The third issue is compliance. Because of the severe economic effects of current proposals for emissions reduction, mandatory and binding targets and deadlines could well render the type of agreement now under negotiation inoperable. The answer is to rely on voluntary compliance, which would make possible an immediate start on new reduction programs, early advances in the technologies that would be needed for further progress, and the public confidence that would be created that substantive corrective actions are now being taken. Voluntary compliance, then, is central to a successful international agreement. We are pleased that representatives of the domestic steel industry presented a voluntary action plan to the Clinton Administration earlier this year.
Incentives are likely to be more productive in achieving results than mere governmental mandates.
The same principle applies to the use of taxation to achieve the agreement's objectives. Such measures distort markets and international competition and reduce capital availability for needed future investment. If these four issues are resolved along the lines suggested, there is reason to believe that some real progress can be made in emissions reduction. We should remember that our industry has in recent years made significant progress in reducing its energy consumption. In fact, energy needs have been reduced by 45 percent in the last two decades.