White House Opens Energy Agenda

Wall Street Journal
December 8, 2006

WASHINGTON -- Facing increased political pressure on environmental policy at home and abroad, the Bush administration is signaling new interest in promoting alternative energies and curbing greenhouse gases.

As part of President Bush's energy agenda for the rest of his term, administration officials may push U.S. auto makers to make more vehicles that can run on ethanol and other alternative fuels. To boost availability, they are also considering a call to cut tariffs on imported ethanol.

White House aides are also suggesting new openness to global-warming solutions, including the broad emissions limits they have resisted so far. The ultimate aim is to begin piecing together a framework to replace the Kyoto accord after it expires in 2012.

"Would we support a one-size-fits-all, economy-wide mandate? Presently it's not feasible or necessary," White House environmental adviser James Connaughton said in an interview. "But it's not off the table" post-2012, he added. While Mr. Bush's presidency ends in early 2009, he can influence negotiations under way for the next global climate-change treaty.

Environmental issues have gained urgency since Democrats won control of both the House and Senate in last month's elections. While many congressional Republicans shared Mr. Bush's skepticism toward environmental regulations, Congress's new Democratic leaders are more likely to push for action, particularly on climate change.

After the election, George Banks, a senior aide to Mr. Connaughton, sent an email to a top aide of Sen. Barbara Boxer, a California Democrat, congratulating Ms. Boxer on the election, which elevated her to chairman of the Environment and Public Works Committee. Mr. Banks added that he would like to meet to discuss climate change. Ms. Boxer called the overture an encouraging sign, after years of White House indifference.

Foreign leaders also are stepping up calls for Mr. Bush to move on the issue. Germany is trying to restart international talks on climate change in its role as host of the 2007 annual summer summit of the Group of Eight industrial powers. The White House has indicated a willingness to explore the idea, according to German officials. The U.S. response has been a "major step forward," says the German official in charge, Bernd Pfaffenbach. "We are going to explore whether it's possible to find a post-2012 formulation," he added.

Meanwhile, Treasury Secretary Henry Paulson has taken an active interest in energy and environmental policy, having been an advocate for curbing carbon emissions in his previous job as Goldman Sachs Group Inc.'s chief executive.

While Mr. Paulson hasn't spoken publicly about the issue since taking office in July, he is part of a group of administration officials looking at ways to reduce dependence on foreign oil and stimulate the market in the U.S. for alternative energy. The group is expected to present ideas to Mr. Bush in the next few weeks. Among the options: lifting tariffs on imported ethanol and providing more subsidies for those who make and sell alternative fuel.

Mr. Paulson also is intent on bringing China into future climate-change solutions, and plans to make greenhouse gases a focus of his talks with Chinese leaders when visiting Beijing this month.

Many American skeptics of global treaties on the environment have said they are meaningless unless China and India can be persuaded to join the next round.

On the domestic front, the administration has been pressing U.S. auto makers to ramp up production of so-called flex-fuel vehicles that can run on either gasoline or alternative fuels such as ethanol or biodiesel. The CEOs of the Big Three manufacturers -- General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group -- pledged after a recent meeting with Mr. Bush to make 50% of their new vehicles capable of running on alternative fuel by 2012. But they said they want assurances of adequate "incentives" for production of flex-fuel vehicles as well as for production and distribution of renewable fuels.

At the same time, the administration is pursuing a strategy of encouraging technological innovation -- instead of regulation and mandated caps -- to reduce overall carbon-dioxide emissions. Last week, administration officials announced the awarding of $1 billion in tax credits to nine companies to develop cleaner coal-burning power plants around the U.S.

But Mr. Connaughton, in the interview, suggested that the administration is weighing other strategies, possibly including tougher mandates, for after 2012, when the Kyoto accord expires. The Bush administration rejected the 1997 Kyoto accord in 2001, viewing its limits on carbon-dioxide emissions as a recipe for economic disaster.

Now, Mr. Connaughton said, even carbon mandates aren't out of the question. "Everyone is looking at what's achievable beyond 2012," he added, and the U.S. must "calibrate its policy to the science" on global warming.

Any new U.S. framework is unlikely to "replicate the mistakes of Kyoto," Mr. Connaughton said. But "as for the shape of what the future looks like, there are lots of ideas swirling around." Critics say the Kyoto accord was too ambitious in seeking to hold carbon-dioxide emissions below 1990 levels before technology was available, and also because it excluded rapidly developing economies such as China and India.

Some Democrats remain skeptical of the administration's interest in climate change and say they don't expect major progress on things like fuel efficiency or greenhouse-gas emissions.

"Recently, the administration has begun to change its rhetoric on global warning and climate change, but given their history it's easy to suspect that only their rhetoric is changing," said Rep. Henry Waxman, a Democrat from California and incoming chairman of the House Government Reform Committee.