“The Green Economy – International Opportunities”

MCI Management Center Innsbruck, January 13, 2012

Ambassador Eacho giving remarks

Herr Dr. Altmann, Ich danke Ihnen für Ihre freundlichen Worte und für die Organisation der heutigen Diskussion. It's an honor to speak before such a distinguished audience in such a lovely part of Austria, especially as we prepare to kick off the Winter Youth Olympic Games. I’m especially pleased to see so many of you here today.

It's a sign that we all share the common goals of stopping the damaging effects of climate change and of keeping our economies strong and growing while doing so. These issues are just as important in my own country, where coastal regions would be hard hit by any rise in sea levels, as they are in Tirol, where your traditional and very impressive winter sports industry relies upon regular snowfall. The climate change challenge is the test of our times. Negotiators from around the world just concluded a summit on the issue in South Africa, and I’d like to open today’s talk by discussing why the United States sees Durban as a success.

Next, I would like to address why environmental protections – such as those needed to combat climate change – are not incompatible with, and can even accelerate economic growth. To make my case, I want to highlight the work we are doing in the United States to generate economic growth while respecting environmental concerns, including some of the steps we’ve taken to "green" our economy.

Finally, I’d like to conclude my talk by discussing why we need international cooperation for any successful effort to mitigate the effects of climate change.

Let’s start with a quick review of the UN climate change conference in South Africa. Some said Durban would not make progress on our climate change agenda, and others said it would not make progress fast enough. I'm here to say that the United States views Durban as a tremendous success. We met, even exceeded, our goal of implementing and making progress on all of the key Cancun agreements.

Let me describe briefly just a few of the important steps forward. At Durban, we finalized the Green Climate Fund and got firm financial commitments from all the participants. This means that – for the first time in history – climate financing will be available to the most vulnerable countries, providing them with assistance to help them reduce greenhouse gas emissions. At Durban we also created a transparency regime.

Transparency is vital to help in monitoring steps taken by developed and developing countries alike to cut global emissions, and to make sure we are all doing our part to stop climate change. Most importantly, under the so-called Durban Platform, we agreed to negotiate a legally-binding climate change framework by 2015, a framework that will be applicable to all parties. This agreement, which should enter into force by 2020, will make clear that all parties have a responsibility to find common solutions to the climate change problem. What does that mean for us? For our economies? For business?

The need to address climate change does not have to hinder economic development. On the contrary, it can create a tremendous opportunity for economic growth and innovation. A decade ago, new technologies and the Internet resulted in remarkable economic growth and changed the way that most of us live our daily lives. The green economy might just be the next jolt the world economy needs. From my conversations with Austrian politicians, business leaders, and citizens, I know that you share the U.S. goals of protecting the environment while simultaneously maintaining economic growth. Some say it can’t be done.

Skeptics say that environmental protection – and the governmental regulation that goes with it – are job killers, especially in difficult economic times like those we have faced in recent years. They say companies will flee from countries with higher environmental standards to places with less regulation and lower costs. Both Austria and the United States are proof that this is not always the case. Indeed, in certain circumstances, environmental regulation can actually prompt innovation and create jobs.

The challenge is finding the proper equilibrium, and in making sure that to the extent possible, the world is united in addressing the challenge. There’s been a good amount of discussion in the U.S. over governmental regulation, specifically environmental regulation, and whether regulation hurts the economy. This question is even more relevant in the U.S. given the millions of jobs we’ve lost since 2007.

Often, it is not the increased cost of current environmental regulations that can limit growth, but rather the mere possibility of new regulations over the horizon that may scare away businesses and corporations planning to invest in expensive technology and equipment. Managers, as you all know from personal experience, tend to struggle with uncertainty. This includes uncertainty about which rules will apply, when they will be imposed, and which standards will be adopted.

Durban has set a timeline for limiting this uncertainty. More importantly, it creates opportunities for innovation, since every country included in a binding climate agreement will be in the market for technologies to limit their carbon footprint. It provides businesses with an incentive to innovate. I have been a businessman most of my life, and I know that we should never underestimate the power of the private sector. Smart business, those interested in growing their operations and succeeding in a competitive marketplace, are already looking at ways to green their operations, knowing that the costs of doing so later will be higher.

Smart long-term planning is the key to success. Many in industry are actually excited about future developments, which are largely driven by environmental and resource concerns. For example, Bill Ford, the Executive Chairman of Ford Motor Company, has noted that the automobile industry is undergoing perhaps the greatest transformation in its history. He predicts that a quarter of Ford’s vehicle line will be electrified by 2020, up from just a few percentage points today. He has called for government assistance with research and development. His view is that the need to tackle the dual problems of energy independence and climate change – two challenges the United States shares with Europe – will lead to new innovation, products, and jobs.

So I think America's experience reinforces President Obama’s perspective that growth promotion and environmental protection can be mutually reinforcing goals. Let me turn now to how the United States has responded to the environmental challenge. As the world’s largest economy and the second largest emitter of greenhouse gases, the United States has a central role to play -- indeed, a duty to act – on climate change. We’ve made great advances in developing green technology, improving recycling, and increasing energy conservation.

Many of these advances took place in university settings and commercial research facilities. Others grew out of public concern – through community organizing and advocacy at the local and state level. As an economy, the United States has much more to do, but a profound change has been underway in the United States and is accelerating under the Obama Administration. In just a few years, we’ve done more to reduce greenhouse gas emissions than ever before. There is a historical precedent that shows how we can address environmental challenges. Several years ago, a major story in most newspapers in the United States was acid rain. Journalists and some scientists predicted massive destruction of our forests, lakes, and rivers. The United States, under both Republican and Democratic presidents, met this challenge.

Through a series of new regulations and legislation, we succeeded in reducing annual acid rain emissions by 64 percent since 1990. Despite industry estimates that the cost of these steps would increase electricity rates by 10 percent or more, electricity prices actually fell in most states. For example, between 1990 and 2006, electricity prices fell by 64 percent in Illinois, 35 percent in Michigan, and 36 percent in Pennsylvania.

The Economist magazine in 2002 called the acid rain program “probably the greatest green success story of the decade.” Since the 1990 Amendments passed, polluting emissions have decreased, electricity generation continued to climb, and lakes and streams are cleaner. Industry responded by developing new technologies. Our economy continued to grow.

And what are we doing today? The Obama administration has invested more than $90 billion in developing clean energy – the largest clean energy investment in our nation’s history. These critical investments have already created or saved hundreds of thousands of jobs across the country and put the United States on a path to double the energy we generate from wind, solar, and other renewables in the near future. In fact, President Obama proposed an ambitious but achievable goal of generating 85 percent of the Nation’s electricity from clean energy sources by 2035.

By the way, I should note that European companies have so far won a significant share of our stimulus spending on wind energy – over $1 billion – showing that green energy is a win-win for both Europe and the United States. We’ve also established new fuel-economy standards for automobiles that will raise fuel efficiency, lower fuel costs for consumers while reducing oil consumption, and reduce carbon dioxide pollution by more than 6 billion metric tons -- equivalent to the total emissions from the United States in 2010, or what the Amazon rainforest absorbs in three years.

To build on this progress, the Administration is now developing the first-ever national fuel economy and greenhouse gas emissions standards for commercial vans, trucks, and buses. In fact, just over a year ago I led a trade mission to California to show Austrian companies and officials some of the exciting new technologies we are using to green our public transportation networks in America.

Together we took a look at the latest in electric, hybrid, and high-efficiency diesel engine technology available to transportation authorities. It was very exciting to see the ways U.S. manufacturers are improving possibilities for efficient, affordable, and – most importantly—cleaner public transportation. American industry is responding to the need to address climate change, and this response is creating jobs. But we’re not talking only about new busses and engines that are under development, but also about the key component of electric vehicles – batteries – that are taking off in America.

The United States is rapidly becoming a major manufacturer of advanced vehicle batteries – batteries that will help to reduce vehicle emissions. We’re on track to produce forty percent of the world’s supply of these batteries by 2015 – a big jump from producing just two percent in 2009. As someone with a business background, I am also pleased to see how the U.S. venture capital community is supporting these efforts by investing billions in energy efficiency, clean energy, and electric mobility ventures.

So again I would say there is an impressive track record in the U.S. response to the climate challenge. This response includes: increased fuel efficiency standards; recycling; energy conservation; greenhouse gas reductions; green tech research and investment; and development of new innovative products. But no country can address the climate change problem on its own.

In the United States, despite what you may occasionally read in the press, we have a long history of working with others. Nearly seventy years ago, the United States used Marshall Plan funds to help Austria develop one of the world's first pumped-storage hydroelectric plants. Pumped storage allows electricity to be produced when needed, in an environmentally friendly manner. Today, our cooperation with Austria continues through numerous business partnerships working together on the Green Economy. For example, Tirol's GE Jenbacher produces worldwide state-of-the-art gas engines. Austria’s Lenzing Technik licenses U.S. technology to improve the efficiency of the biofilters they produce, which are now being exported throughout Europe.

But we need cooperation around the world, not just between individual countries, if we are to address climate change. To obtain cooperation from as many countries as possible, we need to ensure that future agreements result in a level playing field. If some countries offer a “free ride” on emissions, then polluting industries may choose not to adapt, but instead maintain dirty lower cost production by moving elsewhere. Developed country politicians rightly ask why we should give emerging markets an energy cost advantage, on top of lower labor costs and weaker regulations.

All developed countries together produce less than half of the world's emissions. Over the last decade, greenhouse gas emissions haven fallen almost two percent in the United States and by more than two percent in the EU, but globally they rose by 28 percent. In the next two decades, 97 percent of growth in emissions is projected to come from developing countries, about half of that from China alone. It is imperative that we bring other major economies on board – especially China, India, Brazil, Indonesia, and South Africa.

In the view of the United States, meaningful “climate protection” must therefore include all the major economies. Part of this strategy includes financial and technological support for poorer countries, as discussed in Durban. The failure to stop global warming will not hit wealthy countries hardest. Instead, climate change has its first and worst impacts on the world’s poorest: subsistence farmers in the tropics and others living on less than two dollars per day. This is part of our moral imperative to address climate change, and it is part of why Americans are committed to the issue.

Ultimately, our goal is not only to limit carbon emissions, but to promote sustainable economic development. A clean energy economy will drive investment and job creation around the world, and bring energy services to hundreds of millions of the world’s poor.

Ladies and gentlemen, I have sought today to illustrate how fighting climate change presents us with opportunities: opportunities to balance the economy and the environment. This can only be achieved if we work together, as we did in Durban. I have no illusions that obtaining the international agreement foreseen by Durban will be easy. But – in the end – the roadmap agreed to in Durban is a significant step forward in making sure that both developed and developing countries work together to cut emissions. As we do so, the climate challenge provides opportunities for our businesses to develop new products and improve the lives of people around the globe.

The climate/energy challenge is indeed the test of our times, and it is my sincere hope and belief that humankind is equal to this challenge. Thank you very much.

I look forward to your questions.