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Economic Challenges for Climate Change Policy

Introduction

President Barack Obama and the Democratic majority in Congress say they are committed to enacting mandates to curb greenhouse gases. In May 2009, the Obama administration announced new standards for auto emissions and mileage aimed at reducing greenhouse gases up to 30 percent by 2016, a hopeful sign for environmental advocates. But a failed attempt by Senate Democrats to push through a bill in 2008 underscores the uphill battle advocates face. Finding an approach that manages to cut greenhouse gases without doing serious harm to the U.S. economy, particularly given the global economic downturn, remains a top concern. Amid a slumping U.S. economy, and a major restructuring of the U.S. auto industry, any legislation that imposes higher energy costs will be particularly difficult to negotiate. However, many lawmakers say climate-change policy also holds economic opportunities, including creating jobs and employing new green technologies. Experts also say implementing climate policy in the United States will bolster international climate efforts set to culminate in Copenhagen in December 2009.

Taking the Plunge

Nearly all of the signatories of the Kyoto Protocol, a UN framework for reducing greenhouse gases, have begun taking steps to meet the emissions caps set for them. The United States was a Kyoto signatory but the treaty was never ratified by the U.S. Senate, in part due to fears that it would hurt U.S. competitiveness with countries like China and India that are not subject to emissions caps. Officials in those countries have likewise expressed reservations that the imposition of emissions caps would reduce their competitiveness and harm their economies. A successor to the Kyoto Protocol, which has expiring provisions in 2012, is expected to be finalized by December 2009 in a meeting in Copenhagen.

President Obama and the Democratic-led Congress are...

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