we will act, but we also believe for the end result, having a treaty and an agreement, that others have to move forward as well and make commitments. Because if you only have a certain percentage of countries globally, you're not going to be effectively reducing greenhouse gas.

MATHEWS: We will get to that, but I think I just want the audience to realize that we just said something important about the nature of global cooperation on this issue. There are not that many issues where what is going to be a major political leap by the United States is required for international action. This is rare and important.

Okay, so let's talk about the right forum. I've asserted that there are eight political actors that matter -- I'm calling the EU one country for this purpose -- and 186 countries out there. Given that, what's the right forum?

Mike.

MICHAEL A. LEVI: There is no single right forum. I think you've framed it correctly in saying that there is this set of eight countries that are responsible for about three-quarters of global emissions. Whenever you try to draw the line in any specific set of countries, you're going to (call ?) the political map with the next ones that you leave out. So I think we need to tackle it in a variety of different forums.

We have an existing global process through the U.N. Framework Convention on Climate Change that exists, and we have to deal with it because it's there. We have what was started as a meeting with major economies, now the Major Economies Forum, so some 17 countries. I think that's an important piece of the puzzle because it includes the developed and the developing countries there. We have a grouping like the G-7, G-8 where I know there have been some discussion at previous sessions here about its irrelevance, but there are common interests there, and as you described it, there's one set of actors in this problem that will have to play a very different role from the others of the developing countries. So that is still useful in coordinating action amongst the developed countries.

And we'll also see things in institutions that aren't specifically about this. So through the World Bank, for example, that will be an important place to look at assistance for developing countries -- (inaudible).

MATHEWS: Let me pursue that. In terms of -- you can talk everywhere, but what about actions, actual negotiations?

LEVI: Well, I wouldn't equate action with actual negotiation. Fundamentally, action is going to come from the domestic processes in each of the countries.

MATHEWS: Okay, but international actions.

LEVI: International actions -- I think the Major Economies Forum, in the long term, is probably where we will see most of the action, that and bilateral relationships.

MATHEWS: Paula.

DOBRIANSKY: I would first start with the premise, as Michael did, you have the U.N. Framework Convention on Climate Change. This is a global issue. Emissions are global. And that provides a forum in which all have a stake in the discussions that take place.

Secondly, the Major Economies Forum, as it's now called, I think does provide a very important mechanism which feeds into the U.N. Framework Convention. And it is not only discussions but ultimately negotiations, how and why? To just take it a little further, the 17 nations are all comprised together, comprise 80 percent of the world's greenhouse gas emissions, 80 percent of the world's GDP and also 80 percent of the world's energy production and consumption.

Practical issues, and let me give one, the issue of measurements, the standards by which we use to measure greenhouse gas emissions is not uniform. And in trying to determine implementation and trying to determine what plans countries advance domestically, that kind of specific detail matters greatly. And it's a practical forum like that, the Major Economies Forum, which could really advance that discussion and, I think, come out with some tangibles that will make a difference to negotiations, for example, in that area.

And let me just add one more. And the one more is Michael mentioned and you asked about practical areas. I'll give an example of a different part of the world but which there's been a very big focus on because of climate change, and that's the Arctic. There's the Arctic Council. There are regional entities which have undertaken efforts in terms of research and in terms of practical programs which, I think, are instructive and by which you can draw lessons from.

MATHEWS: Bill, can you do this without undermining the UNFCCC?

BILL ANTHOLIS: Huge question. I think the effort right now through the major emitters group is to try to do it in a way that's complementary and hands it off to the UNFCCC to ratify, endorse, wrap their arms around, and works on sort of side issues. And I don't want to sort of minimize them but, you know, everything from standard measures to the narrow points of adaptation because some of the big issues in the global context, which are very real issues, are not included in those eight, or those eight are not necessarily the ones most in need of adaptation. You've got sub-Saharan countries or Bangladesh or the like.

But I want to come back to eight because I would actually steer it in an even smaller direction than the major emitter group. And I like the number eight. I wrote an article called "The E-8" with Todd Stern. And Todd now is responsible for the major emitters group which is more than eight. And the reason that I like eight is because we have to understand this from the context of other broader global governance challenges like the intersection of the climate regime with the WTO, the intersection of what we're going to do on climate change with the global financial crisis.

And what you really need are a smaller number of countries and, quite frankly, a smaller number of heads of state taking it above the climate-negotiator level. Because once you get into the deep efforts to address these issues at the domestic level, you start running into the other hard politics on trade, on generally managing the macro economy or finance flows and other things.

So you know, to the extent that you start getting down to technical details and start expanding the number of people, it's harder to lift it up and do those other sets of hard issues, you know, (border ?) tax adjustment. Does this mean that in order to get a working climate regime you're going to undermine a shaky WTO regime? That's something climate negotiators can't be responsible for. That's something heads of state have to be responsible for.

MATHEWS: Well, climate negotiators can be directed.

ANTHOLIS: Right.

MATHEWS: So did you answer my question? I mean, does moving the primary locus of decision-making into a small group of countries undermine the universal aspect of this and, in particular, the prospect of getting eventual cooperation from 186?

ANTHOLIS: It doesn't undermine the universal aspect, but it does undermine the universal decision-making. It's like determining law in the United States in a Senate-House conference or in a Congress-White House narrow negotiation in the Roosevelt Room or in the Cabinet Room as opposed to trying to actually write legislation on the House floor, which is what we tried to do through the UNFCC which totally doesn't work.

MATHEWS: Okay, just for the -- I shouldn't have used the acronym without explaining it. UNFCCC is United Nations Framework on Climate Change, the entity from which the Kyoto protocol springs.

LEVI (?): Or is rooted in --

MATHEWS: So let's talk for a minute --

LEVI (?): -- a treaty-based organization ratified by George Herbert Walker Bush.

MATHEWS: Right, but one could say that that was a framework and had no content, it had no commitments. It was a framework, an important framework, but it didn't move us.

Before we go to Copenhagen, let's talk about U.S.-China. U.S.-China are somewhere between 42 (percent), 45 percent of the global emissions. And China is a particularly important one in the domestic context because it looms so large in the minds of those who say we can't act because if China doesn't act it's worse than doing nothing. So do we need a U.S.-China agreement pre-Copenhagen in order for Copenhagen to succeed? Let's start with that.

Bill, why don't you -- we'll start at the other end here.

ANTHOLIS: Yes. But I think we have to understand what the terms of that agreement are going to be. I think that China has to not only -- in the terms of the agreement on the Chinese side, there has to be an acknowledgment that climate change is a problem but China itself going to at some point take a commitment to act under the framework convention, and that is a very high bar, but I think one that is going to be needed if Copenhagen --

MATHEWS: I'm sorry. By commitment to act, do you mean a commitment to particular goals or a commitment --

ANTHOLIS: Yeah.

MATHEWS: -- to undertake measures?

ANTHOLIS: Yeah, a commitment to, yeah, undertake measures, not a target, not a specific greenhouse gas-reduction target nor a particular timetable but that they will become obligated under the international framework to reduce or abate emissions.

MATHEWS: And so you --

ANTHOLIS: To the extent that not only do they not do that, they won't even entertain a conversation to that.

MATHEWS: Well, let me ask Paula and Michael if they want to add on that.

DOBRIANSKY: Well, I would have answered your question a little bit differently. I think that China matters in this, and China must be part of an agreement. But this comes back to your first question about the instrument. I think, again, this is a global issue. We have to have a global agreement. And you have to have all the players undertake responsibility and commitment, and China is part of that.

So I would not venture to have and I interpreted it to mean a separate agreement with China up front. But what I would do is to engage China very practically, and not just only China, India, Indonesia, South Africa, all of these countries that are defined as major economies -- the world has changed since 1990 and the birth of the U.N. Framework Convention -- and to actually look at ways of assisting them in growing their economies, but doing it in a way that's environmentally responsible. I think you have to look at it in providing some incentives, but also you want the results, the results that you mentioned in terms of actual commitments from those several countries.

MATHEWS: Do you see moving into that forum before December, before Copenhagen?

DOBRIANSKY: The Major Economies Forum has been meeting, it's continuing to meet. And I think one of the specific purposes in fact is to engage in practical terms with these countries on those issues, not just only China.

ANTHOLIS (?): Let me build on what Paula said. This is not just about, what is the set of countries that we engage with? But it's, who are we working alongside to engage them? The question isn't, should the United States work to make a deal with China, or should the United States work to make a deal with China and one with India and one with Brazil? That almost assumes that the United States can solve this problem by itself, at least from the sort of rich-world perspective.

There's no reason to believe if China needs incentives to really deliver, and I think they do, that the United States is going to come up with all those incentives by itself. It makes much more sense, I think, for us to be working with the Europeans, to be working with the Japanese to bring China, to bring India into this. And that's why I come back to something like the major emitters or an E-8, a smaller group, but one where it's not the United States going from being seen as not a real player in solving the problem, just thinking that it's going to solve the whole problem by itself.

MATHEWS: Okay. But we have a date to show up in Copenhagen in seven months. So what are you all saying about the prospects for action in Copenhagen?

LEVI (?): Well, I guess the way I would put it, and particularly with respect to the question that you asked before about China and what's needed of China, if the theory is the United States has to pass domestic legislation in order to have a strong hand, in order to deliver a real meaningful agreement in Copenhagen, one of the critical elements to get the swing votes that will get you either to cloture at 60 or to a passing of that legislation at 51 in the Senate is some sort of sign from China that they are going to act so that we are not acting by ourselves and unilaterally disarming in terms of competitiveness.

The substance of that claim may be right or wrong, that we would be at a competitive disadvantage if we acted and we didn't. But the political optics are such that for swing Senate votes in industrial states, there needs to be some signal from China that eventually they will be part of this regime ratified at the U.N. It is still iconic to have a U.N. agreement, even if the negotiations happen in E-8 or in an emitters group or something like that.

DOBRIANSKY: I think the end results is what we agree on, but how you get from here to there, I think that the multilateral forum of what you're speaking, the Major Economies Forum, is the vehicle to do that rather than just the separate individual or separate discussion or negotiation with China. That was just the point that I'm making here. They matter and the others matter.

MATHEWS: Just to pause here a little bit, that's still a big and difficult group.

LEVI (?): The major emitters.

MATHEWS: Yeah.

LEVI (?): Yeah.

MATHEWS: And China, I think, so far has been a good deal easier to deal with on a bilateral basis than it is when it's with any of its G-77 partners. And the Group of 17 has a lot of G-77 partners in it. So realistically, does the direction that Paula and Michael, at least, are advocating mean failure in Copenhagen?

ANTHOLIS: I think the barriers to success in Copenhagen -- well, first, let's define what success in Copenhagen is.

MATHEWS: Fine, define.

ANTHOLIS: Okay. If success in Copenhagen is every country makes significant commitment either to specific emissions (caps ?) in the developed world or to really ambitious policies and measures in the developing world plus a whole suite of financial and technical support for that, we're not going to have that in December. We saw the U.S. proposal come out for its negotiating (text ?) a few days ago. And it consists -- they're doing incredible work under a tight time line. But it consists mostly of things like fill-in financial incentives here. We're not close to having -- I mean, there's a (literal close ?) -- we're not close to having that sort of agreement in Copenhagen where we're going to have all those pieces.

Now, can we have some kind of framework plots where we get goals lined up, where we get some of the basic parameters, that we continue negotiating and looking for a broad international agreement while we work at the same time amongst the smaller groups? I think that's a more realistic potential outcome and one that I think you may be able to deal with the smaller group and then expand it to the bigger one. But if it's going to be the fine details, I think that's going to be a very hard objective to get to.

DOBRIANSKY: I'll agree.

LEVI (?): Yes. You can already see the Danish Environment minister that's responsible for the meeting, Connie Hedegaard, just in the last month and a half, her expectations, she's setting expectations in a different place.

MATHEWS: So do we need -- is this just a question of kicking the can down the road, extending the UNFCC to the negotiating horizon? Or do you all see a post-Copenhagen move to where the center of gravity of international negotiation really has shifted?

ANTHOLIS (?): I'd say there's some benefit to conceptually kick the can down the road as actually a substantively smart thing to do, which is to focus on a long-term target. We have had a little bit of focus in previous international negotiations, particularly in the last few years of the Bush administration, which I think was a positive step to keep people focused on 2050 as a signal point for the global environment and the things we need to do to get to that point. This always looking five years out and trying to coordinate domestic action in sort of five-year bursts and increments doesn't give, I don't think, broad publics as well as governments the long-term perspective that we all need.

And if you get that long-term perspective and an agreement wrapped around that, then you can back out of that the midpoints that you need to hit. And my own advice would be your top achievement in Copenhagen is to get that long-term perspective.

And the short-term benchmarks that people are used to looking at -- what is your target and timetable for 2012 or 2020 or whatever it might be -- I would view easier, lower-hanging fruit that people should go after. Much of the focus has been on carbon. Other than water vapor, there are five other major greenhouse gases that we can actually do something about. And some of those have very short-term high impact for low dollars -- black carbon soot which drives the melting of both Arctic poles and the third pole, as it's referred to, the Himalayans -- (inaudible) -- a lot of icepacks, glaciers. A lot of that is driven by black carbon, not to mention methane and nitrous oxide, the man-made greenhouse gases.

So one could imagine an agreement at Copenhagen that was both long term and short term and not middle term which is where a lot of its focus has been on. And I think that actually could be a successful negotiation.

DOBRIANSKY: I would say that I think we need an outcome that is truly substantive. I think a long-term global goal is one that provides a kind of framework that oil could work with. I think that also what's important here is really not just looking at the Copenhagen meeting, but it is the outcome. Wanting and being desirous of an outcome, which it seems to me what is happening now, it's moving in that direction -- it's moving in that direction -- and that is getting truly an agreement that's environmentally effective and I'd use the word economically sustainable.

Let me add a different piece in the mix, which you mentioned earlier and I wanted to reinforce, is the point of adaptation. I think it was very significant in Bali that the issue of adaptation was put up on the same level of the discussions on mitigation. Why does that matter? That matters greatly here for also the issue of other countries, developing countries that would like to have resources invested in such a way that would bolster their capacity. That is going to matter greatly in this discussion. And I think that that's the piece that also there really needs to be some movement on in tangible ways.

LEVI: Let me quickly pick up on this point of a long-term goal because I think it's part of it, but it's not all of it. It's extremely important and much more difficult than a lot of people imagine. Because once you pick a meaningful, long-term goal, it implies that everyone who is a big emitter will have to do a substantial amount. That's why people are so allergic to a -- (inaudible).

But the competitiveness issue which is so important in the politics of this domestically needs to be dealt with on a short-term basis. Your long-term plans do not tell you whether you will be shifting the competitive playing field significantly with your short-term actions. So we need to combine the long-term view when it comes to aggregate global emissions which is what matters from an environmental perspective with some sort of agreement that lets countries feel like they are not giving the shop away on a competitiveness front in the short term by tilting that playing field.

And that can be perhaps a little bit easier to get our hands around because we can focus on the handful of sectors that are critical on the emissions-intensive, trade-exposed front.

MATHEWS: I'm not sure I followed that. You're agreeing with Bill that the right place is to keep your (eye ?) focused as the short term and the long term and forget the middle?

LEVI: No, I'm agreeing with him on the long term, but I'm saying on the short term you can't forget about carbon dioxide because that is where the competitiveness issues come up.

MATHEWS: Okay.

LEVI: You simply can't -- (inaudible).

MATHEWS: All right. We'll come back on how real this competitiveness question actually is. But let me ask a different question first, which is, how much of the change that needs to happen can the markets carry?

ANTHOLIS: Which markets?

MATHEWS: Economic markets. (Laughter.) What other kind of markets are there?

LEVI (?): In this discussion, we talk a lot about carbon markets. And then we talk about the basic financial markets.

MATHEWS: Let's say this. How much of the needed international change can be driven by the right pricing partner?

LEVI (?): Setting the price is -- what's the McKenzie rule? Eighty percent of the problem can be solved by focusing on 20 percent of it? Setting the price of carbon is critical. But getting that right is not something one should do too quickly, right? That's the challenge of getting legislation passed before Copenhagen. Is a price going to come out of this process?

How that price is felt across the economy depends an awful lot on how you set up your emissions plan. So I mean it kind of goes to the cheeky phrase, which market? You know, are you optioning permits, are you allocating permits? That sets up a couple of different markets. There's, you know, a bidding market and then there's a secondary market and all of that.

MATHEWS: But if you're right, most can be done by the price of carbon. Then if you follow the "KISS" rule, that suggests -- keep it simple, stupid -- that suggests an international direction quite different from Kyoto.

ANTHOLIS: I'm not sure. Look, I think the basic framework that could come out of Copenhagen probably won't, will probably come out of some meeting after the 2010 midterm elections, is essentially a Kyoto-style agreement that will be based largely on a U.S. carbon market that becomes the, you know, the Treasury Bill standard for the world, right. This goes back to what I said in the first little bit of discussion, which is a bad piece of legislation in the United States is absolutely better than something large in ambition but that doesn't actually have real legislation behind it. People will believe a U.S. price signal, whatever that price signal is, more than the weak price signal that currently exists in Europe.

MATHEWS: Let me just interrupt this discussion. I want to hear from Paula and Michael on this. But you've mentioned legislation as opposed to regulation, but we now are in a different situation where the Supreme Court has said the EPA has the legal authority to regulate carbon emissions. This sets up with an administration willing to exercise that authority a very different situation because the rest of society can look at the discussions on Capitol Hill and say, would I rather have a piece of legislation, or would I rather have EPA making regulations? So there is a certain framework here that did not preexist. So when you say legislation, do you say legislation specifically? Or are you also including regulation as an --

ANTHOLIS: Regulation would send the price signal. The question about regulation is, how credible is -- is Congress going to come in and be so angry at the way the regulations were set that they set a different price? It won't be as stable over time. The administration says, in principle, they're open to a regulatory path. I am a little bit doubtful of that.

MATHEWS: Let me ask Paula and Michael this. If you want to use markets as much as you can, if you want to use the price signal as much as you can, what is the simplest way to get international agreement that relies heavily on the price signaling?

Start with you first, (your league ?).

LEVI: Well, it's not clear to me that you're going to have international carbon markets in the near term in any very broad sense. So when I ask the question, which kind of market, I really meant that because I think that the key will be for each country to unlock the potential for investment from private flows into clean energy in its own markets. That may be through carbon markets and carbon trading. It may be through other incentives that are provided.

At the international level, setting up carbon markets, the simplest thing is, of course, simply for each country to take on a task and then to agree that you can trade permits between them. The problem is that in the process of negotiating those caps you're essentially divvying up enormous amounts of money and in ways that would be extremely hard for Congress to agree to and where the integrity may be ultimately compromised if one or another countries ultimately bows out. So I'm not sure -- that's the simplest way of doing it, but I don't think it's effective.

MATHEWS: Paula.

DOBRIANSKY: Well, I was deferring to him first because of my own view on this is focusing more on the international rather than on the domestic. My impression is is that I think this is really an open question and for the reason and the way because of what Michael just said. I think you have different countries grappling with what they want to do domestically, how then they could come together internationally. Does this particular mechanism fit within? There's then skepticism, is this the path that should be pursued internationally? Is it verifiable or accountable?

There are others that are looking at other ways and means. So well, you know, (Pax ?) is out there, which has been discussed. Some have put on the table sectoral approaches and how you start and look at internationally sectoral approaches. So when you posed the question, I was thinking I don't think I would prejudge it yet. I think that right now there's a very debate and very good discussion about what is out there and what are the best means of coming together globally but also providing flexibility domestically.

MATHEWS: Okay. One final question before we engage everyone on this. It has to do with trade. Somebody suggested -- maybe it was Bill, I can't remember -- how real do you see the threat to the WTO from protectionism masquerading as green concern? How real, in your view, is the threat given the number of things that can't move? Emissions from buildings don't move. Emissions from transportation don't move. How real is this? Should the concern be recognizing the domestic political optic on this? How much do we have to worry about the long-term health of the international trade commitments from this issue?

ANTHOLIS (?): I think it's really quite real, depending on if there is legislation. What pieces -- I'm focusing, for the most part and originally -- I'll start with something on a very narrow thing and then talk more broadly. The narrow thing that's out there is, in the debates about domestic cap-and-trade legislation, a recommendation by some power utilities and electrical workers. So you've got unions and companies in agreement that there should be essentially a tax on goods made in countries that have not adopted Copenhagen commitments or Kyoto-style commitments if the U.S. makes such as a commitment.

So China, India, anybody else that's not in the agreement would have to essentially buy emission permits in the United States when they import a good into the United States. And they, the people that are putting this forward, say that it's WTO legal. But my own view is that it's not. And so what you're likely to have is a trade dispute based on that with developing countries coming in, saying, yes, the WTO allows exemptions for environmentally sensitive issues, products, but we have a global agreement on how to address the climate, and it says industrial countries have to act first, and developing countries don't have to act until industrial ones have acted.

So in other words, people dug into the WTO will say, we've already addressed this. People trying to pull together a climate agreement say, we haven't. And a clash is likely.

There are three or four other things that could also lead to conflicts -- subsidies or allocating emissions permits which make it cheaper for come companies, essentially they get energy rebates which are, by WTO standards, not necessarily legal as well. And quite frankly --

MATHEWS: And sanctions.

ANTHOLIS (?): I'm sorry?

MATHEWS: And sanctions.

ANTHOLIS (?): And there's already protectionism built into the current system, you know. We are subsidizing ethanol in the United States. We have a very high tariff against ethanol from places like Brazil. Disputes are coming through the WTO on those things. If the disputes are resolved in the WTO in a way that undermines support for climate action in the United States, that could be bad for both regimes.

DOBRIANSKY: I wanted to take this from a slightly different angle. Having been in Bali, I remember very distinctly that the Indonesians held for the first time, the time that the U.N. Framework Convention meeting was going on -- in other words, you had all the environment ministers -- you had, at the same time, a meeting of finance ministers and, for the first time, a meeting of trade ministers. The outcome of that meeting of trade ministers happened to be the United States and the EU came out with a declaration, and the declaration was, let's take tangible steps to adhere to the World Bank list of, you know, environmental goods and services and eradicate and, you know, literally eliminate the trade barriers. It was a pretty significant statement in this area that came out in Bali.

I think the unfortunate thing is after that happened, which was a very strong statement -- and there had been issues in which the United States and Europe have not come together on -- after that statement was made and the next Doha round took place, it was unfortunate all of this has been stalled. This is an area that, I think, is an area that does matter. It can make an important contribution, particularly to countries in need that are desirous of access to clean, efficient technologies. And it would be a step, I think, in the right direction, both from the standpoint of protectionism as well as really showing strong environmental stewardship.

LEVI (?): And that's absolutely right. Let me just pick up quickly on the trade measures question. We need to be clear. The big energy-intensive trade-exposed sectors like steel, cement, aluminum, this is a few percent of the U.S. employment. Now, it really matters a lot to those people, and we shouldn't be doing things that are going to, you know, be disastrous for individuals without helping them out. But we do have to keep it in that context. This is a very small fraction.

The other important piece of context, most of those imports in those areas do not come China, do not come from India, they mostly come from Canada and Europe. And in some cases, they come from Russia. In the case of chemicals, they come from Trinidad. But it's, for the most part, other countries that will probably take at least as strong measures as the United States.

Which brings me to the last point which is we shouldn't just think of this as something that we may do to others. This is not an American invention, this is a French invention. And we should remember that if we legitimize this, we may not like what comes out of it.

ANTHOLIS: We actually stole the idea from the French, which is utterly ironic.

MATHEWS: Let's open the discussion, please. And there are microphones. And if you would, introduce yourselves.

Right here in the front. And if you wouldn't mind, if you could, direct it to maybe one person just so that we can get more discussion going.

QUESTIONER: I was going to go for the whole panel but I'll -- (inaudible). Tracy Walston Kroft (sp) at Goldman Sachs. You opened by saying a precondition for success at Copenhagen is concrete action by the United States. I'd like to submit that one of those concrete actions has to be clarity around the financial support that the developed countries are going to have to articulate to the developing countries. Two parts, a, would you agree with that? And b, how would you characterize what the minimum financial support is that is necessary in order to have some agreement at Copenhagen around that?

MATHEWS: Okay, fair enough, because I was going to ask the same question. So let's see if we can -- (inaudible).

DOBRIANSKY: Well, I'll jump in on that. First, I think, because I even referred to the point of adaptation and its importance of having emerged. That's what that's about in many ways, financing for building capacity. In this regard, I think that it is essential the United States, the developed world, the international financial institutions -- but having said that, I don't think that there is a panacea in one single fund. You can't have one fund that's going to address needs globally.

So that brings you to the second which is, how do you integrate these issues into broader development strategies. Like we have the Agency for International Development -- when you look at on-the-ground, country-by-country, how you can help other countries like small-island states be able to deal with deforestation issues where the issue of the forest is actually contingent and important for their own livelihood, and how you balance conservation issues with the economic needs.

So the second piece would be, in terms of, literally, I would say, a completely integrative strategy of looking at these issues in terms of the kinds of aid and assistance that we give to other countries. It's not purely just a fund, in my view.

MATHEWS: Mike.

LEVI: Tracy, I think you're absolutely right that this is going to have to be a critical piece of things. But part of the problem is that to sort out what kind of financing needs to be provided -- and I agree with Paula, this is going to be a wide variety of strategies -- but to sort out the kind of financing that needs to be provided, we need to have a discussion about what these other countries are going to do. And as long as we're -- the political dynamics are tricky. Because as long as we're not saying what we're going to do, we are going to be very shy about asking others what they are going to do. And as long as we don't ask them that, we can't have much of a serious conversation about financing that. So this is part of the sort of jam that we're in.

I'd say as we sort out our domestic legislation, one of the key parts will be this offset mechanism. So I said I didn't think a simple answer to carbon markets was going to work, but there are some more complex answers that may be quite relevant. Right now, for example, in Waxman-Markey, previously in Lieberman-Warner bill, you have these schemes where you can buy offsets from other countries for actions that they take. We need to craft that very carefully to set up the right kind of financial incentives. The way it roughly looks in Waxman-Markey right now basically says anything you do that takes you below what we call business as usual, you'll be able to see it to a carbon market. At least that's how EPA has modeled it out.

If we do that, we are not going to be able to provide enough support to make the things that we need to have happen happen. What we need is a sort of a more of a package deal where we get countries like China to say, we're going to do this much of the low-cost stuff by ourselves. And the deal is that we'll commit to do that if you help us pay to do more through these kinds of financing mechanisms. That's the kind of deal that we need to have. We need to make sure we have that in mind as we build our domestic legislation or else we can really undermine our foreign policy objectives.

MATHEWS: I have a very politically unacceptable view in this, which is that I think most of what is said and thought about adaptation funding is a complete illusion. I think a certain fund or funds is going to be necessary for political reasons. But if we're looking ahead 20 years and ask, how much of the necessary change did the developed countries bear for the developing countries? Moreover, if you ask me to say, in 20 years, what will be the most important adaptations? I think it would be female literacy, family planning and health because the people that are going to, you know, die first, they're the poor. And what do we know about poverty? It's the most important thing in female literacy.

You know, one of the problems with climate is knowing local impacts is very hard, so knowing what you want to change. Moreover, the line between mitigation and adaptation is very blurry, so this is a politically unpopular (conversation ?) --

ANTHOLIS: And I don't disagree with it in the least. It's quite analogous actually of the trade context to the measures taken for the least-developed countries which, in the grand trading scheme, are very small, but they get a huge amount of political attention. And the biggest benefit for development and trade have been for middle-income countries, you know, India and China, and how do you distinguish that between real live markets and development assistance, you know, where adaptation and --

MATHEWS: I mean, there's now about five hands in the air. I'm going to take several comments so everybody can just take notes and remember.

Start here.

QUESTIONER: Laurie Garrett from the Council. I think I beg to differ with you on adaptation. Perhaps the best way to pose the question to the group is, so when 25, 30 percent of the Pacific Islands become uninhabitable because of sea level rise, who pays to move all those people? Where do they get moved to? Adaptation, I don't think, is about necessarily female literacy. When you have massive heat stroke events, who's paying the bills in poorer countries? When you have famine, does it all end up going through humanitarian relief channels? In which case, how can we possibly take humanitarian relief to scale that this would necessitate? And where is the governance infrastructure for that?

MATHEWS: We can't, at least that's one aspect. The panel will answer the question. (Laughter.)

Right here and then (Dan ?).

QUESTIONER: Mark Levinson. Having worked in the economics of this stuff for several years, it seems to me that domestically doing anything serious about climate change is actually going to be really expensive which is something that nobody in Washington or anywhere else likes to talk much about. And it seems to me that the value of undertaking that kind of expensive effort really depends a lot on what other countries are doing. My question is, is there a way to structure U.S. policy domestically contingently if we're actually serious about addressing climate change that the more we should be willing to do ought to depend on what others are willing to do? And the more that other countries actually reduce emissions as opposed to making agreements, the more we ought to be willing to do? But if others are not actually willing to take a big step, I question how much it's worth the U.S. to bear the cost.

MATHEWS: Dan.

QUESTIONER: Dan Sharp with the Institute for Large-Scale Innovation, affectionately known as ILSI. The discussion thus far appears to be based on the assumption that the way forward depends upon countries alone, either in negotiating agreements or in countries helping other countries. My question is based on asking you, is there perhaps another basis for action forward that would bring to bear not only government knowledge but that of business, NGOs, academics and other groups in some kind of a continuing global-action mechanism? It may not exist at the present time. I can't think of an exact model. But I think depending only on country limits the access to the best innovation on the various issues that you're addressing. Can you imagine such a mechanism? What might it look like?

MATHEWS: Okay, we'll take one more. Yeah.

QUESTIONER: Thank you. Steve Kass (ph). I want to come back to the initial point made by the moderator, which is that the causes of climate change largely come from a small group and the consequences are largely felt by others. And to add to Laurie Garrett's point, if adaptation is going to be essential, as I think it will be, it strikes me that it can be considered institution-building in a prophylactic way in order to assist developing countries to put in place the kind of land-use plans, nutritional plans, legal plans as well as health and education programs that will be necessary to help them begin to adapt now and before the consequences are completely evident in 10 or 20 or 30 years from now. And I wonder to what degree we can go about effectively trying to sell that to countries that are being asked to take on large domestic costs for their own purposes.

MATHEWS: Okay. Who would like to start? We have two questions on adaptation. We have the question about whether the U.S. ought to act contingently, and then we have Dan's question about we can get out of the national --

ANTHOLIS: If I can do the contingency question because I think it was about as precise and elegantly phrased a version of the economist's question as I've heard. And so I'll give you a couple of the stock responses that I think have the benefit of being true. One is that, first of all, the benefits, as described by economists in this case are often narrowly described about the benefits to the global climate as opposed to all of the other benefits that come from doing the things that are very possible but have other hidden costs, whether it's the geostrategic dependence on foreign oil that's part of it, the other health benefits of shifting away from coal and so-called moving to clean coal, and obviously capturing carbon is one step beyond the other things that are done to coal-fired power plants to have other health benefits. But as a general matter, most of the costs of acting on climate if just seen in climate sort of understate the broader benefits of acting in the same way.

The second thing that I would say about this is it is often also framed that we won't receive any of the benefits or many of the benefits if other countries don't act. The key thing here to remember is how much worse the cost would be if we didn't act, and the failure of our actions in inhibiting others to act would be, particularly as this stuff not only lasts a long time but continued to accumulate and rise. So at some level, there's almost no choice.

And then the last is, if you make it contingent and they don't follow through and we don't follow through, then we're all sinking deeper. I mean, that's sort of an extension of the same argument. So while all of those are good points, sometimes the bad idea of us simply acting unilaterally, while a bad idea, may be the least bad of all the ideas. I mean, that's sort of how it's put back.

MATHEWS: Okay.

DOBRIANSKY: May I just jump in with a footnote on that because that was your first question? A really fast footnote. And that is when Jessica posed the first question, I believe we should act, but I also think that the political reality will be, if the debate going on in our Congress is is that there is a desire to have others also join in because there is a strong desire by the U.S. to have, as I said, an agreement that's environmentally effective. If others do not join in, I think that's going to be very problematic indeed. And I just want to underscore that.

I strongly believe that from this it's not just one unilateral action. There has to be a collective movement here, and we have to have that diplomatic engagement up front. The U.S. needs to put its cards on the table, we need to have a plan. But at the same time, I don't see our Congress moving forward. Given the statements by Republicans and Democrats, there's a strong desire to have a collective whole on this one.

LEVI: Let me quickly challenge the premise -- one of the premises --

MATHEWS: I think Bill already did. Let's -- I don't -- do you have something new to say?

LEVI: Yeah, I don't think that it's all that expensive. I mean, Bill was looking on the other side of the ledger. But to claim in the first place that this is going to be extraordinary expensive isn't borne out by a lot of the models. It will be tough for particular segments of the population. You need to make sure you deal with that. But shaving one-tenth of a percent a year off GDP growth is not economic catastrophe. And we have to put this in context. I think that's important to keep in mind.

MATHEWS: Okay. Does anybody have anything more to add on adaptation?

DOBRIANSKY: On adaptation, I'll just jump in here, two points. Jessica, I understand what you're saying, but I identify with the comments that are made out here in the sense that I think that it's important to have a holistic strategy. I don't think it's a panacea. And in responding to your question before, I think it's a tough issue, a very tough issue. And you don't have one single, as we say, silver bullet. There are multiple areas that have to be worked here. But having said that, there are some very creative strategies that I think have been having an impact.

For example, the Tropical Forest Conservation Act. There are some 14 countries that want to alleviate their debt, and in return they're preserving their tropical forests. That is an adaptation measure that has really had, I think, an important impact and consequence.

There's another one, if I can.

MATHEWS: It's primarily a mitigation measure.

DOBRIANSKY: Well, you know, it's interesting. When you get into these circles, some will discuss and say, some of these strategies, they are very close. Let me give the second -- the Global Earth Observation System Assistance which is about dealing with tsunamis, setting up standardization and equipment that would help prevent the lack of preparedness in certain parts of the world. That was an adaptation measure in which monies have been invested into and actually, I think, is very helpful to, for example, coastline issues.

So my point is is some of these are integrated. It's not a simple answer, but I feel the important news is is that in the last eight years, I will say in the last two years, in the U.N. Framework Convention on Climate Change, it got the most, I would say, very serious international attention and in which many were looking at the health ramifications, the environmental ramifications, the economic questions. It was integrative.

MATHEWS: All right. Okay.

Justin and then we'll take three here.

DOBRIANSKY: There was the one about innovation.

MATHEWS: Well, nobody volunteered. Does anybody have any brilliant ideas about non-national --

DOBRIANSKY: I'd say on innovation, that's important. Very simply, we need a revolution in clean, efficient technologies. Innovation matters. And actually, where does innovation come from? It comes from the private sector. And in that sense, I think that such a network and a comparative strategy is an important one and really a wave of the future.

QUESTIONER: Jeff Laurenti, the Century Foundation. I want to pick up on something that Michael had briefly alluded to, and that's the question of how once you have agreement on commitments, the international community as a whole and all its individual parts can be assured that all the other players are going to honor those commitments. Because with Kyoto, the experience has been, yes, grand targets, and then everybody redefines for himself what his real goals are and invents new numbers.

Michael seemed to be suggesting that one of the options might be an almost WTO-style external mechanism for adjudication or resolving disputes. But again, as Michael said, we want to make sure other countries honor their commitments, but we don't want others to make us honor ours. What in fact will be the, I don't want to say enforcement, but the reliability of implementation achieved here that you envision realistically possible among countries that also will claim jealousy for their sovereignty?

MATHEWS: Good question. Okay, next.

QUESTIONER: Paul Richards. Is it not the case, going back to fundamentals, but a temperature rise of a few degrees and carbon dioxide moving up almost 350, 400 parts per million is possibly quite good for the economy in certain large, modern countries? And if that's the case, for example with Canada and Russia, is that a significant complication in this national negotiations?

MATHEWS: Okay. And one more up here.

QUESTIONER: I'm Gordon Omliss (ph) with the -- (inaudible) -- Foundation from Minneapolis. This is kind of an off-the-wall question to all of you. But the assumption at the beginning is is that climate change is somewhat a result of what the human beings have done to this world. Is that basic science agreed upon? In other words, is it agreed that hydrocarbon emissions are changing our atmosphere? Because I would argue, and it has been argued, that because we're covering the whole world in cement or hard cover that that's a bigger danger to what's going on. So are there environmental scientists here who could answer that basic question because we started off with that assumption? I'm not sure it's true.

MATHEWS: Okay. Nobody -- the science does not say it's as a result just of fossil fuel emissions but of anthropogenics that cause change, and that includes land-use change. Okay.

QUESTIONER: (Off mike.)

MATHEWS: Sorry?

QUESTIONER: (Off mike.)

MATHEWS: At this point, I would say no. I mean, the only -- there's no other way to explain what's happening, right. We know what solar variance is. It doesn't account for more than about 4 percent. God -- I mean, you know, what -- if you're asking science, I don't think, at this point, that there is any remaining room for doubt.

LEVI: Well, there's plenty to be resolved in projections for the future, and there are very wide ranges. And frankly, I see that as a reason for action. Because I worry more about being wrong and having things turn out a lot worse than about being wrong and having things turn out a lot better. I buy insurance for my (car ?), we should be buying insurance for the planet that we live on.

Let me take Jeff's question. So enforcement is always a tricky issue. For the near future, the primary reason for him is going to be the fact that we have protests on commitments that are already in country's interests. So it is going to be self-enforcement, to some degree. And the fact that we will be providing some incentives to countries to take actions, and we will take them away if they don't follow through, we being the developed world. We're talking about financial mechanisms, technology incentives, what not. Those are in exchange for doing something. Those things aren't done, those incentives aren't delivered.

But I'd say, what you talk about in this WTO analogy brings us back to something very important, which is this need to move away from thinking about emissions caps and emissions targets, at least in the near term, for the big developing countries. Because it does let you weasel out the way that you're talking about. Whereas if we focus on commitments of specific policy measures and actions, I think we are all talking about this, this is the way a lot of the global discussions are heading. It's easier to pin leaders to those down the road. They can come and say, well, we tried this and we tried it, and we couldn't get emissions to this particular level. It's a lot harder for them to come back and say, yes, we said that we would do this kind of reform in how we price energy that should've led to all sorts of emissions reductions, we decided not to.

It's easier to pin people to specific outcomes. Just like in trade negotiations, you focus on the specific measures on tariffs, on subsidies, whatnot, not on promising an overall economic outcome.

ANTHOLIS: And let me just -- a 30-second add. As in the trade negotiations, the model shouldn't be the GAAT, it should be the WTO, right, which is for 40 years countries often miss their targets but they miss them by a little bit. It's sort of like speeding, right. If you're doing 62 in a 55, you don't get pulled over. If you're doing 85 in a 55, you rightly should get pulled over and, you know, put the handcuffs on.

DOBRIANSKY: I'll jump in on the other question and, you know, the point about with the increase in temperatures and the implications, particularly in the Arctic. The Arctic Council which I mentioned is very focused on this. There are identified benefits and also complications and challenges. Passages are opened up but, at the same time, passages are opened up because of the ice melting. You have greater commerce, but you have greater concerns about environmental preparedness and taking care of what steps you have to deal with in terms of not only the opening of passages but also the disappearance of communities. This goes back to the adaptation question.

Let me just say two points here. One is, just last year, Denmark and Greenland hosted a forum in which they were bringing countries together of the north to actually look at this and to work together cooperatively.

The second point is, he was here at lunchtime, I don't see him here in the room, but Scott Orbison (ph) spends a significant amount of time on the Law of the Sea. And let me just say the Law of the Sea Treaty, I think, is very important; the United States has to be part of it. And in this regard, because of the need for having, if you will, a framework in which we will all be operating, where we can seize the benefits but at the same time also be prepared and deal with environmental challenges that come with ice melting.

MATHEWS: If I could just jump in. The two countries in particular that you mentioned are both continents, continent wide. And whenever you're looking -- there may turn out to be some countries that are net gainers in climate change. I'm very skeptical, but there may be. It depends a lot on the rate of change. But when you're looking at any country that really spans a whole lot of different geographies, I think it's highly unlikely that the net change is going to be positive.

QUESTIONER: (Off mike.)

MATHEWS: Well, but then you have to worry about, a, whether you've got water, b, whether you've got decent soil. And very frequently, you know, when you look up, it turns out the soils are (lousy ?). And you know, drilling in permafrost is a lot easier than drilling in melted permafrost. So there are, you know -- you really have to kind of look in -- there may be some, there may be some net gainers, but I think --

DOBRIANSKY: I wasn't making a judgment on it. But what I wanted to say was that it actually is being evaluated. Benefits that may be derived -- that's why I mentioned opening up passages, that was one of the benefits that some of the countries have identified -- but many of the challenges that come with it.

MATHEWS: Okay, yes. And then we'll go back -- yes, I remember. I'm seeing him. I just --

QUESTIONER: Okay. Elizabeth Bramwell. I do want to point out to address this comment here that we have changed the wording of global warming to climate change because there is a debate as to whether there really has been warming in the last 10 years. So anyway to go on, I just wonder what kind of cost-benefit analysis has really been done here because I see things like higher carbon taxes placed on utility bills that will affect all of us. It will particularly affect industry. And it will make us a lot more uncompetitive. And, you know, we do have a sick auto industry. And I don't particularly want to see American manufacturing driven off to China where there are limited emission controls compared to ourselves, and actually, I think it has a chance of increasing global emissions. So unless you really have teeth in something, say by x year your emissions are going to be this, I don't think you can be left to something like, you know, we agree in 20 years to be at x, because it's meaningless.

MATHEWS: Okay, Dick. Yeah.

QUESTIONER: Dick Garwin, IBM fellow emeritus. I was taken by Michael's proposal that we buy the Chinese carbon emissions at the actual cost rather than a marginal cost. And while we're at it, why don't we buy oil at an actual cost of about $20 per barrel? How will that negotiation pay out?

MATHEWS: Okay, Michael, you wanted to start on --

LEVI: Well, let me just say very quickly on the temperature thing, 1998 was an extremely hot, anomalous year. That doesn't mean that temperatures have not been increasing. We have some that goes like this. There was an el nino year. The general trend is up.

There's a big difference here. We are manufacturing a market for carbon emissions. That market for emissions trading does not exist without our political decision to make it. So we have a little bit more control in shaping it and in doing things in a way where we, as you put it, pay their marginal cost rather than our marginal cost, basically.

With oil, we're mostly stuck with a world market, and we can try to shift things around, but we are not the ones inventing that market. So I think that's why we're in a very different situation in the two cases.

MATHEWS: Anything else to add?

LEVI: A tiny extra bit. We DO try to use our market power in the oil market. I mean, proposing we should be, at least. And proposals to really significantly cut U.S. oil consumption aren't just about cutting the number of barrels, but they would bring down the world price of oil. So using our market power in a situation where we have the ability to do that, to make things cheaper for us in accomplishing our policy goals is nothing new.

MATHEWS: We've exhausted you? Yes.

QUESTIONER: Dr. Hansen, who was the first whistle-blower here, says that 425 parts per million is not a sustainable level, and that's the level that, generally speaking, people have been thinking about for Copenhagen and how do we hold ourselves to that or 450. He says, you've got to go back to 350 or 385 parts per million now of CO2. And the implications of that would be much more severe cuts in carbon than anything that I'm aware of is on the table. I wonder whether any of you think that serious thought should be given to it, is being given to is, can be given to it.

ANTHOLIS: Can I just say, I'm neither a scientist nor an economist, okay, so both in terms of the cost and the ultimate scientific levels that's appropriate, I do my best to work both through the economic journals and the science journals. But I have done my best to work through them. And where I come out on it is sort of what Michael was saying before about insurance policies. There is a wide range out there of estimates on the costs and benefits of actions where the science might be. But we buy no insurance right now, and we have events that keep telling us that things are changing in a way that if they continue to go even at that relatively constant direction or, as some scientists tell us, could get much worse at a tipping point -- tipping point a being the Arctic ice cap, tipping point b being Himalayan and how much of South Asia and Asia depends on the water supply being regular from those places.

And you know, Brookings colleague Bruce Riedel calls, you know, Pakistan and Afghanistan the most dangerous place in the world. To the extent that there's any economy going on in those places is depending on a stable set of glaciers up there. So I think the costs of inaction, it strikes me, are hard to quantify. And they're not simply economic, they're geopolitical, and they're cultural-religious. I mean, I have been working with, you know, the Greek Orthodox patriarch in Istanbul has been a real leader on this issue. As people of various faiths -- and the most active faith communities in the United States have been the evangelicals on this. As people of various faiths have come to try to understand the costs of this, it's well-beyond economy. It's sort of, what planet do we want to live on? What do we want to leave to our children?

So basic answer to both of you is I don't really know, but I know enough to know that we shouldn't just sit on our hands.

MATHEWS: Anybody want to add?

LEVI: I can speak specifically to Jim Hansen's paper. The first thing, I think, that people miss when they look at that paper is it says that if we are above a certain level forever, really, really bad things will happen. There is absolutely no work done to sort out how long that takes. So the 350 case, it is not clear whether the effects that he predicts would happen after you sat there for 100 years, 1,000 years, 10,000. That's not clear, so this is a big missing piece of the puzzle.

The other is it's very hard to measure the costs and benefits on that one because I don't think anyone has put out a serious proposal that would actually get you anywhere close to that target. He puts out a set of proposals, a carbon tax, some nuclear investment. I mean, they are nowhere close to what it would take to achieve the kinds of things he's talking about. So before we can frankly have a serious conversation about the prudence of that kind of goal, we need to have some better understanding of what it would take to get there. Frankly, 450 is going to be a tough lift as it is.

MATHEWS: I just think, in closing, I want to just respond to the question about contingent U.S. action. I've been working on this issue since 1982. And it's interesting to me how the U.S. keeps worrying that others won't follow when we won't act. (Laughter.) The only reason we would be acting is not for some kind of abstract pleasure of providing leadership but because we think it's in our interests to reduce emissions, indeed that we have to, understanding that, as Michael I think said, there will be a different set of winners and losers, even if we don't know how big the net cost will be, it may actually be negative, it may be a positive benefit. But we know there will be disruption. But we are acting because we think it's in our interest. So why would we want not to act because others aren't if the primary reason is self-interest?

I'm supposed to close at 2:15. And it's been a great discussion. I want to thank all the panelists and thank all of you.

(Applause.)

(C) COPYRIGHT 2009, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

THIS IS A RUSH TRANSCRIPT.

-------------------------