Robert M. White’s “Kyoto and Beyond” and Rob Coppock’s “Implementing the Kyoto Protocol” (Issues, Spring 1998) are excellent overviews of the issues surrounding the Kyoto Protocol. As chairman of the House Science Committee, I have spent a great deal of time analyzing the Kyoto Protocol, including chairing three full Science Committee hearings this year on the outcome and implications of the Kyoto negotiations. And in December 1997, I led the congressional delegation at the Kyoto conference.
The facts I have reviewed lead me to believe that the Kyoto Protocol is seriously flawed-so flawed, in fact, that it cannot be salvaged. The treaty is based on immature science, costs too much, leaves too many procedural questions unanswered, is grossly unfair because it excludes participation by developing countries, and will do nothing to solve the supposed problem it is intended to solve. Nothing I have heard to date has persuaded me otherwise.
Those who argue that the science of climate change is a settled issue should take notice of the National Academy of Sciences’ National Research Council (NRC) Committee on Global Change’s report, entitled Global Environmental Change: Research Pathways for the Next Decade, issued May 19, 1998. The NRC committee, charged with reviewing the current status of the U.S. Global Change Research Program, stated that the Kyoto agreements “are based on a general understanding of some causes and characteristics of global change; however, there remain many scientific uncertainties about important aspects of climate change.” And Appendix C of the report’s overview document lists more than 200 scientific questions that remain to be adequately addressed.
I want to note one major issue not discussed by White or Coppock-the Kyoto Protocol’s impact on the U.S. armed forces. Because the Department of Defense is the federal government’s largest single user of energy and largest emitter of greenhouse gases, the protocol essentially imposes restrictions on military operations, in spite of Pentagon analyses showing that such restrictions would significantly downgrade the operational readiness of our armed forces. In addition, the protocol would hamper our ability to conduct unilateral operations such as we undertook in Grenada, Libya, and Panama. On May 20, 1998, the House resoundingly rejected these restrictions by a vote of 420 to 0 by approving the Gilman-Danner-Spence-Sensenbrenner-Rohrabacher amendment prohibiting any provision of law, any provision of the Kyoto Protocol, or any regulation issued pursuant to the protocol from restricting the procurement, training, or operation and maintenance of U.S. armed forces.
This unanimous vote of no confidence in the Kyoto Protocol follows last summer’s Senate vote of 95 to 0 vote urging the administration not to agree to the Protocol if developing countries were exempted-an admonition ignored by the administration. These two “nos” to Kyoto mean the agreement is in serious trouble on Capitol Hill.
Like Rob Coppock, I believe that setting a drop-dead date of 2010 for reducing global CO2 emissions by 7 percent below 1990 levels is unrealistic and even economically unsound. Experience has shown, at least in the United States, that citizens become energy-sensitive only when the issue hits them in the pocketbook. (One need only look at the ever-increasing demand for fuel-guzzling sport utility vehicles that has accompanied the historic low in gas prices.). If prices were raised even to their current level in Europe (about $4 per gallon), I think you would have the makings of profound social unrest in the United States.
If dramatic increases in fuel prices through tax increases are politically difficult (if not impossible), then the only alternative available to governments is the power to regulate-to require the use of processes and products that use less energy and emit less CO2. Germany, as well as most other European nations, has traditionally used high energy costs to encourage consumers to reduce demand and increase efficiency. Germany’s energy use per capita is about half that of the United States, but I don’t think that you find any major differences in standard of living between Germans and Americans. This indicates that there are many ways to improve energy efficiency and thus reduce emissions in the United States.
I prefer slow but steady progress toward reduction of carbon emissions, taking into account both the long- and short-term economic implications of taxation and regulation. As Coppock points out, “the gain from rushing to do everything by 2010 is nowhere near the economic pain.” Just as one sees the “magic” of compound interest only at the end of a long and steady investment program, we can provide a better global climate future for generations yet unborn through consistent actions taken now.
Kyoto is a very significant step in affecting how future generations will judge our efforts to halt global warming at a tolerable level. Germany stands ready to support the spirit of the Kyoto agreement and to help all nations in achieving meaningful improvements in energy use and efficiency. It has offered to host the secretariat for implementing the Kyoto Protocol, as defined in the particulars to be decided in November 1998 by the Conference of the Parties. One can only hope that these definitions recognize some of the points that Coppock and I have raised, especially the economic implications of massive efforts to meet an arbitrary date.
The articles by Robert M. White and Rob Coppock support what industry has been saying for years: Near-term actions to limit greenhouse gas emissions are costly and would divert scarce capital from technological innovation. Building policy around technology’s longer time horizon, rather than the Kyoto Protocol’s 10 to 12 years, means that consumers and businesses could rationally replace existing capital stock with more energy-efficient equipment, vehicles, and processes. Avoided costs free up resources for more productive investments, including energy technologies and alternative energy sources.
White notes that the Kyoto Protocol is “at most . . . a small step in the right direction.” Worse, trying to implement it would mean “carrying out a massive experiment with the U.S. economy with unknown results.” What we do know is that all economic models that don’t include unrealistic assumptions indicate negative results.
Most of White’s “useful actions” are on target: pay attention to concentrations, not emissions; adaptation has been and will remain “the central means of coping with climate change;” disassociating costs and benefits attracts free riders; “population stabilization can have an enormous impact on emissions reduction.” Although he’s right to call for more technological innovation, he may have overstated our grasp of climate science when he says that “only through the development of new and improved energy technologies can reductions in greenhouse gas emissions of the necessary magnitude be achieved without significant economic pain.” His closing paragraph is closer to the mark: “If climate warming indeed poses a serious threat to society . . .” Finally, wind, photovoltaics, and biomass are still not economically competitive except in niche markets, nor can companies yet stake their future on hybrid electric or fuel cell cars. These technologies show great promise, but their costs probably will remain high in the time frame defined by the Kyoto Protocol.
Coppock’s most insightful comment about the protocol is that “no credit is given for actions that would reduce emissions in future periods” and this “creates a disincentive for investments” in new technologies. He also puts CO2 emissions in perspective (1850 levels will double by around 2100), rejects the protocol’s timetable (“the gain from rushing to do everything by 2010 is nowhere near worth the economic pain”), and cautions against assuming that a tradable permits regime would be easy to set up (“the trading is between countries. But countries don’t pollute; companies and households do”) or maintain (“how would pollution from electricity generated in France but consumed in Germany be allocated?”).
However, he seems willing to create a large UN bureaucracy to enforce a bad agreement. Moreover, his model, the International Atomic Energy Agency, is a recipe for massive market intervention: IAEA’s implementation regime “of legally binding rules and agreements, advisory standards, and regulations” includes the all-too-common industry experience of governments turning “today’s nonbinding standards [into] tomorrow’s binding commitments.” The Kyoto Protocol goes IAEA one bureaucratic step better: Any government that ratifies the protocol grants administrators the right to negotiate future and more stringent emission targets.
As Coppock concludes, “the world’s nations may be better off scrapping the Kyoto Protocol and starting over.” To which White adds: “Developments in energy technology show promise, and there has been a gradual awakening to this fact.” Both steps are needed if we are to have a dynamic strategy that reflects a wide range of plausible climate outcomes and also gives policymakers room to adjust as new scientific, economic, and technological knowledge becomes available.
Since the emergence of the Berlin Mandate, the AFL-CIO has been on public record in opposition to the direction in which international climate negotiations have been headed. Upon the conclusion of the Kyoto round, we denounced the treaty but made it clear that, regardless of a flawed treaty, we want to be a part of solving this real and complicated global problem. To that end, we are working with allies who want not only to examine real solutions to climate change but also to address the economic consequences those solutions present for U.S. workers and their communities.
The articles by Rob Coppock and Robert M. White mirror our concerns about the correct approach regarding action on the global climate change issue. We have taken a straightforward position: A global concentration target must be identified so that the entire global community can join in taking specific actions that, in sum, will result in a stable and sustainable outcome; domestic economic considerations must be as important in the overall effort as are environmental ones; and time frames and plans should guarantee a transition that is smooth but mandates that action begin now.
We are certain that technology is part of the answer for reducing our domestic emissions and improving efficiency as well as for avoiding in the developing world the same “dirty” industrial revolution we’ve experienced. We understand that there are finite resources available for this pursuit and that we’d better spend them wisely, in some sensible strategic manner, from the start.
We have only one chance to properly invest our time, energy, and money. A serious commitment to include regular participation by workers will serve this process well. We can become more energy-efficient plant by plant, institution by institution, and workplace by workplace in this country through worker participation. It would be irrational to pursue solutions that did not start first with the “low-hanging fruit” that is available at every U.S. workplace, perhaps without the need for much investment or expense.
We agree that we need a clear strategy more than a quick fix. We need to honor natural business cycles and long-term investment decisions. We should not spend excessively to meet arbitrary deadlines but rationally to meet national strategic objectives. This is a political problem as much as it is an environmental one. We add our voices to the voices of those who will pursue reasonable strategic solutions that include everybody and who will move this process with some urgency.
I know Rob Coppock personally and greatly respect his perspectives on science and policy. I am sympathetic to the logic of the arguments he presents in “Implementing the Kyoto Protocol” in terms of taking a more measured and gradual approach to mitigating greenhouse gas emissions, and I agree that careful, well-considered strategies are more likely to produce better long-term results at less cost.
For the sake of further thought and discussion, however, I would like to raise a philosophical point or two, on which I invite Rob and others to comment. Major pieces of environmental legislation passed in the United States in the early 1970s contained ambitious (perhaps even heroic) targets and timetables for pollution abatement that strike me as being very similar in nature to the provisions of the Kyoto Protocol. You will remember that we were to eliminate the smog plaguing our major cities, make our rivers fishable and swimmable, and so on, all in short order (generally by the mid-1980s, as I recall). Was an awful lot of money spent? Yes. Was money wasted? Most certainly. Were the targets and timetables met? Hardly ever. Were the laws flawed? Yes. (Witness the continuing amendments.) Was it the right thing to do at the time? This is the critical question, and despite all the criticisms of these laws raised over the past quarter century and more, I would still answer, “Yes. Most definitely.”
What those early expressions of public policy such as the Clean Air Act of 1970 and the Water Pollution Control Act of 1972 did was not just reduce pollution (which they indeed in some measure accomplished), they also changed the trajectory of where we were headed as a society, both physically, in terms of discharges and emissions, and mentally, in terms of our attitudes toward the levels of impact on our environment we were willing to accept.
I am much concerned about this same issue of trajectory when it comes to global warming. Greenhouse gas emissions continue their inexorable increase, and every study I read projects growth in energy demand and fossil fuel use in industrialized nations, as well as explosive growth in the developing world. I am concerned that this tide will swamp plans based on otherwise worthy concepts such as “waiting to install new equipment until old equipment has come to the end of its useful life.” (I heard similar arguments made concerning acid rain and other environmental issues, yet the genius of our engineers managed to bless a lot of this old equipment with almost eternal life.)
Sometimes good policy is more than carefully orchestrated and economically optomized plans and strategies. Sometimes there has to be a sense of vision, a “call to arms,” and maybe even seemingly impractical targets and timetables. If climate change is real, now may be one of those times.
Rob Coppock’s thoughtful article faults the Kyoto Protocol for its emphasis on near-term targets to the exclusion of more fundamental changes that could enable us to ultimately stabilize global concentrations of greenhouse gases. Without some remarkable breakthroughs at this November’s Buenos Aires Conference of the Parties, Coppock envisions that the Kyoto Protocol will prove very costly to implement; will, even if implemented, do relatively little to slow the steady rise in global concentrations of greenhouse gases; and will be unlikely to be ratified by the U.S. Senate.
A more fundamental shortcoming of the Kyoto Conference may have been the failure to create a level playing field for emerging green energy technologies and to provide near-term market incentives to producers of transformational energy systems. Industrialized countries left Kyoto without committing to phase out multibillion-dollar yearly subsidies to domestic fossil fuel industries or to shift the roughly $7 billion of annual direct government investment in energy R&D in OECD countries to provide more than a pittance for renewable energy sources or efficiency. Even in the face of evidence that an energy revolution may be under way as profound as that which between 1890 and 1910 established the current system of grid-based fossil fuel electricity and gasoline-fueled cars, no effort was made to aggregate OECD markets for green energy or, aside from an ill-defined Clean Development Mechanism, to provide inducements for such applications in developing countries. The Clinton administration’s promising proposal to provide about $6.3 billion over five years in tax and spending incentives to promote greenhouse-benign technologies in the United States has foundered in Congress on the grounds that this would be backdoor implementation of a not-yet-ratified protocol.
Even if universally ratified by industrialized countries and fully implemented, the Kyoto Protocol will make only a small dent in the continuing rise in global greenhouse concentrations that is driving climate change. Stabilization of greenhouse concentrations would require about a 60 percent global reduction in CO2 emissions below 1990 levels; even if the Kyoto Protocol is fully implemented, global CO2 emissions are likely to rise, according to a U.S. Energy Information Administration analysis, to 32 percent above 1990 levels by 2010. The radical reductions required for climate stabilization will require a very different model than that established in Kyoto.
Achieving climate stabilization will occur not through global environmental command and control but by emulating the investment strategies of the information and telecommunications revolutions. Some characteristics of emerging green technologies, especially photovoltaics, fuel cells, wind turbines, and micropower plants, could mirror the information technology model of rapid innovation, mass production, descending prices with rising volume, and increased market demand. Major firms such as Enron, BP, and Shell, and governments such as those of Denmark and Costa Rica, have began to glimpse these possibilities. The challenge of future climate negotiations is to develop policies to reinforce this nascent green energy revolution, which may ultimately deliver clean energy at prices lower than those of most fossil fuels.
Rob Coppock puts his finger on the critical point: Concentrations of greenhouse gases are closely coupled to climate change; emissions are not. It is cumulative emissions over decades that will shape the future concentration of CO2, the principal greenhouse gas.
Finding a way to make sure that global emissions peak and then begin to decline will be a great challenge. Perhaps more daunting still will be the challenge of eventually reducing emissions enough to achieve atmospheric stabilization. Stabilization of CO2 at 550 parts per million by volume (ppmv) means reducing per capita emissions at the end of the 21st century to approximately half a metric ton of carbon per person per year. The trick is to do this while maintaining and improving the standard of living of the developed nations and raising the standard of living of the developing nations. Per capita emissions in the United States are approximately five metric tons of carbon per person per year, and only some of the developing nations are presently able to claim to have emissions at or below one-half metric ton per person per year. Even if the world eventually defines 750 ppmv to be an acceptable concentration, global per capita emissions must be only one metric ton per person per year.
Ultimately, something beyond Kyoto is needed: a strategy to preserve a specific concentration ceiling. The strategy needs two pieces-a policy that will clearly indicate that in the future emissions will peak and decline, and a strategy for delivering technologies that will lower net carbon emissions to the atmosphere. Delivering technologies that will enable humans to provide the energy services needed to give economic prosperity to the entirety of Earth’s populatio of 10 billion or so, while releasing less carbon per capita than at present, will require more than just the best available technologies of today. It will require a commitment to R&D, including the development of technologies to enable the continued growth of fossil fuel use in a carbon-constrained world.
Defining and building a research portfolio whose size and composition will deliver the next generation of energy technologies and lay down the foundations for future technologies is a critical task for the years ahead. It cannot be undertaken by a single agency, firm, or institution acting alone. It requires an international public-private partnership committed for the long term. Several international efforts are beginning to take shape: the Climate Technology Initiative, announced in Kyoto by the United States and Japan; the IEA Greenhouse Gas R&D Programme; and the Global Energy Technology Strategy Project to Address Climate Change. They offer hope real hope that our grandchildren will inherit a prosperous world with limited atmospheric CO2.
Robert M. White and Rob Coppock overstate the difficulty of meeting the Kyoto emission targets. Climate protection is not costly but profitable, because saving fuel costs less than buying fuel. No matter how the climate science turns out or who goes first, climate protection creates not price, pain, and penury, but profits, innovation, and economic opportunity. The challenge is not technologies but market failures.
Even existing technologies can surpass the Kyoto CO2 targets at a profit. For example, contrary to Coppock’s bizarre concept for retrofitting commercial buildings, conventional retrofits coordinated with routine 20-year renovation of large office towers can reduce their energy use by about 75 percent, with greatly improved comfort and productivity. Just retrofitting motor and lighting systems can cheaply cut U.S. electricity use in half.
On the supply side, today’s best co- and trigeneration alone could reduce U.S. CO2 emissions by 23 percent, not counting switching to natural gas or using renewables. All these strategies are widely profitable and rapidly deployable today. In contrast, nuclear fission and fusion would worsen climate change by diverting investment from cheaper options, notably efficient end use.
Just saving energy as quickly as the United States did during 1979-86, when gross domestic product rose 19 percent while energy use fell 6 percent, could by itself achieve the Kyoto goals. But this needn’t require repeating that era’s high energy prices; advanced energy efficiency is earning many firms annual returns of 100 to 200 percent, even at today’s low and falling prices. Rapid savings depend less on price than on ability to respond to it: Seattle’s electric rates are half those of Chicago, yet it is saving electrical loads 12 times faster than Chicago because its utility helps customers find and buy efficiency.
The Kyoto debates about carbon reduction targets are like Congress’s fierce 1990 debates about sulfur reduction targets. What mattered was the trading mechanism used to reward sulfur reductions-the bigger and sooner, the more profitable. Now sulfur reductions are two-fifths ahead of schedule, at about 5 to 10 percent of initial cost projections. Electric rates, feared to soar, fell by one-eighth. The Kyoto Protocol and U.S. climate policy rely on similar best-buys-first emissions trading. But trading carbon will work even better than trading sulfur: It will rely mainly on end-use energy efficiency (which could not be used to bid in sulfur trading), and saving carbon is more profitable than saving sulfur.
Kyoto’s strategic message to business-carbon reductions can make you rich-is already changing business behavior and hence climate politics. Leading chemical, car, semiconductor, and other firms are already behaving as if the treaty were ratified, because they can’t afford to lose the competitive advantage that advanced energy productivity offers. The profit-driven race to an energy-efficient, commercially advantageous, climate-protecting, and sustainable economy is already under way.
In my view, not one of the articles on global warming in the Spring 1998 Issues puts this potentially disastrous global problem in meaningful perspective. Robert M. White comes closest with his point that “Only through the development of new and improved energy technologies can reductions in greenhouse gas emissions of the necessary magnitude be achieved.” However, none of the technologies he lists, with one exception, can provide a major solution to the problem.
In the next half century, world energy needs will increase because of increases in world population and living standards. If the projected 9.5 billion world population in 2050 uses an average of only one-third of the per capita energy use in the United States today, world energy needs will triple. The only available energy source that can come close to providing the extra energy required without increasing greenhouse gas emissions is nuclear power. Solar power sounds wonderful, but it would take 50 to 100 square miles of land to produce the same power as one large nuclear or coal plant built on a couple of acres. A similar situation exists with wind power. Fusion too could be wonderful, but who can predict when or if it will become practical.
In view of the coming world energy crunch, we should be working on all of these technologies, and hopefully major advances can be made. But is it responsible to let the public think we can count on unproven technologies? And is it responsible to imply that we can solve the problem by emissions trading or other political approaches, as suggested by Rob Coppock and Byron Swift?
I respect the qualifications of the three authors I refer to above, and I don’t necessarily disagree with the points they make. But in terms of educating and providing perspective to readers of Issues who are not expert in energy issues, the articles do a disservice. In principle, nuclear energy could, over the next 50 years, provide the added world energy needed without greenhouse gas emissions. But in this country nuclear energy is going downhill because the public doesn’t understand its need and value. This situation results from the antinuclear forces, the so-called environmentalists, who have misled the public and our administration. But aren’t we technologists also to blame for not informing the public about the overall problem and its one effective solution?
If we continue on our present course and the greenhouse effect is real, our children and grandchildren who will suffer can look back and blame the anti-nukes. But will they, should they not, also blame us?
Patent reform pending
The title of Skip Kaltenheuser’s article “Patent Nonsense” aptly describes its contents (Issues, Spring 1998). Kaltenheuser alleges that a provision to create “prior user rights” would undermine the patent system. Let’s begin by explaining that the concept refers to a defense against a charge of patent infringement. This defense is available only to persons who can prove they made the invention at least one year before the patentee filed a patent application and who also actually used or sold the invention in the United States before the patentee’s filing date.
I should point out that the notion of a prior use defense is not unprecedented. The 1839 Patent Act provided that “every person . . . who has . . . constructed any newly invented . . . composition of matter, prior to the application by the inventor . . . shall be held to possess the right to use . . . the specific . . . composition of matter . . . without liability therefore to the inventor.” Moreover, like H.R. 400 and S. 507, prior use under the 1839 act did not invalidate the patent. Even today there is a form of prior use defense for a prior inventor who has not abandoned, suppressed, or concealed a patented invention, or where the patented invention is in public use or on sale more than one year before the U.S. filing date of the patent.
Fundamentally, a prior use defense is needed because no company, large or small, can afford to patent every invention it makes and then police the patents on a global basis. Where inventions are kept as trade secrets to be used in U.S. manufacturing plants, these inventions are job creators for U.S. workers. However, a risk exists that a later inventor may obtain and enforce a patent that can disrupt the manufacturing process. In almost one-half of such cases, the later inventor will be a foreign patent holder. Kaltenheuser draws on a former patent commissioner’s suggestion of how to avoid this risk: Simply publish all your unpatented manufacturing technology so no one can patent it. I don’t know about you, but publishing this country’s great storehouse of technological know-how without any kind of protection, provisional or otherwise, so that its foreign competitors can use it to compete against U.S. workers in U.S. manufacturing plants doesn’t strike me as a terribly good idea.
That brings me to another point-the prior use defense is a perfectly legal “protectionist” exception to a patent. All of our trading partners use prior user rights for just this purpose. Nearly half of all U.S. patents are owned by foreigners. The prior use defense will mean that these later-filed foreign-owned patents cannot be used to disrupt U.S. manufacturing operations and take U.S. jobs. To qualify for the defense, the prior commercial use must be in the United States; a use in Japan or Europe will not qualify.
Finally, it should be noted that the prior use defense is just that-a defense in a lawsuit. The person claiming to be a prior user must prove this in a court of law, and anyone who alleges such a defense without a reasonable basis will be required to pay the attorney’s fees of the patentee.
There are more safeguards in H.R. 400 and S. 507 than space permits me to cover in this letter, but suffice it to say that there have been 16 days of congressional hearings on all aspects of these bills and two days of debate on the House floor. The legislation is supported by five of the six living patent commissioners and by a vast number of large and small high-tech U.S. companies who rely on the patent system, create jobs in the United States, and contribute to our expanding economy. H.R. 400 and S. 507 will strengthen the patent system and allow us to continue our prosperity in the 21st century.
“Patent policy isn’t a topic that lends itself to the usual sausage-making of Congress.” Skip Kaltenheuser’s concluding statement, coupled with material headlined, “The bill’s bulk obfuscates,” captures the essence of recent convoluted attempts to legislate changes in the U.S. patent system.
The U.S. patent system was designed to enable inventors to disclose their secrets in return for the exclusive right to market their innovation for a period of time. There are many in government, industry, and academia who fail to appreciate this. They do not understand that disclosure helps the economy by putting new ideas in the hands of people who, for a fee to the patent holder, find novel and commercially applicable uses for these ideas. Meanwhile, exclusive use of the innovation by the inventor provides a huge incentive for inventors to keep inventing.
Legislation to change the patent system has been pushed in the past three Congresses by certain big business interests, domestic and foreign. Currently, the Senate is considering S. 507, the Omnibus Patent Act of 1997. This measure is intended to harmonize our patent standards with those of foreign systems. I am opposed to this bill, and its House of Representatives companion bill H.R. 400, because they contain several elements that will damage the innovative process and sacrifice our nation’s status as the global leader in technology-driven commerce. Many Nobel laureates in science and economics agree with me.
I appreciate Kaltenheuser’s perspective that the heart of this proposed legislation is a provision to create prior user rights, which encourage corporations to avoid the patent process altogether. To me, it makes sense that under current law, companies that rely on unpatented trade secrets run the risk that someone else will patent their invention and charge them royalties. What doesn’t make sense is that the Senate and House could consider, much less pass, legislation that would permit companies whose trade secrets are later patented by someone else to continue to market their products without paying royalties. Encouraging companies to hide secrets is the opposite of what is needed in an economy that relies on information.
As Kaltenheuser states, “The more closely one looks at the bill, the more its main thrust appears to be an effort by companies at the top to pull the intellectual property ladder up after them.” I’m certain that the void created will destroy the small inventor, substantially harm small business, and reduce U.S. technological innovation.
We must do all we can to preserve the rights and incentives of individuals, guaranteeing that they have ownership of, and the ability to profit from, their endeavors as the Constitution mandates. We must not rush to drastically alter our tested patent system in ways that would produce unsought, unforeseen, and unwelcome consequences.
As Skip Kaltenheuser points out in his excellent article, the bill S.507, now in the Senate, will discourage the flow of new inventions that are essential to our country’s advancement of science and technology. The bill’s proponents make arguments for this legislation and its prior user rights provision but cite no real-life cases showing that such a dramatic change in our patent system is necessary.
Considering the damage such legislation would do, as evidenced by the opposition of two dozen Nobel laureates, the Association of American Universities, the Association of University Technology Managers, and the Intellectual Property Law Institute, it is incumbent on those proponents to show an overwhelming need for this legislation. They have not done so. If a company doesn’t want to file a patent application on every minor invention, in order to protect itself against patent applications later filed by others, all it needs to do is publish that invention anywhere in the world in any language.
Under S.507, even after a patent has issued, a large company could, after initiating a reexamination procedure in the Patent Office, appeal a decision made by the examiner to the Board of Appeals in favor of the patent. If the Board of Appeals also decides in favor of the patent, the large company could then appeal to the Court of Appeals in the Federal Circuit. All this extra and unnecessary legal work required of the patentee would cost him or her hundreds of thousands of dollars, so that many laudable inventions would be abandoned or given away to the deep-pocketed adversary. The U.S. patent system should not operate solely in favor of the multinationals, forcing universities, individual inventors, and start-up companies out of the patent system.
The patent bill that the U.S. Senate is considering, S.507, modernizes America’s two-century-old patent law to bring it into the information age. The bill is strongly supported by U.S. industry, venture capitalists, educators, and the Patent Office. Opposing modernization are many attorneys who, frankly, benefit from the status quo. The opponents rally support against modernization by characterizing it as a sellout to industry and by making the claim that the laws that built America should not be changed.
The vast majority of America’s inventive genius is not patented. It is kept as trade secrets, and for good reason. A U.S. patent protects an invention only in America. When a U.S. patent is granted and published, that invention can be freely and legally copied anywhere else in the world. In most cases, trade secrets are the only effective way to protect internal manufacturing processes from being copied, and those processes are absolutely critical to maintaining our competitive position in a global economy. Indeed, protecting our trade secrets is why we worry about industrial espionage and why we don’t let competitors, especially foreign competitors, see everything they would like to see in our factories. If we were unable to keep trade secrets, we would be making a free gift of U.S. technology to the rest of the world.
In spite of this obvious truth, America’s right to have trade secrets is under powerful attack by some attorneys. Skip Kaltenheuser advances the “patent it or lose it” theory, which says that because they failed to get patents, the owners of trade secrets should be vulnerable to losing their businesses. This heavily promoted theory is based on the rather far-fetched premise that the primary purpose of patent law is to force inventors and innovators to publish the details of their technology. Under this theory, anyone who invents and fails to publish or patent the invention should lose it. To make this theory work, it is necessary to discard our cherished notion that patents should go only to first inventors. The “patent it or lose it” theory uses patents as an enforcement tool – a kind of prize awarded to people who “expose” the trade secrets of others. It would permit people who are clearly not first inventors to openly and legally patent the trade secrets of others. The new patent owner would then have the right to demand royalties or even shut down the “exposed” trade secret owner. Under this theory, the trade secrets used to make the local microbrew or even Coca Cola could legally be patented by someone else. And, of course, so could the millions of inventions and innovations that are routinely used in U.S. factories.
Existing U.S. patent law contains wording that can be interpreted (I would say misinterpreted) to give support to the “patent it or lose it” argument advanced by Kaltenheuser. The problem lies in section 102(g), which says that an inventor is entitled to a patent unless “before the applicant’s invention thereof, the invention was made in this country by another who had not abandoned, suppressed or concealed it.”
That word “concealed” is the culprit. The intention behind the wording is laudable. It is designed to ensure that inventions are used to benefit the public and that someone’s inventive work which was long buried and forgotten cannot be brought up later to invalidate the patent of another inventor who commercializes the invention and is benefiting the public. What some attorneys are now claiming, however, is that “concealed” should apply to any unpublished invention, without regard to whether or not it is being used to benefit the public. In other words, any inventive trade secret is fair game to be patented by someone who can figure it out.
The best solution to this problem is to do what most other counties have done. They protect their inventors, entrepreneurs, and trade secrets with what they call prior user rights laws. In principle, a prior user right law provides the same kind of grandfather protection that exists in many U.S. laws. It lets businesses keep doing what they were doing even though someone comes along later and somehow manages to get a patent on their trade secret.
Title IV, the “prior domestic commercial use” section of S.507, is a very carefully worded and restricted form of prior user rights. It provides an elegant win-win solution when a patent is granted on someone else’s commercial trade secret. The bill says that if the trade secret user can prove that he was using his technology to benefit the public with goods in commerce and that he was doing these things before the patentee filed his patent, then he may continue his use. The bill contains other restrictions, including the requirement that the trade secret owner be able to prove that he was practicing the technology at least a year before the patentee filed his patent. This simple solution will make many of today’s bitter legal battles over patents unnecessary. Because a prior user need only meet the required proofs, it will no longer be necessary to attack and defend the patent’s validity. The obvious benefit to small business is such that most of the major small business organizations have come out in support of S.507.
S.507 will help stem the astronomical growth in legal fees being paid by U.S. manufacturers to protect their intellectual property. And, pleasesing the Constitutional scholars, S.507 will restore patents to their intended purpose-incentivizing technology and progress, not taking the technology of others.
“The bill [S. 507] was designed not for reasoned debate of its multiple features but for obfuscation,” charges Skip Kaltenhauser. Yet the record behind the comprehensive patent reform bill extends back to the 1989 report from the National Research Council and the 1992 report from the Advisory Commission on Patent Law Reform (itself based on 400 public comments), not to mention 80 hours of hearings over three Congresses. To the contrary, this bill is a model of transparency. Does Kaltenhauser not know this history or does he deliberately disregard it? And how can he characterize as “nonsense” a bill supported by every living patent commissioner save one?
Repudiating all the errors and misleading statements in Kaltenhauser’s article would take more space than the original. A partial list of whoppers:
- The concluding sentence, “Let’s take time to consider each of the proposed changes separately and deliberately,” carries the false implication that this has not already been done, when demonstrably it has. Each major component was originally introduced as a separate free-standing bill. Kaltenhauser seems to be unaware that the Senate previously passed a prior user rights bill (S. 2272, in 1994). Where was he then?
- “There is also a constitutional question. Most legal scholars . . . interpret the . . . provision on patents as intending that the property right be ‘exclusive.'” First, the proposed prior user right (S. 507, Title IV) would create only a fact-specific defense that could be asserted by a trade secret-holding defendant, who would have to meet the burden of proof in establishing that he or she was the first inventor, before the patent holder. This fact-specific defense would no more detract from exclusivity than does the more familiar fact-specific, limited defense of fair use in copyright.
All the supposed consequences of a (nonexistent) general derogation to the patent right therefore simply cannot occur. Moreover, every other major nation already has enacted such a defense, although you would never know that from reading Kaltenhauser. Nor would you learn that the extant right is rarely invoked in litigation-in France and Germany, seven cases each over two decades; in England and Italy, no recorded cases. What the provision does is to replace high-stakes litigation where the only certainty is a harsh result-a death penalty for the trade secret, or occasionally for the patent-with a grandfather clause that leads to licensing as appropriate.
Second, Congress emphatically does have the power to create a general limitation on rights (nonexclusivity) if it so chooses. The Constitution grants a power to Congress, not a right to individuals (a point often misconstrued), and the greater power to create exclusive rights logically implies the lesser power to create nonexclusive rights that reach less far into the economy, as preeminent copyright scholar Melville Nimmer always made clear. Congress first created such nonexclusive copyright rights under the same constitutional power in 1909, and the U.S. Copyright Act today has more such limitations than any other law in the world. Claims of unconstitutionality are frivolous.
The first consideration-that a prior user right is a specific, not general, limitation of rights in the first place, carrying no loss of exclusivity-of course totally disposes of the constitutional objection. Yet the larger bogus claim needs to be demolished, as the charge of unconstitutionality carries emotional freight and will be accepted by the unsuspecting.
- “Entities that suppress, conceal or abandon a scientific advance are not entitled to patent or other intellectual property rights. It is the sharing of a trade secret that earns a property right.” Did Kaltenhauser read the Restatement of Torts, the Model Trade Secrets Act, or the Economic Espionage Act? The well-established general rule is that trade secret protection flows to anything that confers a competitive advantage and is not disclosed; and when the proprietor decides to practice the technology (if it is that) internally, no loss of rights applies. Trade secrets are not suspicious; to the contrary, Congress legislated federal protection in 1996, in the face of widespread espionage by foreign governments.
Companies often face difficult decisions as to which remedy to choose-patent or trade secret. According to the late Edwin Mansfield, companies choose patents 66 to 84 percent of the time. When they pass up trying for a patent, they do so for one of two basic reasons. First, to avoid undetectable infringement of inside-the-factory process technologies such as heat treatment. Second, to avoid outrageous foreign patent fees that are designed to make a profit off foreign business.
Faced with the same fees, the bill’s opponents often take a self-contradictory posture, giving up on filing abroad (the only path to get protection anywhere in the world), then bemoaning their lack of protection. The bill’s supporters are working hard to reduce these outlandish fees, thus making it more possible for all U.S. inventors to file for patents abroad.
Skip Kaltenheuser attacks the proposal to modernize our patent law. On the other hand, virtually all of U.S. industry, almost all former patent commissioners, and many successful U.S. inventors support the Omnibus Patent Act of 1997, S. 507, because it will provide increased intellectual property protection for all inventors and those who put technology to use, whether or not it is the subject of a patent (most U.S. innovators and businesses do not have patents). Our patent law, written two centuries ago, today puts U.S. inventors and industry at a global disadvantage. The modernization bill addresses those problems and also modernizes the patent office so it can keep pace with the rapid development of new technology and resulting patent applications.
Foreign entities now obtain almost half of U.S. patents, and they have the right to stop U.S. innovators from using any of the technology covered by those patents. Patents, no matter how obtained or however badly or broadly written, carry the legal presumption of validity, and challenging them in court can cost millions in legal fees. The modernization bill provides an inexpensive and expert forum (the patent office itself) for adjudicating questions about the validity of inappropriately obtained patents.
Kaltenheuser offers emotional quotes from people he claims oppose the bill. He cites an open letter signed by Nobel laureates. One of the signatories to that letter, Stanford University physics professor Douglas Osherhoff, wrote the Senate Judiciary Committee to say, “my name was placed on that letter contrary to my wishes, and it is my expectation that it [S. 507] will indeed improve upon existing patent regulations.” Similarly, Nobel laureate Paul Berg asked that the opponents of S. 507 stop using his name because he supports the bill: “Indeed, I believe [the Omnibus Patent] bill offers improvements to the procedures for obtaining and protecting American inventions.” And in spite of Kaltenheuser’s claim that the patent bill will dry up venture capital, the National Venture Capital Association supports the bill.
Successful manufacturing depends on confidential proprietary technology-trade secrets. Kaltenhauser’s proposal to eliminate from the bill the prior user defense against patent infringement would continue to punish companies (and individuals) who invest scarce resources to develop technologies independently, do not publish or patent them, and put them to use before others have filed a patent application on these same technologies. Such disincentives to investment and risk-taking are clearly counter to sound economic policy and would allow the ultimate patent recipient to force those innovators and companies to pay royalties on their own independently developed technologies, or even to stop using them altogether. A prior user defense would prevent this. Also, the impact on the patent holder is minimal, since, apart from the entity that successfully asserts the prior user defense, the patent holder can still collect royalties from any other users of the technology.
Kaltenheuser quotes former Patent Commissioner Donald Banner as saying that the only thing companies have to do is publish all their technology, and then it can’t be patented. But why should manufacturers have to publish their trade secrets so their competitors can use them, or be required to get patents just to establish the right to keep using their own innovations?
If we do not reform our patent system and U.S. companies have to publish or patent everything they do, our leading-edge technology and manufacturing will be driven offshore. We need the United States to be a safe place for creating intellectual property and putting it to work. Most foreign countries protect their native technology and industries by allowing trade secrets and prior user rights. We should do the same.
Like Richard Munson and Tina Kaarsberg (“Unleashing Innovation in Electricity Generation,” Issues, Spring 1998), I too believe that a great deal of innovation can be unleashed by restructuring the electric power industry. Some transformation is likely to occur simply because electricity generators will, for the first time in nearly a century, begin to compete for customers. Much more change can be stimulated, however, if we draft national energy-restructuring legislation that fosters rather than stifles innovation.
In drafting my electricity-restructuring legislation (S.687, The Electric System Public Benefits Act of 1997), I was careful to construct provisions that accomplished the direct goal of emissions reductions while stimulating innovation at the same time. One provision requires that a retail company provide disclosure regarding generation type, emissions data, and the price of its product so that consumers can make intelligent decisions regarding their electric service providers. With verifiable information available, many customers will choose to buy clean power. In fact, firms that are currently marketing green energy in California’s competitive market are banking on the fact that people will opt for green power. This consumer demand is likely to increase production of new supplies of renewable energy, a sustainable, clean product.
Another provision would establish a national public benefits fund, whose revenues would be collected through a non-bypassable, competitively neutral, wire charge on all electricity placed on the grid for sale. Money from this fund would be available to states for R&D and to stimulate innovation in the areas of energy efficiency, demand-side management, and renewable energy.
Yet another provision establishes a cap and trading program for nitrogen oxide emissions. This provision would put in place a single, competitively neutral, nationwide emission standard for all generators that use combustion devices to produce electricity. Currently, older generation facilities do not face the same tough environmental standards as new generation facilities, and the nitrogen oxide emission rates of utilities vary by as much as 300 percent. The older facilities continue to operate largely uncontrolled and thus maintain a cost advantage over their cleaner competitors. With this provision, the older firms would be forced to upgrade to cleaner generation processes or shut down.
The three provisions I outline above are just a selection of the innovation-stimulating measures in my bill, and the measures in my bill are just a selection of the measures included by Munson and Kaarsbergin their insightful article. Congress should carefully consider including many of these proposals when it passes national energy-restructuring legislation.
Richard Munson and Tina Kaarsberg do a fine job of describing the technological advances in store for us upon electricity deregulation. I think we share the view that no issue is more important than deregulating the electric industry in such a way that technological advances, whether distributed or microgeneration, silicon control of power flows on the grid, or efficiency in fuel burning and heat recapture are given the best possible chance.
But for that very reason, I’m reluctant to praise the drive for mandatory access as the fount of new technology. It isn’t that we need programs like the Public Utilities Regulatory Policy Act and mandatory access to force what amounts to involuntary competition across a seized grid. Instead, government must strive to remove legal impediments to voluntary competition and allow markets to deliver competition on their own, instead of instituting an overarching federally regulated structure to manage transmission and distribution.
In electricity, the primary impediment to competition is not the lack of open access but the local exclusive franchise, usually in the form of state-level requirements that a producer hold a certificate of convenience and necessity in order to offer service.
In a free market, others should have every right to compete with utilities, but how they do so is their problem. But the problem is not insurmountable. (Several Competitive Enterprise Institute publications explore the theme of a free market alternative to mandatory open access; see www.cei.org.)
For reform to foster technological advances fully, the size of the regulated component must shrink, not grow, as it may under open access. Mandatory access can itself discourage the development of some important new technologies by tilting the playing field back toward central generation. As evidence of this, energy consultants are advising clients not to bother with cogeneration because open access is coming; and breakthough R&D on the microturbines we all love is hindered by regulatory uncertainty.
Ultimately, reformers must acknowledge the fundamental problem of mandatory open access: A transmission utility’s desire to control its own property is not compatible with the desire of others to hitch an uninvited ride. No stable regulatory solutions to this problem exist.
I believe the authors would find that the technological advances they anticipate are best ensured not by imposing competition but by removing the artificial impediments to it.
Richard Munson and Tina Kaarsberg present a clear vision of where power generation could go if innovation were unleashed and institutional barriers remanded. The electric restructuring now underway in California deals with many of the issues they raise.
The California Energy Commission has been a strong advocate for market economics and consumer choice. We have supported CADER, the California Alliance for Distributed Energy Resources, and we are supporting the largest state-funded public interest research program to spur innovation in the industry. Because the electric industry is highly dependent on technology, I believe that industry players who wish to become leaders will voluntarily invest in R&D to provide consumer satisfaction. Since the start of restructuring, numerous investors have approached the commission with plans to build the new highly efficient, low-emission power plants cited in the article. These facilities will compete in the open market for market share. Although California’s installed capacity is extremely clean, its efficiency needs improvement. As new facilities are constructed, such as one recently completed 240-megawatt facility operating at 64.5 percent efficiency with extremely low air emissions, they will bring competitive and innovative solutions into our market.
Despite all the optimism about new generating facilities, regulatory barriers such as those described by Munson and Kaarsberg continue to inhibit the most innovative approaches, especially those in the area of distributed generation. I strongly support their call for consideration of life-cycle emissions determination and for output-based standards. Too many regulators don’t understand the need to take into account the emissions produced by the system as a whole. In addition, emissions created when equipment is manufactured and fuels are produced are often overlooked. Another area of concern is the repowering of existing sites. Those sites and related transmission corridors have extensive associated investments in infrastructure that may be lost if environmental rules do not allow for rational cleanup and reuse.
Electricity generation and reduced air emissions represent only half of the available opportunities in a restructured industry. The other half is the opportunity for more effective use of electricity. The Electric Power Researach Institute has been successful in developing electrotechnologies that reduce overall energy use and minimize pollution. Armed with consumption data available from recently invented meters and the expanding information available on the Internet, customers can take greater control over how they use electricity. An active marketplace for energy-efficient products is an important goal of California’s restructuring.
California has just begun the profound change contemplated by the authors. Although it is too early to predict the final outcome, it is not too early to declare victory over the status quo. The danger in predicting the outcome of electric industry restructuring is that we will constrain the future by lacking the vision to clearly view the possibilities.
Genes, patents, and ethics
Mark Sagoff provides a good overview of recent changes in the interpretation of patent law that have permitted genetically modified organisms to come to be considered “inventions” and therefore patentable subject matter (“Patented Genes: An Ethical Appraisal,” Issues, Spring 1998). He also accurately lays out the concerns of religious groups that oppose this reinterpretation on theistic moral grounds. But opposition to the patenting of life is also widespread among secular advocates of the concept of a “biological commons,” supporters of the rights of indigenous peoples to benefit from their particular modes of interaction with the natural world, and scientists and legal scholars who disagree with the rationale for the Supreme Court’s 5-4 decision in Chakrabarty, which at one stroke did away with the nonliving/living distinction in law and opened the way for eventual elimination of the novelty requirement for inventions relating to biomolecules. By not dealing with this opposition, some of which, like the religionist’s concerns, also has a moral basis, Sagoff can represent as “common ground” a formula that would give away the store (large chunks of nature, in this case) to the biotech industry in exchange for its technologists acknowledging that they do not consider themselves to be God (in Sagoff’s words, “not . . . to portray themselves as the authors of life [or] upstage the Creator”). This might be acceptable to most people on the biotech side but not to any but the most legalistic of theists. It would certainly not satisfy the secular critics of patents on life.
Since the 1980 Chakrabarty decision, U.S. law treats genetically modified organisms as “compositions of matter.” This interpretation stems from an earlier opinion by the Court of Customs and Patent Appeals that the microorganism Chakrabarty and his employer General Electric sought to patent was “more akin to inanimate chemical compositions [than to] horses and honeybees, or raspberries and roses.” Thus, a biological solecism that would have raised howls from academic scientists on the boards of all the major biotech corporations, had it been included in a high court opinion relating to the teaching of evolution, was unopposed as the basis for the law of the land when there was money to be made.
Traditions within the world’s cultures, which include but are not limited to the mainstream religions, provide ample basis for resistance to the notion that everything, including living things, is fair game for privatization and transformation into product. Such commodification would inevitably come to include humanoids-the headless clones that were recently discussed approvingly by a British scientist, as well as all manner of “useful” quasi-human outcomes of germline experimentation. The Council for Responsible Genetics, a secular public interest advocacy organization, states in a petition that has already garnered hundreds of signatures that “[t]he plants, animals and microorganisms comprising life on earth are part of the natural world into which we are all born. The conversion of these species, their molecules or parts into corporate property through patent monopolies is counter to the interests of the peoples of this country and of the world. No individual, institution, or corporation should be able to claim ownership over species or varieties of living organisms.”
By ignoring such views, which have worldwide support that has often taken the form of popular resistance to the intellectual property provisions of the biotech industry-sponsored international General Agreement on Tariffs and Trade, and instead describing the major opposition to the industry position as coming from the religious community, Sagoff winds up espousing a framework that would leave in place all but the most trivial affronts to the concept of a noncommodified nature.
Mark Sagoff makes a valiant attempt to reconcile the divergent views of religious leaders and the biotechnology industry regarding gene patenting. Yet his analysis suffers from the same misperceptions that accompanied the original statements from the religious leaders. The foresight of our founding fathers in establishing the right to obtain and enforce a patent is arguably one of the principal factors that has resulted in the United States’ pre-eminence among all the industrial countries. Throughout the 200-plus years of our nation’s history, inventors have been celebrated for the myriad of innovative products that have affected our daily lives. In biotechnology, this has meant the development of important new medicines and vaccines as well as new crop varieties that are improving the sustainability of agriculture.
The question of “ownership” of life has been wrongly stated by the clergy. As representatives from the Patent and Trademark Office have often noted, a patent does not confer ownership; it grants the holder the exclusive right to prevent others from profiting from the invention for a period of 20 years from the time the patent was filed. Second, Sagoff alludes to patents on naturally occurring proteins. The proteins themselves are not the subject of composition-of matter-patents. What is patented is a method of purification from natural sources or through molecular cloning of DNA that will express the protein. Thus, I cannot own a protein that is produced in the human body. I can, however, have a patent on the expression of the protein or on the protein’s use in some therapeutic setting.
Sagoff’s summary of the usefulness of the patent law gives short shrift to the important feature of public disclosure. When a patent is published, it provides a description of the invention to all potential competitors, permitting them the opportunity to improve on the invention. Thus, although the original patent holder does have a period of exclusivity in which to use the invention, publication brings about new inventions based on the original idea. It is fruitless to try to protect new biotechnology inventions as trade secrets because of the large number of researchers in the industrial and academic sectors. Despite the relatively brief history of patents in the biotechnology area, there are countless examples of new inventions based on preceding patents.
Sagoff’s search for common ground leads to proposed legislation modeled on the Plant Variety Protection and Plant Patent Acts (PVPA and PPA). Passed at a time when new plant varieties could be described only by broad phenotypes, these acts were designed to provide some measure of protection for breeders of new plant varieties. Because a plant breeder can now describe the new traits in a plant variety at the molecular level, a patent can be obtained. This offers more complete protection of the invention. Consequently, the PVPA and PPA are infrequently used today.
Sagoff’s proposal is a solution in search of a problem. The case has not been made that under U.S. patent law the issuance of a patent either confers ownership of life or its creation. Changing the law to eliminate use patents for biotechnology inventions would surely cause major uncertainties in companies’ ability to commercialize new discoveries.
Carl Safina’s “Scorched Earth Fishing” (Issues, Spring 1998) highlights a number of critical issues regarding the conservation of marine systems and the development of management strategies for maintaining sustainable catches from marine fisheries. The present dismal state of many wild fisheries is the result of poor management in three interconnected areas: overfishing, bycatch, and habitat alteration.
A colleague and I just completed a global review of the literature related to the effects of fishing on habitat, to serve as a reference for U.S. federal fisheries managers. Measurable effects on habitat structure, benthic communities, and ecosystem processes were found to be caused by all types of mobile gear. Because little work has been done to assess the effects of fixed-gear harvesting strategies, data are not available to suggest that fixed rather than mobile gear be used. However, common sense tells us that individual units of fishing effort, if transferred from mobile to fixed gear, would reduce the areas affected. Ultimately, it is the frequency and intensity of effects that change marine systems (for example, how many tows of an otter trawl are equivalent to a scallop dredge, how many sets of a gillnet are equivalent to an otter trawl, etc.). Until we have much greater knowledge of how fishing mortality, bycatch, and habitat alteration interact to produce changes in marine ecosystems, precautionary approaches must be instituted in management. Total harvests must be constrained and the areas open to fishing reduced in size. Error must be biased on the side of conservation, not the reverse. I fully concur with the suggestion that we require no-take reserves to serve as barometers of human-caused effects, to allow representative marine communities to interact under natural conditions, and to serve as sources of fish for outside areas. Even here, we are forced to broadly estimate where and how large such no-take areas should be. For many species, we have little to no data on movement rates, sources and sinks for larvae, and habitat requirements for early benthic life stages. Only by adaptively applying precautionary approaches in all three areas of management will we develop the knowledge and wisdom to manage ecosystems for the benefit of both humans and nature.
I write these words while at the helm of my fishing trawler on a trip east of Cape Cod; the fishing is good and getting better as the trip progresses. Carl Safina’s article is on the chart table. Most crew members who see it shake their heads and say nothing. But his unfair condemnation of the sustainable fishing practices used by myself and most other trawlermen cuts deeply and demands a response.
The use of towed bottom-tending nets for harvesting fish from the sea floor is many hundreds of years old. The practice provides the world with the vast majority of landings of fish and shrimp. Bottom trawling is not without its environmental effects, but to simply declare it fishing gear non grata is not sensible. The many species that mobile gear catches–flounder, shrimp, ocean perch, cod, and haddock, to name a few–would virtually disappear from the shelves of stores and the tables of consumers around the world if bottom trawling were stopped.
Safina implies that fishermen could turn to a less-invasive means of catching fish, such as hooks or traps. He also knows that the use of such set or fixed devices is being restricted because it can hook or tangle mammals and birds.
What I find most disappointing about the article is that it does not take into consideration scale. It is the excessive use of high-powered fishing practices of any kind, not just mobile gear, that needs to be examined. The impact of bottom gear is acceptable when it is used in moderation and in high-energy areas that do not suffer from the disturbance that it can cause. This happens to be the vast majority of the fishable sea floor. The proof is fifty fathoms below me as I tow my net across the flat featureless plain of mud, clay, and sand that stretches for miles in every direction. For twenty years I have towed this area. Before me, thousands more towed their nets here for the gray sole, ocean dab, cod, and haddock that we still catch. Although the effects of overfishing have been dramatic, stocks are now improving as recently implemented regulations and improved enforcement are taking hold. The identification of critical habitat that must be protected has begun and will continue. But fishermen should not stop using modern sustainable fishing methods that are sound and efficient just because some scientists don’t understand how our complex gear works.
If towing a net across the seafloor is like “harvesting corn with a bulldozer,” as Safina writes, how is it that we are experiencing an increase in the populations of fish that need a healthy ecosystem to thrive? Bottom trawling in this and most sea floor communities does not lower diversity and does little permanent damage when practiced at sustainable levels, which we in New England waters are currently doing.
In his review of the Manufacturing Extension Partnership (MEP) (“Extending Manufacturing Extension,” Issues, Spring 1998), Philip Shapira does a good job of tracing its origins, its successes, and some of the challenges the system will face in the future. There are two factors, however, that have contributed to the success of MEP and require more consideration.
The first of these is that MEP excels in helping manufacturers become more competitive. This is no accident. The vast amount of knowledge that the industry-trained field specialists have acquired in working with 30,000 companies has led to effective service delivery based on the understanding of how small companies grow. Some of the lessons learned include:
- Recognizing that cutting-edge technology is for the most part not the key to success for a business (much to the chagrin of federal labs and other public technology programs). Technology is obviously relevant, but before small companies can use it effectively, they need to be well managed. Technology is simply a tool used to attain a business objective, not an end in itself.
- Understanding that not all small firms are equal. The vast majority of small manufacturers are suppliers of parts and components to large companies. and their ability to modernize and grow is to a large extent limited by the requirements of their customers.
- Realizing that many small firms want to remain small, and growth is not part of their long-term objectives. Much to the surprise of many people in public life, most individuals start a business because they want to earn a good living for themselves and their families, not because they want to become the next Microsoft.
We have also come to realize that significant contributions to a local economy (in terms of higher-wage jobs) result when a small company becomes a mid-sized company. This generally requires that a company have a proprietary product that is sold directly in the marketplace, not a supplier role. As a result of this understanding of the marketplace, MEP centers and their field agents tailor their strategies for increased competitiveness and growth to the specific needs of the customer.
The second factor is the tremendous job that the National Institute of Standards and Technology has done in creating a federal MEP organization that acts in a most un-Washingtonlike manner. I don’t think that the folks who put this system together have been given the appropriate credit. MEP would not exist without a substantial federal appropriation, but it is equally important to recognize that a national system that includes all 50 states could not have been put together without tremendous leadership, planning, flexibility, and organizational skills. The MEP Gaithersburg organization not only partners with several other federal agencies to bring the most appropriate resources to manufacturers at the local level, but it is collaborating with state affiliates to create a vision and a strategic plan for the national system. Moreover, it is holding these same affiliates accountable by using results-oriented standards applied in industry.
Pretty cool for a federal agency, don’t you think ?
Byron Swift’s article (“A Low-Cost Way to Control Climate Change,” Issues, Summer 1998) on the potential uses of emissions trading to implement the Kyoto agreement cost effectively has the right diagnosis but the wrong prescription. Emissions trading certainly can reduce the overall cost of achieving environmental goals. But Swift’s fealty to the “cap and trade” emission trading model blinds him to the real issues involved in developing a workable trading system for greenhouse gases.
The potential of emission trading is becoming universally accepted. Trading is a money saver. It also provides a stimulus to technological innovation, which is the key to solving the global warming problem. Emissions trading also establishes empirically a real cost for emission reductions. This can eliminate the most nettlesome problem of environmental policymaking for the past 25 years: the perennial argument between industrialists who say an environmental program will be too expensive and environmentalists who say it is affordable. Because this kind of argument becomes untenable when prices are known, trading offers the potential to replace some of the heat with light in environmental policy debates.
Unfortunately, however, when Swift looks at how to implement such a program for global warming, he gets tangled up being an advocate for the cap and trade approach, which has been successful in addressing sulfur dioxide emissions, which cause acid rain. But acid rain is a special case, because fewer than 2,000 large, highly regulated, and easily measured sources account for more than 80 percent of all sulfur dioxide emissions in the United States. This is very different from the problem of greenhouse gases, which are emitted from millions of sources of all different sizes and characteristics.
Swift advocates a “cap and trade” system for CO2 emissions from U.S. electric power generating stations. But power generators account for only about one-third of U.S. CO2 emissions. He admits that such a system might not work for the other two-thirds of U.S. emissions. As for the 75 percent of greenhouse gas emissions produced outside the United States, he is forced to admit that “strengthening the basic institutional and judicial framework for environmental law may be necessary,” a project that he acknowledges with remarkable understatement “could take considerable investment and many years.” In the end, then, Swift’s cap and trade approach seems workable for less than one-tenth of the world’s greenhouse gas emissions.
There is also a more subtle problem with limiting the market to those players whose emissions are easily measured. Although the cap and trade system will stimulate technological innovation in the source categories included in the system, it will ignore possibilities for innovation and cost savings outside the system.
The “open trading” approach is more promising. Swift’s claim that open market trades must be verified by governments in advance is incorrect. With regard to market integrity, analogous commercial markets long ago developed many mechanisms to assure honesty in transactions. These include third party broker guarantees, insurance, and independent audits. If government involvement were desired, existing or new government or quasi-governmental agencies could be created to invest in measures that would reduce greenhouse gases and to sell the resulting greenhouse gas credits.
Swift’s article, like much of the discussion on this subject so far, puts the cart before the horse. The big political issue in creating a market system for greenhouse gases is achieving a fair, politically acceptable allocation of the rights to emit. And the big design issue is balancing the conflicting desires for the economic efficiency of the broadest possible market with verifiability. A cap and trade system modeled after the U.S. acid rain program does not satisfactorily address either of these issues in the context of global greenhouse emissions and therefore appears a poor candidate to achieve substantial reductions in greenhouse gases soon. As Swift admits, the rest of the world has neither the capacity nor the inclination to adopt such a system, and in any case the commodity emissions that are addressed by such a system represent only a small fraction of the global greenhouse emissions.
Open market trading fits the real world better than cap-and-trade systems. Of course, neither will work in the absence of government limits on greenhouse gases and a commitment to adequate enforcement. But the right trading system is a powerful tool to stimulate new and more economically efficient means of achieving greenhouse goals.
Immigration of scientists and engineers
Since 1987, the science work force has grown at three times the rate of the general labor supply. To compound the hiring squeeze, the 1990 Immigration Reform Act resulted in a tripling of job-based visas, with scientists representing nearly one-third of the total. Immigration and the subsequent production of Ph.D.s with temporary visas, especially in the physical sciences and engineering, have clearly been a challenge to the science and technology (S&T) system of the 1990s. But to consider immigration apart from other human resource issues might solve one public policy problem but exacerbate others.
We have often discussed human resource development with our colleagues Alan Fechter and Michael S. Teitelbaum. Their “A Fresh Approach to Immigration” (Issues, Spring 1997) captures well the policy choices that have to be made. There is no federal human resource policy for S&T. The federal government, through fellowships, traineeships, and assistantships, invests in the preparation of graduate students who aspire to join the science and engineering work force. No rational planning, however, shapes the selection criteria, the form of student support, the number of degrees awarded, or the deployment of those supported. The composition of the U.S. science and engineering work force reflects a combination of agency missions, national campaigns (such as the National Defense Education Act of 1958), and wild swings in demand stratified by region of the nation, sector of the economy, and industry needs.
Add to this the changing demographics of the student population, with increasing numbers from groups historically underrepresented in S&T, and this could be a defining moment for the future vitality of U.S. research and education in science and engineering. Although women and minorities have made dramatic gains in a number of S&T fields over the past three decades, their representation as recipients of doctoral degrees in most science and engineering fields is still far below their representation in the U.S. population at large, in those graduating from high school, or in any other denominator one prefers. A policy is surely needed. Addressing immigration would be a necessary part of that policy.
Fechter and Teitelbaum suggest that a balanced panel of experts propose separate immigration ceilings for scientists and engineers based on how the ceilings are affecting our national R&D enterprise, including the attractiveness of careers in science and engineering for our citizens. We would expand the panel’s focus to consider not only the attractiveness and accessibility of such careers to U.S. citizens in general but also the extent to which the availability of the world’s talent leads us to ignore the development of our native-born talent.
The proposed panel, they say, would operate under the aegis of the White House Office of Science and Technology Policy, with input from the Department of Labor, the Immigration and Naturalization Service, and federal agencies such as NSF, NIH, and NASA. If one favored a nongovernmental host for such a panel, the National Academy of Sciences could provide a forum for discussion and advice on the full range of human resource issues. We do not fear duplication of effort; rather the contrary.
One might ask why not just take advantage of available immigrant talent rather than pursue the sometimes more painstaking work of developing talent among historically underrepresented native-born groups? We would argue that it is imperative to cultivate a science community that is representative of our citizenry. It is equally imperative to produce research that is responsive to citizen needs and, in turn, generates political support. There is a delicate balance to strike between welcoming all and depending on other nations to populate our graduate schools and future science and engineering work force..
Such dilemmas were often debated with our friend Alan Fechter. His passing robs us all of an analytical voice. With this article, he and Teitelbaum ensured that debate to inform human resource policy and practice will continue.