How critical is the advancement of U.S. EPA's power plant regulations to the success of the next international climate agreement? During today's OnPoint, Dr. Andrew Steer, president and CEO of the World Resources Institute, discusses the challenges for the United States, China and other key players ahead of this year's final round of international discussions. He also talks about the impact low global oil prices could have on clean energy investments.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Dr. Andrew Steer, president and CEO of the World Resources Institute. Andrew, thank you for coming back on the show.
Dr. Andrew Steer: Thank you.
Monica Trauzzi: Andrew, U.S. EPA recently announced it would be pushing back the release of its new, modified and existing source rules to midsummer. How do you read this move, and is it a sign of some of the challenges the agency is facing in making sure that this is as legally defensible as possible?
Dr. Andrew Steer: I think it's a sign of a vibrant debate that's going on. I don't know 2 [million] or 3 million comments so far and various congressional members asking whether it could be delayed by a few weeks. No, much, much, much more important that it's right than it's -- you know, whether it's June or July, so we see this not as a bad thing. And in addition now, I think the administration's announced that it will be also issuing the sort of the federal guidelines if states don't respond, and so that's also a positive.
Monica Trauzzi: How critical, though, is the advancement of these rules to the international community with respect to the next climate agreement?
Dr. Andrew Steer: Oh, I think it's very important that the United States demonstrates that it's serious about its big announcement of 26 to 28 percent reduction in greenhouse gases by 2025. It's really wonderful to see how the United States has repositioned itself globally in the last, you know, the last year or so. And that matters. It matters because, if the U.S. doesn't lead, everyone has an excuse to do less, and so the tone in Lima last month at the Conference of the Parties was very different because the United States and China had made these announcements. But if, for example, the power plan guideline -- requirements came out weak, it will not take much to demonstrate that they then would undermine the entire U.S. effort, and so it's very, very important that the -- what is issued is strong.
Monica Trauzzi: With Republicans now controlling both houses of Congress, do you think the United States will successfully deliver on its green climate fund pledge of $3 billion?
Dr. Andrew Steer: Well, we certainly hope so. Obviously that's something that Congress has a very legitimate role in, and so we have to wait and see, but my goodness me, very, very important that the U.S. delivers and plays its roles. $3 billion is -- can make a huge amount of difference in terms of leveraging other money. It's when the U.S. comes in that others follow, and then that, in turn, will bring in a lot of private money, and if you do the calculations, the $3 billion that the United States will be putting in will benefit U.S. industry much more than the $3 billion. And the reason for that is that it will be multiplied many times over. This will be -- these modest funds will basically be a small part of the financing of much larger investments, and it will be a lot of American technology that actually is being invested. So it would be very short term and ideological to say that this is a bad use of money. It's very good for the United States, in addition to helping to address the climate change problem.
Monica Trauzzi: What are the chief hurdles that you've identified that still exist in 2015 as the international community works toward that Paris meeting?
Dr. Andrew Steer: Well, I think we're all much more optimistic than we were a year ago. If you look at all of the emissions in the world, half of those emissions are accounted for by the three blocs of all individual countries that have already made commitments -- European Union, China and the United States. And those are good commitments. They're not enough, by the way. That half of the equation actually needs to do more, but still it is impressive. Twenty-six to 28 percent for the United States is good, but -- so that's very positive, but there's still the other half of the world's emissions to come forward. The countries need to come forward with ambitious goals, but in addition to that, we need to see the deal having certain elements because the country commitment simply won't be enough, and therefore, we need a review mechanism, we need a sort of ratcheting mechanism to be agreed by Paris, and we also need a financial mechanism that's robust, and we need a long-term goal. If you -- if you're not going to make commitments that are enough today, you need to know where you're going. And by 2070 or so, we're going to need to be down to net zero emissions.
Monica Trauzzi: And what about India's role in all of this? I mean, are they going to start embracing a low-carbon future? What's the future of that?
Dr. Andrew Steer: Well, the Indian government obviously is at an absolutely critical and exciting time. I mean, Prime Minister Modi came in committed to growth. He felt that India could be growing much faster than it is, jobs could be created more rapidly, so he wants to create a lot of -- he wants to reduce a lot of red tape, get investment going, but he's also launched some very important positive measures. So for example, you know, 100 gigawatts of solar energy by 2022. That is 30 times what the current installed capacity is, so very exciting possibilities. He's got this idea of 100 smart cities. The name of the game is going to be city development in India. Seventy-five percent of all of the infrastructure and buildings in Indian cities by 2050 haven't been built yet, so there's huge opportunities to get it right, and the sense is that actually they may be really understanding that the low carbon and more human cities will actually be more competitive and will generate more jobs. So in terms of sort of the logic, it is very much in India's interest to do the right thing. We don't know what they're going to come forward with on the climate change deal yet.
Monica Trauzzi: Global oil prices continue to drop. How is that trend going to impact the dynamic of the discussion on renewable energy?
Dr. Andrew Steer: Well, falling oil prices are very good for countries that want to grow. They're good for poverty reduction. They're also extremely good at the moment for those policymakers who want to get rid, once and for all, of energy subsidies. Let's remember that there are $500 billion of cash subsidies to encourage citizens and business to spend too much. Now with low oil prices, you actually can get rid of those that are on oil and gasoline and kerosene where there tend to be a lot of -- as most of their subsidy, so that's very positive. Now, the negative side is that it may make the move toward electric cars, for example, it may slow that down. In terms of renewable energy, in terms of electricity generation, less important because it's really the price of gas, obviously, that is the big competitor there. Not many countries are using oil to generate electricity these days, but nonetheless, clearly it does make the renewable energy, and in particular, the electric car business more difficult, and it will encourage people to delay moving to what they ought to be moving to, which is smaller vehicles, public transportation and so on.
Monica Trauzzi: All right. Interesting stuff. Thank you. We'll end it there.
Dr. Andrew Steer: Thank you very much indeed.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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