SIEMENS

To what extent can the U.S. realistically reduce its greenhouse gas emissions?

Claussen: The U.S. Climate Action Partnership — USCAP — a coalition of corporations and NGOs that includes, among others, both the Pew Center and Siemens, issued a blueprint in January 2009 that includes targets for greenhouse gas emissions reduction that are ambitious yet realistic. It calls for achieving at least 1990 levels by 2020. This is tougher than it sounds because the U.S. is now about 14 % above its 1990 levels, which makes it nearly impossible for us to achieve Europe's goal of reducing total greenhouse gas emissions by 20 % by 2020. However, I think that by 2030 we will probably be able to catch up with Europe. By then, we are talking about a reduction of about 28 % as compared with 1990 levels, and a reduction of 66 % by 2050.

How can the U.S. achieve these goals?

Claussen: The most important thing is to put a price on carbon, and the best way to do so is by implementing a cap and trade regime — a system that caps total emissions and allows companies that pollute less to sell credits to those that pollute more. That, more than anything else, will spur innovation. It will get us to deal with energy efficiency issues and it will spur us to move into new technologies and create incentives for investing in the cleanest forms of energy — meaning renewables. In addition, we will have to implement tough efficiency standards for vehicles, appliances and industrial machines. We are already on the right track. Twenty-four U.S. states are involved in a patchwork of cap and trade systems, and I anticipate that we will have a national policy in this area within two years. In terms of setting stricter standards, California's mileage proposal is likely to be enacted on a national basis. If approved, it would require cars and trucks to get an average of 43 miles per gallon by 2020 as compared with 25 today.

Which technologies offer the greatest promise of reducing CO₂ emissions?

Claussen: I think the most important technology issue today is the burning of coal for electricity. Coal accounts for about 50 % of U.S. electricity and 80 % of China's. It is the largest single source of carbon dioxide emissions and it is unlikely that we will be able to find a substitute for it for some time. So it is imperative that we develop affordable technologies that allow us to separate and sequester CO₂. By the same token, we must also develop carbon-free ways of generating electricity. Then there is transportation, which accounts for 30 % of U.S. emissions. Here, we will have to come up with a low carbon fuel standard and move in the direction of hybrids and plug-in hybrid electric vehicles. So we have to find some way of decarbonizing our transportation system. Finally, in terms of buildings, one of the major problems in the U.S. is our patchwork of local codes. But if there is a price on carbon, owners will start to pay attention. People will want more efficient heating and cooling systems, better windows, and much more, including passive buildings, which are energy self sufficient. Steve Chu, the new Secretary of Energy, will help us get there.

Can the U.S. ratify the Kyoto Protocol?

Claussen: The problem is that we are now so far behind the emissions reduction targets that we can't ratify it. As a result, I believe that the approach of the Obama Administration will be to see how much real progress we make on domestic legislation, and then see what we can realistically agree to with regard to Kyoto. That's why the idea of having a ratifiable agreement by December 2009 — the upcoming Copenhagen summit — may not be practical for the U.S. Nevertheless, getting a global agreement here is very important. This could be a strong interim agreement that puts a full, final and ratifiable treaty within reach. Other countries are looking to us to make the first move. We have to put something on the table. On the other hand, India and China must get on a cleaner path. So I think that everybody has to play a part. Everybody will have to make changes. Some — like the U.S. — will have to make major changes. Others — like India and China — will need more time. But no one can afford to stand on the sidelines.

What can Siemens do to help make the U.S. economy greener?

Claussen: I think the fact that Siemens is part of USCAP is very important. USCAP is a combination of NGOs and industry, and because of that, I believe that it will have a disproportionate effect on what our ultimate CO₂ legislation will look like. You see, the private sector has a much better idea than does government as to what is possible from a technological point of view, and what will spur innovation. So it is important for Siemens to continue to make the case for reduced CO₂ legislation with those lawmakers who think this will ruin the economy. I think Siemens has a pretty good idea of how to move forward in this area, and I think this strategy will probably be quite effective.

Is this a win-win strategy?

Claussen: Well, obviously, there is a lot of money to be made in terms of offering efficient solutions that cut CO₂ emissions and protect the environment. But governments need to hear these arguments. They don't necessarily know these things themselves. This is one of the reasons that we formed the Pew Center and work with 44 companies on our Business Environmental Leadership Council.

Will the Clean Air Act eventually cover greenhouse gas emissions as pollutants?

Claussen: I think that the Environmental Protection Agency (EPA) will have to do an "endangerment finding" indicating that CO₂ emissions are a danger to the environment. They have actually done all the work on that already, but it was disregarded by the previous Administration. So, yes, I think EPA will start to move and I believe this Congress will enact cap and trade legislation as its enforcement vehicle for cutting greenhouse gas emissions.

Cutting CO₂ emissions is expensive. But what about the costs of not cutting them?

Claussen: The fundamental debate is between those who see investing in avoiding climate change as a cost, and those who view it as a benefit. I think we also need to look at the cost of not doing something. The Stern report was a first step in this direction. It found that the cost of not acting was much higher than that of acting. Now, I don't know if I believe all its numbers. But I think in terms of direction, it is correct. The cost of weather extremes, famines, droughts, and biodiversity impacts are enormous. They far exceed the cost of doing something. So not dealing with climate change is not an option. Furthermore, the more we wait, the more emissions will grow and the more we will have to reduce later on. We have waited much too long already.