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ECONOMIST: GLOBAL CLIMATE CHANGE POLICY COULD HARM COAL INDUSTRY

A global climate change policy that includes stringent carbon emission reductions could harm the economic well-being of Wyoming's coal industry, according to a University of Wyoming professor who recently completed a term on the President's Council of Economic Advisers. Jay Shogren's comments follow last week's Washington, D.C., climate change onference during which President Clinton warned of the dangers of global warming but said he would not raise energy taxes to fight the causes of this environmental phenomenon. The conference was designed to gather support for a policy in advance of international climate talks in Japan in December to negotiate binding caps on heat-trapping emissions that according to many scientists are resulting in an increase in global temperatures.

Shogren, who holds the Stroock Family Chair on Natural Resource Development and Conservation in the UW College of Business, served eight months in Washington, D.C. as a senior economist on environmental policy. He says that no global climate change policy is in place yet, but the Clinton administration has spent the past year in intense discussions on what directions such a policy should take, how flexible it should be, to what levels should carbon emissions be reduced, and how best to include developing nations in the international agreement, based on predictions that their carbon emissions could exceed those of developed nations within 30-40 years.

"Our discussions on the council focused on the most cost effective path to reduce the risk of global climate change," said Shogren. "The outcome could impact the coal industry if the United States decides to reduce carbon emissions quickly, because that would reduce the demand for coal since it has high carbon content. But if we move at a gradual, more reasonable pace that allows the capital stock turnover at a more natural rate, the coal industry will not be as adversely affected as would be the case with some of the stringent global climate change policies that have been proposed."

A timetable for target levels for carbon emissions will be announced before the end of this month, and depending on the target, Shogren says an international treaty may be signed during December's meetings in Japan. He notes that it still must be ratified by Congress. "The tighter the carbon emission reduction target, the less likely we are to see Congress ratify the treaty because of the short-term cost," he said. "Economists are right in the middle of this debate, trying to understand how to guide policy because our economy will feel the pain now for taking actions for which we might not see benefits until many decades into the future. Of course, there are those who say the detrimental consequences of global warming will happen much sooner if we don't take evasive actions right away."

During his assignment in Washington, Shogren provided President Clinton with economic advice on the development and implementation of a wide range of domestic and international economic policy issues, including issues involving air quality, the Superfund, and the Endangered Species Act. "Vice President Gore is dedicating a lot of energy to environmental issues, and the administration can devote more attention to the environment now since the economy is doing well and unemployment is down ," he says.

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