tion now provides no solution at all. Because the FCCC does not establish obligations that will reduce GHG emissions to levels compatible with "solving" the climate change problem, the United States and others should not rely on joint implementation credits at this point.

Advocates of flexible compliance programs such as joint implementation contend that environmental programs should set an environmental quality objective and then allow maximum fleixibility in the means permitted to meet the objective. However, the current FCCC does not meet the first condition: countries have not yet agreed to the substantial reductions in global GHG emissions required to protect against adverse climate impacts. Rather than setting a global GHG target and establishing country obligations compatible with achieving the target, the FCCC confines itself to a series of obligations that demonstrate the ability of parties to make some changes in the right direction.

The nature of the obligations under the FCCC would make it difficult, if not impossible, to establish a legitimate system of credits against current obligations through joint implementation projects (JIP). Credits by definition require quantification, yet many FCCC obligations are not quantified. For example, while Annex I countries have quantified initial targets for reducing GHG, they also have unquantified obligations to protect and enhance GHG sinks and reservoirs, as discussed above. Similarly, developing country parties have unquantified obligations to adopt programs containing measures to mitigate climate change, promote sustainable management of sinks and reservoirs, and take climate change into account in their policies and actions. (Art. 4, Par. 1(b),(d), (f)). Since parties have obligations that are not quantifiable, the question of which overseas projects may produce credits is complex and will not be resolved quickly.

Some have argued that action taken in a developing country to reduce GHG emissions or protect sinks should be automatically creditable. This is clearly not correct under the FCCC. First, it is questionable whether the FCCC permits JIP with a party that lacks quantified obligations. Second, both Annex I and developing countries have programmatic obligations to carry out GHG reductions and sink measures in developing countries. The incremental costs of developing countries' Art. 4, Par. 1 duties must be funded by Annex II countries such as the U.S. (Art. 4, Par. 3.) Thus, no credit would accrue from the U.S. funding such Par. 1 measures. Criteria and mechanisms will have to be established to distinguish between measures required to satisfy a host country's Par. 1 duties and additional measures that go beyond those duties. The lack of quantified duties invites gaming to inflate credits and is certain to stimulate lengthy disputes. Both are additional reasons to avoid reliance on JIP measures to meet current U.S. GHG emission reduction commitments. As an example of such gaming, one large U.S. electric utility company has proposed that it should receive GHG credits for building a large new coal-fired power plant in a developing country. While such a new plant would add millions of tons of GHG annually to the atmosphere, the company claims it should receive credits because an even more polluting plant might have been built instead. By this logic a U.S. emitter could build an overseas plant increasing GHG by 10 million tons per year, argue that it could have built an 11 million ton plant, and then receive credits allowing it to emit an additional 1 million tons from its U.S. plants. Paper credit schemes like this would obviously frustrate GHG objectives and poison the well for even valid future use of JIP measures.

Finally, if the United States were to seek credit now for overseas actions that reduce GHG emissions under the rubric of JIP, the United States also would have to account for all of its other actions overseas that increase GHG emissions. If national GHG accounts are to include emissions effects overseas, one-way accounting cannot be justified. Just as some U.S. financed projects abroad may in fact reduce GHG emissions, many other U.S. overseas projects indisputably increase GHG emissions. Assembling a global inventory of such actions to establish a GHG balance of payments account will be essential to implementing a JIP credit program. The time required to produce this inventory precludes reliance on JIP credits for any near-term obligations, particularly for reductions required by the year 2000.

1. Conclusion

Ample cost-effective opportunities exist for the United States to reduce emissions of greenhouse gases to 1990 levels by 2000 and achieve further reductions beyond that date. A combination of available energy efficiency measures and increased reliance on more greenhouse-friendly fuels can achieve President Clinton's commitment. Policy tools for implementing these measures are largely available under current law, such as the Clean Air Act of 1990 and the Energy Policy Act of 1992, but additional authority will be required in some areas, such as automobile fuel efficiency.

These authorities must be used aggressively and adequate budgetary resources must be requested and appropriated if this strategy is to succeed. Furthermore, it is essential that the climate change mitigation plan include a binding process of assessment and mid-course correction to ensure that the United States stays on track to achieving its policy commitment. Finally, while the plan should include policies and measures to encourage the preservation and enhancement of sinks and reservoirs and the reduction of emissions overseas, "credits" from such actions must not be used to justify allowing U.S. emissions to exceed 1990 levels in 2000.

Attachment 1

PRINCIPLES FOR REVISING THE U.S. NATIONAL ACTION PLAN

1. Goals

Consistent with President Clinton's Earth Day speech, the revised National Action Plan should contain measures which not only return emissions of carbon dioxide and other greenhouse gases to their 1990 levels by the year 2000, but continue the trend of emissions reductions thereafter.

2. The process must result in a comprehensive plan, not simply a basket of measures

The revised Action Plan should be a strategic document which sets forth goals, priorities, timelines, levels of effort and program directions that are useful on a day-to-day basis here in the U.S. in making research, policy, and resource decisions, and instructive to other countries. The plan should be comprehensive, and should achieve substantial reductions in each sector.

3. A structure must be put in place to insure that the plan achieves its goal by the year 2000

The Plan should contain binding procedures for ongoing assessment and mid-course correction as needed to insure progress towards targeted emission reduction goals. Back-up measures should be implemented later in the decade if the U.S. falls behind its emissions reduction objectives. These might be needed, for example, if the economy grows faster than expected, if energy prices remain lower than expected, or if certain measures achieve lower than expected emission reductions.

4. The analysis must be credible and open

The U.S. should employ rigorous, defensible, and explicit methodologies for all quantitative aspects of the NAP. The assumptions used to determine the emissions impacts of the measures contained in the plan should be fully articulated (including funding levels and market penetration). The plan should determine the extent of compliance attributable to each measure, as well as the uncertainties of achieving the goals associated with each measure. As part of the ongoing analysis and review of the plan, a credible system of emission monitoring and accounting should be established. Each stage in the process should include participation from all segments of the public: businesses, industry, consumer environmental and social justice organizations and unions.

5. Reporting and Revision must be ongoing processes

The U.S. should publish an annual report on the implementation of the NAP, describing progress towards reducing greenhouse gas emissions. The adequacy of the US targets and timetables themselves must be periodically reexamined in light of new scientific findings and international progress towards emissions reductions.

6. The US should take the lead in International Action

The United States should assist other countries in addressing global warming, especially by promoting technology transfer, and providing aid for adaptation. The US Plan should identify strategies to both assist developing countries in reducing their long term emissions growth and to ensure that developed countries are taking the lead in modifying long-term trends in anthropogenic emissions at home.

CRITERIA FOR EVALUATING THE U.S. NATIONAL ACTION PLAN ON GLOBAL CLIMATE CHANGE

1. Jobs for America Today and Tomorrow

Does the plan promote job creation in new, environmentally safe industries and enhance US competitiveness?

Many measures to reduce greenhouse gas emissions have the potential to provide long term benefits to the nation's economic competitiveness and economic growth. The NAP should seek to craft policies which will: improve the nation's economic competitiveness for the next century by cutting wasteful energy consumption; reduce oil imports which drain money and jobs from the US economy, and aggressively develop the efficient and low-polluting technologies which will be in such great demand worldwide over the next several decades (and create high paying industrial jobs in the United States). The development and export of US produced environmental technologies internationally is also critical if this global problem is to be dealt with effectively in developing nations as they continue to industrialize and expand their economic base.

2. A Framework for the Future

Does the plan put us on a path to sustainable development?

Measures included in the plan should be designed to contribute to continuing the trend of emissions reductions beyond the year 2000. Policies contained in the plan should promote new modes of economic development and renewal that do not destroy the environment on which America depends. These policies should give businesses the signals to invest in and develop appropriate technologies for a competitive and efficient low-emissions future. The plan should reflect the need for significant structural changes in all sectors, such as reform of, transportation and energy infrastructure investments, energy price structures, land-use planning, and basic research, development and commercialization priorities.

3. Reduce the cost to our children: Act Constructively Now

Does the plan take adequate steps to reduce the risks from global warming?

Our children will benefit far more in the long run from actions taken now to prevent global warming than from costly future efforts to adapt to a changing climate. The potential societal cost of global climate change is so great that it warrants taking preventative action for that reason alone. As the NAS wrote in its May 1991 report on global warming policy, "investment in mitigation measures acts as insurance protection against the great uncertainties and the possibility of dramatic surprises".

Prepared by the following participants in the U.S. Climate Action Network: Alliance to Save Energy, American Council for an Energy-Efficient Economy, Center for International Environmental Law, Environmental Action, Environmental and Energy Study Institute, Friends of the Earth, National Audubon Society, Natural Resources Defense Council, Sierra Club, Union of Concerned Scientists, U.S. Public Interest Research Group

Attachment 2

21 THINGS THE CLINTON ADMINISTRATION

SHOULD DO ABOUT CLIMATE CHANGE

In his Earth Day speech, President Clinton pledged to reduce US. emissions of greenhouse gases to 1990 levels by the year 2000, and directed his Administration to produce a revised Action Plan which would "continue the trend" of reduced emissions. If implemented, the Administration's energy tax proposal could contribute to reaching these goals, but further steps will be necessary. The actions below are some of the many cost-effective steps that can be taken in achieve these commitments. They are representative of the types of activities that government and the private sector would pursue under a comprehensive framework of emissions mandates and incentives, which the US. will have to adopt in order to cut greenhouse gas emissions over the long term. Several of these policies are under consideration by, or are supported by the Administration. Adequate funding, and in some cases additional legislative authority, are essential to implement these proposals effectively.

REFORM THE ECONOMICS OF ENERGY USE

1. Decouple Utility Profits from Electricity Sales and Include Externalities in Energy Planning. In the vast majority of states. utilities' profits depend upon their sales of electricity, creating a disincentive for the utilities to undertake aggressive energy efficiency programs. The Department of Energy (DOE) and other federal agencies involved in energy regulation should develop an aggressive, proactive strategy to promote this reform in wholesale power transactions and at the state level, allowing utilities to profit from costeffective investments to improve the efficiency of electricity generation, transmission, and end use. The U.S. should also estimate and incorporate the cost of environmental and national security externalities in its energy planning activities.

2. Remove Subsidies for Mature, Conventional Energy Resources. The current pattern of federal tax and program subsidies encourages the use of conventional energy resources which pollute the environment, such as fossil fuels and nuclear energy. The U.S. should eliminate tax and other subsidies for these fuels, and increase the fees charged for extraction of energy resources on federal lands.

IMPROVE THE ENERGY EFFICIENCY OF HOMES

3. Promote Energy Efficient Mortgages. The Administration should implement a uniform Energy Efficient Mortgage (EEM) program linked to technically credible performance ratings, and designed to significantly upgrade the energy efficiency of at least 6 million homes by 2000. EEMs allow homeowners to finance cost-effective efficiency improvements as part of their normal home mortgages. 4. Expand Federal Assistance for Low-Income Home Weatherization and Retrofits of Public Housing. The Administration should increase funding for DOE's Low-Income Weatherization Program in order to expand the number of homes the program is able to reach. In addition, new quality control measures should be put into place which ensure that weatherization programs capture all cost-effective efficiency improvements in participating homes. Utilities accepting federal support for low-income household energy use should be required to invest in efficiency and weatherization in these homes. Finally, the Dept. of Housing and Urban Development should provide much greater funding for retrofits in public housing.

IMPROVE THE ENERGY EFFICIENCY OF MOTOR VEHICLES

5. Increase Fuel Economy Standards to 45 Miles Per Gallon. It is critical that the Administration propose tough new fuel economy standards immediately to ensure ongoing, substantial carbon emissions reductions. A 45 mpg standard for cars phased in by 2003 (with similar increases for light trucks) would reduce U.S. carbon emissions by 70 million metric tons of carbon annually in 2005, with greater annual reductions in later years. The U.S. should also reform its auto fuel economy testing procedures, to ensure that economy ratings accurately reflect on-road performance.

6. Establish Market Incentives for Energy Efficient Vehicles at the State and Federal Levels. The US. should reverse a Bush Administration position challenging the ability of states to adopt market incentive programs to improve automobile fuel economy, such as "feebates" and gas guzzler taxes. It should also develop innovative efficiency incentives for heavy trucks and other vehicles.

7. Develop Advanced Automobiles. In addition to market incentives and efficiency standards, a public-private partnership with input from public interest groups to develop truly visionary, zero-emission, "super" efficient vehicles, coupled with aggressive mandatory and voluntary fleet procurement programs to develop markets for these vehicles, would help lay the foundation for longer-term CO, reductions. PURSUE OVERLOOKED OPPORTUNITIES TO SAVE ENERGY

8. Reduce Cooling Needs in Urban Areas. Planting trees and painting roofs and pavement with lighter colors are cost-effective strategies for reducing the heat island effect, which raises cooling requirements in urban areas. Together with communities and electric utilities, the Administration should undertake a major campaign to promote heat island mitigation.

9. Boost Recycling and Source Reduction. To promote energy conservation, the Administration should discourage the unnecessary use of raw materials. It should provide incentives for greater use of recycled materials, since this would reduce solid waste while avoi ding the energy- and pollution-intensive processes necessary to process new steel, aluminum, paper, plastics, and glass from raw materials. ACCELERATE DEVELOPMENT AND ADOPTION OF CRITICAL NEW TECHNOLOGIES

10. Prioritize Renewable Energy. The US. should develop a National Renewables Strategy to work with the private sector accelerate research and development of advanced renewable (solar, wind, geothermal and biomass) energy technologies, and to expedite the deployment of these technologies. It should provide federal grants to states and localities to help implement policies that help commercialize renewables (e.g. "green energy pricing," in which customers pay voluntary premiums to receive energy from renewable sources). It should also include market aggregation initiatives and directives to federal agencies to utilize renewables whenever possible.