In keeping with Obama’s campaign promise to fight against climate change, four steps that can accomplish that goal are outlined below:

1. The Administration must create certainty about long-run carbon prices – the key drivers of investment. President-elect Obama’s long-run goal of cutting emissions 80% below current emissions by 2050 is broadly consistent with what most scientists tell us will stabilize the climate at safe levels. That should remain the president-elect’s top priority.
2. Near-term targets – emissions targets for the next decade – are also important, but the near-term costs of achieving these targets should be monitored. The targets must be sufficiently stringent to send an appropriate price signal to companies investing now, but the legislation should also include provisions to contain near-term costs in case advanced technology turns out to be less plentiful than anticipated.
3. A compromise is possible on how cap-and-trade is established. In what is bound to be one of the most contentious issues in this debate, the Waxman wing of the party will want to auction all emissions permits to generate revenue that can be returned to consumers and invested in clean technology. At the same time, energy and manufacturing industries will either want some of these permits allocated to them for free or will expect large rebates in order to offset the new costs imposed on them. Such a compromise is possible but is advisable only if the share allocated to industry is small and allowed to shrink over time to prevent large windfalls.
4. Finally, a bipartisan climate bill would acknowledge the reality of the international climate debate. The U.S. must take the first step in order to demonstrate leadership, but it also must make clear to other major emitters that they, too, must act. The U.S. should make climate change a central part of its strategic dialogue with China and a part of its partnership with India. Such engagement will lessen concerns over domestic competitiveness and ultimately lead to a more inclusive and effective agreement.

[src]