A mandatory greenhouse gas reduction program for the U.S. could be both effective and politically feasible, according to a diverse group of business, government, and environmental leaders brought together by the Aspen Institute and the Pew Center on Global Climate Change.

The group, which included representatives of the energy, mining and automobile industries, environmental and consumer organizations and Congressional staff, did not debate whether there should be a mandatory policy. Instead, they started with the premise that all parties want to ensure, if mandatory action is taken, that climate policies will be environmentally effective, economical and fair.

"What is truly significant is that such a diverse group was able to reach consensus on several elements of what a mandatory national policy might look like," said Eileen Claussen, president of the Pew Center on Global Climate Change.

Recommendations for a policy framework are detailed in a report released by the dialogue's co-chairs, Claussen and Robert W. Fri, visiting scholar and former president of Resources for the Future.

The group agreed upon a set of criteria to evaluate program design options, including environmental effectiveness, cost effectiveness and competitiveness, administrative feasibility, distributional equity, political feasibility, and encouragement of technology development.

Two principles guided the choice of recommendations. First, the desire for broad rather than sector-specific coverage, and coverage of multiple gases, not just CO2, guided the participants. This ensured long-term environmental effectiveness and distributional equity.

Second, there was consensus that phasing of actual reduction targets would be important and that a modest start would be preferable. This would send a signal that reducing greenhouse gases was national policy. Deeper cuts could occur later, as technology evolves and capital stock turns over in response to early market signals generated by the policy.

After considering several possible designs, participants reached consensus on a hybrid program that combines elements of a cap-and-trade program with tradable efficiency standards. An initially modest but declining absolute national cap on greenhouse gas emissions would be placed on large sources such as electric utilities and manufacturers. Deeper cuts could occur later, as technology evolves and the economy responds to the policy. The group did not attempt to specify the level of the absolute cap on CO2 emissions, or the date it should go into effect.

A similar cap would apply to emissions from transportation fuel suppliers, coupled with tradable CO2-per-mile automobile standards. The group also recommended tradable efficiency standards for appliances and other manufactured products.

Manufacturers, utilities and other large emitting sources that fell short of or exceeded the new standard could buy, sell or trade emission credits in a nationwide emissions trading program, allowing emissions reductions to be achieved where it can be done most cost effectively. Emission credits would be awarded for removing existing CO2 from the atmosphere by verifiable means, possibly through land-use related carbon sequestration projects such as afforestation and energy plantations.

Participants also stressed the importance of a policy that encourages development and diffusion of new technologies, both to reduce emissions and to provide new market opportunities for U.S. business.

"The report represents a framework, not a fully developed policy -- a starting point for further dialogue rather than a final product," commented Fri. Nonetheless, he noted it should prove helpful to those seeking to balance policy and politics, environmental effectiveness and cost, and efficiency and equity in designing a mandatory greenhouse gas reduction program.

The report, "A Climate Policy Framework: Balancing Policy and Politics," is available online.