Stern optimistic U.S. will act on climate

By Timothy Gardner

UNITED NATIONS (Reuters) - Climate change expert Nicholas Stern said on Monday he's confident the United States will move to regulate greenhouse gases in the first half of next year, providing leadership that would help the world reach an agreement in late 2009 on slowing climate change.

Stern, who met with the presidential campaigns of both Sens. Barack Obama and John McCain and several U.S. senators late last week in Washington, said he expected a new U.S. climate bill would make progress in the first half of next year.

"Whoever is elected, there will be action in the first six months to deliver a bill," Stern told Reuters in an interview. "It doesn't have to be all tied up in the first half of next year... but the sense of direction has to be clear."

He said U.S. action on a climate bill will help speed a global deal at a U.N. climate meeting in Copenhagen slated for December 2009, which is expected to reach a successor deal to the Kyoto Protocol on global warming.

Any deal would have to iron out differences between the United States, historically the largest greenhouse gas emitter, and rapidly developing countries like China, which by some accounts has surpassed the United States on emissions.

Stern, a former Treasury economist, released a seminal report in 2006 that said inaction on emissions blamed for global warming could cause economic pain equal to the Great Depression of the 1930s. Since then he has said the unexpectedly fast growth of global greenhouse emissions mean the report underestimated the problem.

He believes rich countries must commit to cutting carbon emissions by 80 percent by 2050 and developing countries like China must agree that by 2020 they too will set their own targets.

Earlier this month, the U.S. climate bill died on a procedural vote in the Senate. It would have regulated gases blamed for warming the planet through a cap and trade program and other measures.

Experts say a new bill next year would have a better chance because both Obama and McCain favour regulating the gases, while President George W. Bush, who will leave office next January, does not.

But some carbon markets experts have said the energy spike in which oil prices have hit $140 a barrel, dragging up natural gas and coal prices, could soften the U.S. focus on regulating emissions. That's because greenhouse gas laws could increase energy bills for consumers, who have already been hit by the credit and housing market crunches, by putting a price on carbon emissions from fossil fuels.

Stern said he expected that even a relatively high price on carbon of about $40 a tonne would only add the equivalent of about 40 cents to a gallon of gasoline. And high fossil fuel prices make the costs of low-carbon energy sources, such as wind and solar power, relatively cheap, he said.

"In some ways (higher energy costs) will make it more difficult in the short term, because you do need to readjust price signals," he said. "In other ways it makes it more easy."

(Editing by Cynthia Osterman)

(For more Reuters information on the environment, see blogs.reuters.com/environment/)