PRESIDENT CLINTON'S CLIMATE CHANGE PROPOSAL

October 22, 1997

Global climate change is the premier environmental challenge and opportunity of the 21st century, and the risks it poses justify sensible preventive steps. Addressing this issue is one of the United States' greatest imperatives, for this and future generations. Recognizing the solid foundation of climate science, President Clinton is committed to strong and sensible action to reduce greenhouse gas emissions -- including realistic and binding emissions targets.

Key elements of President Clinton's climate change proposal include:

• Binding Targets to Reach 1990 Emissions Levels by 2008-2012 and Reductions Below 1990 Levels in the 5-Year Period That Follows. A critical component of the President's comprehensive framework is a realistic, achievable, and binding target of reducing greenhouse emissions to 1990 levels by 2008-2012 and reductions below 1990 levels in the 5-year period that follows.

• $5 Billion Program of Tax Cuts and R&D for New Technologies. To spur energy efficiency and the development of new technologies, the President proposes a major new package of tax cuts and R&D spending amounting to $5 billion over five years.

• Industry-by-Industry Consultations and Early Credit. The Administration challenges key industries to prepare plans over the next 9 months on how they can best reduce emissions. To provide an incentive for near-term actions to cut emissions, the President is committed to ensuring appropriate rewards for firms that act early.

• Developing Countries Must Participate. Climate change is a global problem, and requires a global solution. That's why the United States has spear-headed joint implementation projects, and the President has committed that the United States will not adopt binding obligations without developing country participation.

• Broad-Based Domestic and International Emissions Trading System Begins After A Decade of Experience Has Accumulated. The President is committed to a market-based emissions trading system, both domestically and internationally, that will harness the power of the market to reduce emissions to 1990 levels by 2008-2012. The trading system would begin after a decade's worth of experience with tax incentives, R&D, early credit, electricity restructuring, Federal efforts, and other measures.

BINDING TARGETS: The U.S. binding target is realistic: It seeks to return U.S. emissions to 1990 levels in the period 2008-2012 and reduce them further thereafter. We reject the European proposal for more stringent early reductions, as well as the "do-nothing" approach of some interests. The target is achievable: By providing incentives for early action to reduce emissions, attacking domestic energy inefficiencies, and putting in place a market-based emissions trading system, we can reach 1990 levels in the proposed time frame with minimal economic costs. And it is meaningful: Achieving 1990 levels in the period 2008-2012 would amount to almost a 30 percent reduction off a business-as-usual path, an important first step on the road toward stabilizing greenhouse gas concentrations in the atmosphere.

SOLID PRINCIPLES: The President's five climate change principles include: that the policies should be guided by science, rely on market-based, common-sense tools, that we should seek win-win solutions, that global participation is essential to addressing the global problem of climate change, and that we must have regular common-sense reviews of the economics and science of climate change.

SOUND AND SENSIBLE THREE-STAGE APPROACH: Reflecting his five key principles, the President's plan includes three stages: Stage 1 includes priming the pump through programs such as R&D, tax incentives, incentives for early action, and Federal leadership, and industry consultations. Stage 2 builds upon the first stage by including a review and evaluation in preparation for the permit trading system. Stage 3 -- which does not occur for a decade -- involves meeting binding targets through a domestic and international emissions trading program. The President is committed to working with labor and Congress to insure that we give proper assistance to any workers dislocated by the changes in energy usage inherent in any climate change plan.