Thank you for inviting me to speak to your panel today. My name is Vicki Arroyo, and I'm director of policy analysis for the Pew Center on Global Climate Change. The Pew Center on Global Climate Change is a non-profit, non-partisan, and independent organization working to provide analysis and solutions in the effort to address climate change. Some 44 major companies participate in our business environmental leadership council, making ours the largest U.S.-based association of corporations focused on addressing the challenges of climate change.
I direct the Pew Center's analytical program, including work on science, impacts, economics, and policy. We've published more than 100 peer-reviewed reports and analyses over the last 10 years.
I want to congratulate the committee for taking up this initiative. I'm happy to report that there's also tremendous momentum in the U.S. in recent months on climate change, galvanized by a variety of factors: more compelling science, increasing public awareness and concern, barriers to construction of new conventional coal plants, state and regional leadership, and a Supreme Court finding that carbon dioxide is indeed an air pollutant under the Clean Air Act, which EPA has the authority to regulate. Also, we've seen the Democratic Party take over Congress and promise to move climate legislation.
In 2007, there were over 110 climate-related hearings in our Congress, and roughly 150 bills mentioned climate change. We also saw the passage of an energy bill that for the first time in decades strengthened fuel economy standards for vehicles. In addition, we saw a spending bill that directed and funded a new greenhouse gas emissions registry.
We also have calls for action from more and more business leaders. Last year, an historic coalition was announced, the United States Climate Action Partnership. The Pew Center is part of this effort, along with leading companies and nine governmental organizations. It calls for mandatory U.S. climate policy and for cooperation on the policy's design. Many of our presidential candidates are making this an issue. In fact, all the major remaining candidates support a cap and trade program.
The most significant development, perhaps, is the passage through the Senate Committee on Environment and Public Works of Senate Bill 2191, the Lieberman-Warner Climate Security Act. This ground-breaking proposal would create an economy-wide cap and trade system covering all six greenhouse gases. It contains short-, medium-, and long-term reduction targets covering about 87% of U.S. emissions—4% below 2005 levels in 2012, 19% below 2005 levels by 2020, and 71% below 2005 levels by 2050. This refers to the covered sources, and it would mean that by 2050 all U.S. emissions would be reduced to roughly 66% of 1990 levels.
The proposal would permit companies to offset their required submission of domestic allowances by up to 15%. Offsets are seen as a key cost control mechanism. In addition, a company can submit emission allowances, from approved international trading systems, of up to 15%.
The Lieberman-Warner proposal contains specific requirements for allocation of allowances. At first, roughly 74% of allowances are provided to help regulated entities and those affected by the new policy, including consumers, to make the transition. However, the free allowance allocation to affected firms will be phased out by 2031.
The auction revenues are distributed for technology development, since we cannot solve this problem without significant investment in technology. Also, the revenues go to low-income energy consumers through, for example, weatherization programs, worker training, and adaptation.
I should note that separate bills devoted to climate change adaptation are also moving through Congress.
The leadership of both the Senate and the committee are working with the bill's sponsors, and others promoting related bills, to bring forward a bill for a floor vote this spring. In addition, the House Committee on Energy and Commerce has produced white papers on key design elements regarding a cap and trade program and is working to produce a bill. Speaker Pelosi put a climate bill on the short list of her legislative priorities for this year.
While it's unclear if the current president will sign a cap and trade bill, it's worth noting that he might be reluctant, just before an election, to exercise his veto power on something that would have bipartisan support if it passed. As I mentioned, the remaining top candidates from both parties support climate action in the form of cap and trade.
In addition, pressure from industry is increasing through the U.S. Climate Action Partnership. State involvement on this issue is also growing. In fact, state and regional governments are taking the lead in this bipartisan issue. In 2005, California Governor Schwarzenegger called for ambitious long-term reductions of greenhouse gases. In 2006, he signed a law that sets California on the path to meeting those reductions—the state is required to reach 1990 levels of emissions by 2020. Florida Governor Charlie Crist, also a Republican, has put in place ambitious executive orders calling for greenhouse gas emissions to fall to 80% of 1990 levels by 2050.
The northeastern and mid-Atlantic states will be implementing their regional greenhouse gas initiative in 2009. It aims to cap carbon dioxide emissions from utilities starting next year and to reduce them by 10% by 2019. Other regions are following suit. There are regional initiatives to reduce greenhouse gases in both the western and mid-western U.S. in partnership with some Canadian provinces. In addition, 10 U.S. states have joined an International Carbon Action Partnership to develop compatible trading with the EU, New Zealand, Norway, and two Canadian provinces.
The action of all these states is indeed very important and laudable. But in and of itself it is not enough to curb the overall national emissions growth we're seeing. For that reason, and also because it's creating a patchwork of regulations, we would like the regulatory certainty and the comprehensiveness of a federal policy program, such as the Lieberman-Warner bill or other cap and trade bills that Congress would consider.
Thank you, and I look forward to taking your questions.