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CLIMATE CHANGE LEGISLATION: 

CONSIDERATIONS FOR FUTURE JOBS 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

NOVEMBER 10, 2009 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3 

WITNESSES 

Breehey, Abraham, director, legislative affairs, International Brotherhood of 

Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers, and Helpers, Department of Government Affairs, Fairfax, VA ................................................... 4 

Berrigan, Carol, director, industry infrastructure, Nuclear Energy Institute, 

Washington, DC ................................................................................................... 6 

Green, Dr. Kenneth P., resident scholar, American Enterprise Institute for 

Public Policy Research, Washington, DC ........................................................... 9 

Thorning, Dr. Margo, senior vice president and chief economist, American 

Council for Capital Formation, Washington, DC .............................................. 10 

Ton-Quinlivan, Van, director, workforce development and strategic programs, 

Pacific Gas and Electric Company, San Francisco, CA ..................................... 12 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 35 

Berrigan, Carol: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 37 

Responses to questions from committee members, with attachments ......... 44 

Breehey, Abraham: 

Testimony .......................................................................................................... 4 

Prepared statement with attachment ............................................................. 69 

Responses to questions from committee members ......................................... 96 

Grassley, Hon. Chuck: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 103 

Green, Dr. Kenneth P.: 

Testimony .......................................................................................................... 9 

Prepared statement with attachments ........................................................... 105 

Responses to questions from committee members ......................................... 142 

Hatch, Hon. Orrin G.: 

Prepared statement of Americans for Tax Reform ........................................ 152 

Kerry, Hon. John F.: 

‘‘Falling Behind on Green Tech,’’ Washington Post article by John Doerr 

and Jeff Immelt, August 3, 2009 ................................................................. 157 

Thorning, Dr. Margo: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 159 

Responses to questions from committee members ......................................... 169 

Ton-Quinlivan, Van: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 183 

Responses to questions from committee members ......................................... 191 

Page

IV 

COMMUNICATIONS

American Petroleum Institute ................................................................................ 197 

Association of American Universities and Association of Public and Landgrant Universities ................................................................................................ 200 

Kammen, Daniel M. ................................................................................................ 203 

(1) 

CLIMATE CHANGE LEGISLATION: 

CONSIDERATIONS FOR FUTURE JOBS 

TUESDAY, NOVEMBER 10, 2009 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:15 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Kerry, Stabenow, Cantwell, Carper, Grassley, 

Hatch, and Roberts. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Thomas Reeder, Senior Benefits Counsel; 

Cathy Koch, Chief Tax Counsel; Pat Bousliman, Natural Resource 

Advisor; and Ryan Abraham, Professional Staff. Republican Staff: 

James Lyons, Tax Counsel. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The hearing will come to order. 

In 1971, the noted economist and Harvard dean Edward Mason 

said: ‘‘There seems to be no reason to believe . . . that the 

employment-creating effects of restoring the environment will be 

any less than those involved in polluting the environment.’’ It 

seems that the debate over jobs and the environment has been 

around about as long as we have had either jobs or an environment. 

Today, we will consider whether climate legislation will create 

jobs in the energy sector. We will examine further this committee’s 

role in climate legislation. And we will discuss what we can do to 

both create jobs and to ease the transition to an economy that accounts for the cost of carbon dioxide. 

I am committed to passing meaningful, balanced climate change 

legislation. I am committed to legislation that will protect our land 

and those whose livelihood depends on it. I want our children and 

grandchildren to be able to enjoy the outdoors the way we can 

today. So I am going to work to pass climate change legislation 

that is both meaningful and can muster enough votes to become 

law. 

Today, we will hear predictions—some optimistic, some otherwise—about the effects that climate legislation will have on American jobs and the American economy. We need to consider these 

predictions, but we also need to consider the consequences of failing to act. 

2 

We can already see some of these consequences in my home 

State of Montana. We can see the consequences in forests near my 

hometown of Helena, destroyed by pine beetles that thrive in 

warmer temperatures. We can see the consequences in sustained 

drought and more frequent wildfires, and hotter wildfires, I might 

add. We can see the consequences in decreased snowpack and 

lower stream flows, reducing water for irrigated agriculture and 

starving out our blue-ribbon trout streams of cold water—which I 

might add are a huge tourist attraction for our State’s economy. 

These are serious consequences, and I believe that we can mitigate 

their effects in a way that does not harm the economy. 

History is instructive. As a senior Senator on the Environment 

and Public Works Committee, I wrote much of the bill that became 

known as the Clean Air Act Amendments of 1990. That legislation 

established a cap-and-trade system to curb sulfur dioxide emissions 

and nitric oxides, as well. It helped to combat acid rain. 

During the debate on that bill, several industry studies made 

dire predictions about the effects of the legislation on the economy. 

Even studies from the Environmental Protection Agency estimated 

the annual costs at between $2.7 and $4 billion a year. And, during 

that debate, there were also dire predictions about job losses. In 

1990, the EPA predicted that between 13,000 and 16,000 coal mining jobs would be lost as a result of the Acid Rain Program. 

But a decade later, an EPA analysis determined that the cost of 

cutting emissions was far lower than they had expected. Reaching 

the sulfur dioxide goals set by the 1990 Amendments cost an estimated $1 to $2 billon a year, less than half the original estimate. 

EPA found that job loss was about one-fourth of what was predicted, and about 95 percent of the job loss that did occur was due 

to productivity gains in the industry. Very few jobs were lost due 

to the Acid Rain Program itself. 

Let me be clear. We should work to minimize any job loss, but 

we should recognize that, in the case of acid rain, the negative consequences were far less than projected. We should keep this in 

mind when similar claims are made about the effects of legislation 

to address climate change. And we should recognize that the Bush 

administration noted how cost-effective the Acid Rain Program 

was. The Bush administration found that its benefits exceeded its 

costs by more than 40-to-1. 

To be fair, the scope of climate change legislation is far broader 

than acid rain. And while we must always be mindful of the cost 

of legislation—that is particularly true in today’s economy—our unemployment rate remains far too high. And it is estimated to stay 

high for a good time yet, not come down soon. And we must be diligent to create jobs, including in the energy sector. Again, we can 

point to some successes. 

In recent years, Congress has extended and modified the tax 

credit for production of power from renewable resources, such as 

wind and biomass. With that credit, wind turbine and turbine component manufacturers announced, added, or expanded more than 

70 facilities in the United States in 2007 and 2008. These facilities, 

when fully online, will represent 13,000 new direct jobs. 

I am also very interested in a new incentive that we wrote earlier this year, a 30-percent credit for advanced energy manufacVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
3 

turing. We passed this credit to spur domestic production of clean 

energy development. I will be keeping a close eye on implementation of this credit, both in terms of energy independence and for 

creating jobs. 

I look forward to hearing our witnesses’ views. I look forward to 

further consideration of these issues in the Finance Committee, 

and I very much look forward to our efforts to protect both jobs and 

our environment. 

I will be asking some questions. Some of them will be along the 

lines of a devil’s advocate, pressing witnesses to see what is up, 

what is real, what is not. 

I will now turn to Senator Grassley. 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman. 

It is the responsibility of Congress to weigh the costs and benefits of every policy decision it makes, and the bigger the issue, the 

more important it becomes. 

The Environment and Public Works Committee is the place for 

a detailed examination of the purported environmental benefits of 

any climate change proposal, and that is an important part of the 

equation. This committee’s expertise is in the costs and economic 

impacts of new taxes. It, therefore, has the relevant expertise to 

evaluate the costs associated with climate change legislation. 

Today’s hearing, about the impact of climate change on jobs, 

builds on lessons this committee has learned from past hearings. 

Last year, then-Congressional Budget Office Director Peter Orszag 

testified that, under a cap-and-trade system, prices for energy 

would necessarily increase. ‘‘Skyrocket’’ is the term that President 

Obama has used about price increases. Dr. Orszag explained, ‘‘Such 

price increases would stem from the restriction on emissions and 

would occur regardless of whether the government sold emission allowances or gave them away. Indeed, the price increases would be 

essential to the success of a cap-and-trade program. . . .’’ 

Both he and Robert Greenstein of the Center for Budget and Policy Priorities also testified that the impact of those price increases 

would fall most severely on the lowest-income Americans. 

Some have tried to claim that cap and trade would somehow 

make enough money through auctioning allowances to cover increased costs to American families, but this ignores the fact that 

this money will be taken from the American people in the first 

place. 

The current Director of CBO, Doug Elmendorf, addressed this 

issue when he testified before the committee in May of this year. 

In response to written questions, he made clear that ‘‘the allowances that are created under a cap-and-trade program do not add 

wealth to the economy. Rather, they are simultaneously a cost and 

a source of income.’’ He also went on to make it very clear that the 

value of allowances would ‘‘. . . inevitably fall short of the total economic effects of the policy. . . .’’ In other words, there is no free 

lunch with this issue. 

At the same hearing, Dr. Elmendorf testified that ‘‘by channeling 

productive resources toward reducing (the risk of damages from cliVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
4 

mate change) rather than toward producing goods and services that 

are measured in gross domestic product, such policies would be 

likely to reduce GDP relative to what otherwise would occur.’’ 

In testimony just last month before the Energy and Natural Resources Committee, he confirmed that economic productivity and 

jobs would be lost as a result of the House-passed cap-and-trade 

bill. Despite this, the more stringent Senate version of this legislation is incredibly entitled the ‘‘Clean Energy Jobs and American 

Power Act.’’ 

Like any government regulation, there will inevitably be winners 

and losers, and we will be hearing about that in today’s hearing. 

That is why this hearing is so very important. However, an honest 

cost-benefit assessment requires that we first stop trying to sell 

this policy as if it will have no cost for Americans, and accept the 

basic economic principle that there is no such thing as a free lunch. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Grassley. 

Now, I would like to introduce our panel. The first witness is 

Abraham Breehey, who is the director of legislative affairs for the 

International Brotherhood of Boilermakers, Iron Shipbuilders, 

Blacksmiths, Forgers, and Helpers. 

Next is Carol Berrigan, director of industry infrastructure at the 

Nuclear Energy Institute. 

Third is Dr. Kenneth Green, resident scholar at the American 

Enterprise Institute for Public Policy Research. 

Then, Dr. Margo Thorning, senior vice president and chief economist with the American Council for Capital Formation. 

And, finally, we have Van Ton-Quinlivan. Is that right? 

Ms. TON-QUINLIVAN. Yes, sir. 

The CHAIRMAN. Good. 

Director of workforce development and strategic programs, Pacific Gas and Electric Company. 

All right. Mr. Breehey, you are first. 

STATEMENT OF ABRAHAM BREEHEY, DIRECTOR, LEGISLATIVE AFFAIRS, INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIPBUILDERS, BLACKSMITHS, FORGERS, 

AND HELPERS, DEPARTMENT OF GOVERNMENT AFFAIRS, 

FAIRFAX, VA 

Mr. BREEHEY. Chairman Baucus, Senator Grassley, and members of the committee, my name is Abraham Breehey, and I am the 

director of legislative affairs for the International Brotherhood of 

Boilermakers. On behalf of the members of my union, thank you 

very much for the opportunity to testify here today. 

The members of the Boilermakers Union will be among those 

workers on the front lines of our Nation’s transition to a clean energy, low-carbon economy. We recognize that it will not be easy, 

but it is essential that the United States not wait to begin the important work of reducing emissions that cause climate change. 

If Congress moves forward with a comprehensive cap-and-trade 

program, the demand for climate solutions will create job opportunities across the economy. We can put American ingenuity and 

skills to work reducing emissions and turn the jobs union members 

do every day into the environmental solutions our Nation needs. 

5 

The lack of a comprehensive policy on global warming and the 

uncertainty associated with the future regulation of greenhouse 

gases is delaying the creation of job opportunities. Waiting to provide investors, regulated entities, and entrepreneurs the market 

signals that will reward innovation only gives America’s competitors a head start in the clean energy race. 

The Senate must demonstrate bipartisan leadership and develop 

the kind of policies that will provide certainty, control costs, and 

encourage job-creating investments. We must not miss an opportunity to make the United States the leader in advanced coal technology development, an undertaking that is essential to meeting 

any significant global effort to reduce emissions. 

We greatly prefer effective, balanced legislation to regulation of 

greenhouse gases under the Clean Air Act. Legislation would more 

effectively balance regional, environmental, and economic concerns, 

while providing the necessary incentives for technology deployment 

that will create jobs. 

The development and deployment of carbon capture and storage 

technology at power plants and industrial facilities is among the 

technological breakthroughs that could reduce our Nation’s carbon 

footprint and create job opportunities for American workers. The 

level of investment, both Federal and private, necessary to ensure 

that widespread commercialization of CCS happens is highly unlikely in the absence of comprehensive clean energy legislation. 

We appreciate Chairman Baucus, Senator Carper, and the other 

Senators involved, for their work in the development of the provisions of S. 1733, designed to encourage early and widespread deployment of CCS at coal plants. The construction of coal-based generation facilities and CCS technology is tremendously laborintensive. The National Commission on Energy Policy recently 

issued a report from its Task Force on America’s Future Energy 

Jobs. 

This task force included representatives of organized labor, industry, and the academic community. The task force relied, in part, 

on job data provided by Bechtel Power Corporation to estimate the 

labor needs associated with the construction of new, clean energy 

generation infrastructure. The estimates for alternative generation 

technologies indicate that coal-based CCS and nuclear power generation options have the highest job creation potential relative to 

other supply options, such as natural gas. 

Based on Bechtel’s analysis, the development and construction 

phase of deploying a normalized 1 gigawatt of power generated by 

an Integrated Gasification Combined Cycle coal plant equipped 

with CCS would employ over 2,700 salaried workers and an hourly 

workforce of over 8,000 skilled workers. CCS development and deployment represents tremendous employment opportunities for the 

members of my union and other workers in the building trades. 

Early deployment and bonus allowance programs for CCS, included 

in the comprehensive climate legislation, will be a tremendous 

driver for job creation in our economy. 

However, good jobs will not necessarily be created by any climate 

legislation without the inclusion of fair, enforceable labor standards. The application of wage standards to the deployment of energy infrastructure will ensure that the benefits of Federal investVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
6 

ment are extended not just to developers and businesses, but to the 

people whose skills are necessary to make this transition happen. 

For example, under the Clean Energy Jobs and American Power 

Act of 2009, workers employed on projects assisted or incentivized 

through allowance allocations will be assured wage rates no less 

than those prevailing in their local community. Ensuring these 

high standards for both workers and contractors will be particularly important when applied to new, highly technical construction 

projects, such as CCS. 

While comprehensive climate legislation that establishes a declining cap on carbon will lead to the creation of new employment 

opportunities, Congress must also act to mitigate adverse employment impacts. Climate policy must not undermine the competitiveness of U.S. manufacturers in the global marketplace. An adequate 

allocation of allowances to an output-based rebate program for 

energy-intensive trade-exposed industries will ensure that the migration of jobs and pollution to countries that fail to act does not 

undermine the goals of domestic action. It is also important that 

the Senate include a strong, yet fair, border measure to prevent socalled carbon leakage. 

In addition, it was deeply disconcerting to learn, this week, that 

Federal clean energy investments made through the Recovery Act 

have been used for projects that generate jobs in China and not in 

the United States. As was widely reported, a Texas wind farm 

project that will rely exclusively on wind turbines manufactured in 

China has applied for financial assistance from the U.S. Department of Energy. It will be American workers and American taxpayers making the sacrifices to reduce emissions. It must also be 

American workers who benefit from the job creation opportunities 

these climate solutions create. 

There are new opportunities for American workers, not just in 

the final construction jobs, but throughout the supply chains of 

clean energy technology. 

I want to close just by reiterating the enormous potential we believe is available to put people to work building the climate solutions we need. This includes energy efficiency through building retrofits, CCS, and countless other innovations, but the work does not 

start until Congress provides the rules of the road and the right 

incentives. The time to act is now. We can make our economy more 

efficient, more energy independent and provide the low-carbon jobs 

we need for long-term, sustainable economic growth. 

Again, I want to thank the committee for the important work you 

are doing and the opportunity to express our views. 

The CHAIRMAN. Thank you, Mr. Breehey. 

[The prepared statement of Mr. Breehey appears in the appendix.] 

The CHAIRMAN. Ms. Berrigan? 

STATEMENT OF CAROL BERRIGAN, DIRECTOR, INDUSTRY INFRASTRUCTURE, NUCLEAR ENERGY INSTITUTE, WASHINGTON, DC 

Ms. BERRIGAN. Chairman Baucus, Ranking Member Grassley, 

and members of the committee, I appreciate this opportunity to express the nuclear industry’s views on future jobs under climate legVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
7 

islation. I am Carol Berrigan, senior director of industry infrastructure at the Nuclear Energy Institute. 

Let me begin by thanking members of this committee for your 

long-standing oversight of the Nation’s fiscal affairs and for your 

support of legislation, like the production tax credit for new nuclear 

generation as passed in EPAct 2005, and the tax credit for manufacturing clean energy technologies afforded under the American 

Recovery and Reinvestment Act this year. 

Both of these programs are important initial steps towards the 

financial incentives necessary to accelerate the deployment of nuclear energy generation and rebuild the Nation’s manufacturing infrastructure. 

Today, the 104 operating reactors in the United States produce 

one-fifth of America’s electricity. U.S. utilities are preparing to 

build advanced-design nuclear power plants to meet our Nation’s 

growing electricity demand. Currently, 13 applications for 22 reactors are under active review by the Nuclear Regulatory Commission. Over $4 billion has been spent on new plant development over 

the past few years, and the industry plans to invest approximately 

$8 billion in the next few years to be in a position to start construction of the first nuclear reactors in the 2011 to 2012 time frame. 

Nuclear energy represents more than 72 percent of the Nation’s 

emission-free generation portfolio, avoiding nearly 700 million metric tons of carbon dioxide per year. This is the equivalent of removing 133 million of the 136 million passenger cars from our roads. 

As Congress and the administration consider climate legislation, 

mainstream analyses show that reducing carbon emissions will require a portfolio of technologies, and that nuclear energy must be 

part of that portfolio. Further, they indicate that the major expansion of nuclear generating capacity over the next 30 to 50 years is 

essential. 

Nuclear energy can have a significant, positive impact on the 

workforce and manufacturing base that arises from current plants, 

new plants, and the supply chain. Each current nuclear unit in operation today directly employs 400 to 700 people. In addition to direct employment, the industry relies on numerous vendors and specialty contractors for additional expertise and services. Over 30 

million man-hours are worked by supplemental craft labor each 

year. 

In addition to payroll spending, nuclear companies procured over 

$14 billion in materials, fuel, and services from over 22,500 domestic suppliers last year. While only 31 States have nuclear power 

plants, nuclear procurement takes place in all 50 States, with an 

average of $277 million of procurement occurring per State. In several States, this procurement is in excess of $1 billion. 

The resurgence of nuclear energy will lead to increasing demand 

for skilled labor at all levels. In addition to producing carbon-free 

electricity, construction of new nuclear power plants will create 

tens of thousands of jobs. According to a recent analysis by the National Commission on Energy Policy, the development of a nuclear 

power plant project will require 14,360 man-years per gigawatt installed. 

A robust nuclear construction program will also significantly expand the U.S. manufacturing sector and the domestic nuclear supVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
8 

ply chain. The nuclear supply chain represents a major opportunity 

for American manufacturers to expand capacity to meet the needs 

of a growing world nuclear-power market. Today, there are 53 nuclear power plants under construction around the world. In addition, there are 137 plants on order or planned, and 295 projects 

under consideration. 

Thanks to the increasing world demand for new nuclear reactors, 

American companies have an unprecedented opportunity to expand 

the nuclear manufacturing base and open new international markets. In the process, nuclear suppliers can contribute substantially 

to job creation, economic development, and the reduction of greenhouse gas emissions. A program to expand nuclear energy, to meet 

U.S. climate change goals, will require a sustained partnership between Federal and State governments and the private sector. 

Financing is the single largest challenge to accelerated deployment of new nuclear power plants. An effective, long-term financing platform is necessary to ensure deployment of clean energy 

technologies in the numbers required, and to accelerate the flow of 

private capital. 

Federal tax stimulus is also an important element that would accelerate capital investment in new nuclear power plants. Tax incentives could also help refill the pipeline of highly trained personnel to build, operate, and maintain new plants, and restore 

America’s ability to manufacture the components and other equipment that go into nuclear plants in the U.S. and abroad, thereby 

creating additional jobs. 

To provide the level of financial stimulus necessary, we encourage you to create a permanent financing platform to provide loans, 

loan guarantees, and other credit support to clean energy technologies, including new nuclear power plants and new nuclear 

equipment manufacturing facilities; provide tax stimulus for investment in new nuclear power plants, new nuclear-related manufacturing and workforce development; and expand the existing production tax credit provided by the 2005 Energy Policy Act. 

Mr. Chairman, in conclusion, the role of nuclear energy in 

achieving the Nation’s climate goals is clearly established. The expansion of nuclear energy in the U.S. and globally provides significant opportunities for American workers and industry, increasing 

high-wage employment and significantly expanding our domestic 

manufacturing sector. 

I encourage you and this committee to continue your legacy of 

leadership on these issues and promote legislation that would provide the necessary financial stimulus to realize these goals. 

Thank you. 

The CHAIRMAN. Thank you, Ms. Berrigan. 

[The prepared statement of Ms. Berrigan appears in the appendix.] 

The CHAIRMAN. Dr. Green? 

9 

STATEMENT OF DR. KENNETH P. GREEN, RESIDENT SCHOLAR, 

AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY 

RESEARCH, WASHINGTON, DC 

Dr. GREEN. Chairman Baucus, Senator Grassley, and members of 

the committee, thank you for inviting me to testify today on this 

timely and important topic. 

I am Kenneth Green, a resident scholar at the American Enterprise Institute. I am an environmental scientist by training, a policy analyst by avocation, and an economist by exposure. 

I have submitted for the record two AEI policy studies on the 

issues before us today, which are part of the research base underlying what I am about to say. 

I have spent the last 15 years analyzing public policy at think 

tanks in both the United States and Canada, with an emphasis on 

air pollution, climate change, and energy policy. Specifically, I have 

studied market-based mechanisms for dealing with pollution problems of all sorts, and have studied cap and trade as it has made 

its appearance in conventional air pollution control, acid rain mitigation, and now, in greenhouse gas control. 

What I can tell you, based on my research, is this: cap and trade, 

the core of greenhouse gas control legislation today, is an inappropriate policy tool for the control of greenhouse gases that will cause 

significant economic harm, will kill export jobs, and produce little 

or no environmental benefit. 

Current legislation applies an emission-trading model to an unsuitable pollutant. For emission trading to work, you need readily 

available technology to capture emissions, or alternative sources of 

energy, that can let some people generate surplus emissions that 

can be sold to others. We heard that with SO2; we do not have that 

with CO2. With CO2, as EPA acknowledges, we are dependent on 

offsets to control costs, and offsets are notoriously slippery. Even 

the economists who first developed the theory and practice of cap 

and trade have said that it is not a suitable mechanism for greenhouse gas control. Earth First agrees. And when you have that 

level of agreement from economists, Earth First, and people like 

myself at AEI, you are talking a serious consensus. Cap and trade 

has not worked in Europe, and it will not work here. 

By design, and despite provisions that try to hide this from the 

public, the carbon control bills now circulating will increase energy 

prices. That is what they are for—slowing economic growth, killing 

jobs, and reducing competitiveness. 

And this is a one-way street, since cap and trade does not only 

cap emissions, it caps economic growth. When GDP goes up, energy 

consumption does also, as do carbon permit prices, choking off continued growth. The tighter the emission cap, the tighter the economic straightjacket. 

As energy prices rise and as American companies find themselves less competitive, businesses and jobs will flow to countries 

without greenhouse gas controls, and without stringent environmental controls of any kind, potentially allowing emissions to increase. The remedy to this, border tax adjustments, is only likely 

to cause a trade war, further damaging the U.S. economy. As increased energy costs raise the cost of U.S. goods and services, conVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
10 

sumption will decline, causing still more job losses across the 

American economy. 

Legislation now before Congress will cause regional and sectoral 

winners and losers, will unjustly redistribute and export wealth 

from industrial, coal-powered States into States with greater hydro, 

nuclear, and natural gas resources, and will send taxpayer dollars 

abroad to countries that are our economic competitors, and sometimes geo-political adversaries. 

Perversely, low-carbon fuel standards might actually prohibit oil 

imports from our number-one foreign supplier, our neighbor to the 

north, Canada. Cap and trade creates a new, poorly understood financial instrument that can be used to leverage debt, potentially 

creating a massive carbon bubble that bursts once it becomes clear 

that we cannot afford to maintain the regime. 

Finally, cap and trade, and all carbon control for that matter, 

puts a bounty on ecosystems. As carbon control favors biofuels, 

more ecosystems will be planted over, and farmland used to grow 

fuel instead of food. A recent article in Science observes that attempting to limit CO2 concentrations to 450 parts-per-million—the 

currently stated goal of carbon controls—would cause bioenergy 

crops to expand, to displace virtually all of the world’s natural forests and savannahs by 2065, and actually increase global greenhouse gas emissions. 

As for the claim that the green energy provisions of current legislation will create green jobs that cannot be exported, this is simply 

not true. As I testified before another Senate committee, governments do not create jobs, they simply move them from one place 

to the other, inevitably, with less jobs on net. Economists have 

known this for over 150 years. Europe has seen much of its green 

industry exported, and the U.S. has already seen solar cell and 

windmill production being moved to China. 

The only thing worse than no energy policy is bad energy policy, 

and that is what S. 1733 and approaches like it represent: bad energy policy wrapped up in misleading terminology that hides the 

true nature of the legislation. 

Thank you for allowing me to speak to you today on this timely 

and important issue. I look forward to your questions. 

The CHAIRMAN. Thank you, sir. 

[The prepared statement of Dr. Green appears in the appendix.] 

The CHAIRMAN. Dr. Thorning? 

STATEMENT OF DR. MARGO THORNING, SENIOR VICE PRESIDENT AND CHIEF ECONOMIST, AMERICAN COUNCIL FOR 

CAPITAL FORMATION, WASHINGTON, DC 

Dr. THORNING. Thank you, Chairman Baucus, Ranking Member 

Grassley, for allowing me to testify today on this very important 

issue. I am Margo Thorning, senior vice president and chief economist of the ACCF. 

Having watched this debate in Congress for the past 15 years, 

I am reminded of a situation—I am a life-long horse lover—of trying to lead a horse over a cattle guard. You have large segments 

of the business community and the private sector concerned about 

moving forward on this type of legislation, just as the horse digs 

in his heels and will not be led through a cattle guard because he 

11 

will break his legs; he knows that. So, I think it behooves us to 

look very carefully at what these policies might mean in terms of 

job growth and employment. 

When policymakers are confronted with the decision about whose 

model is best, what numbers are right, I think you need to distinguish between macroeconomic models used to look at the costs of 

climate bills and input-output models. Most government agencies 

and private think tanks rely on macroeconomic models, because 

they are able to capture the dynamic impact of changes in energy 

prices: how they flow through the economy, how they impact production, and how they impact capital stock and employment. Inputoutput models, which some organizations use, are static models; 

they are not able to capture the dynamic impacts of changes in energy prices. 

I would like to share with you, briefly, the results of a study that 

the ACCF and the National Association of Manufacturers sponsored, examining the impact of the Waxman-Markey bill. We used 

a macroeconomic model, the same model that the Department of 

Energy uses, the National Incident Management System (NIMS) 

model. Our study showed that for the U.S. as a whole, by 2030, the 

Waxman-Markey bill would reduce gross domestic product relative 

to the baseline forecast between 1.7 percent and 2.4 percent. Twopoint-four percent GDP may not sound like much, but it is about 

$600 billion. That is about what we are paying Social Security recipients right now. 

Job growth would be slowed. We did show that we would pick up 

new green jobs; certainly we will because of the provisions of the 

Waxman-Markey bill, but on balance we lose between 1.7 and 2.4 

million jobs in the year 2030. Household income is about $1,200 

less than it otherwise would be. Some of the input-output studies 

that are out there show job growth, but again, as the Center for 

American Progress study admits, they are not dynamic and they 

are not able to capture the impact of higher energy prices on the 

U.S. economy. 

So, what are the positive steps that we could take to try to ensure job growth, as well as energy security, and also make an impact on the growth of greenhouse gas emissions? First, we should 

expand access to onshore and offshore reserves. We should also expand and make it easier to build nuclear generating capacity. Nuclear can certainly be a big part of the solution here. 

We should also accelerate our research on carbon capture and 

storage so that we can burn our vast supplies of coal without negatively impacting job growth. We should continue to work with the 

Major Economies Initiative to try to promote best technologies 

abroad and accelerate the uptake of clean, less emitting technologies. 

So, on balance, when I look at the impact of the Waxman-Markey 

bill or the Kerry-Boxer bill, I can see that most studies, including 

some from CBO, EIA, Charles Rivers, and others, and—as I mention in Table 2 in my testimony which summarizes those—the macroeconomic study shows significant costs. As EPA has testified and 

as the Obama administration has admitted, if the U.S. goes it 

alone and adopts these targets, the environmental benefits would 

12 

be almost nil. By the end of this century, there will be virtually no 

difference in global greenhouse gas concentrations. 

So, when we look at the costs of these bills, and we look at the 

benefits, it is pretty clear the costs outweigh the benefits, and we 

need to go forward, build a bridge that even the most skittish horse 

would be willing to cross, based on better technology, and accelerating working with developing economies. 

Thank you. 

The CHAIRMAN. Thank you very much, Dr. Thorning. 

[The prepared statement of Dr. Thorning appears in the appendix.] 

The CHAIRMAN. Next, Ms. Ton-Quinlivan? 

STATEMENT OF VAN TON-QUINLIVAN, DIRECTOR, WORKFORCE DEVELOPMENT AND STRATEGIC PROGRAMS, PACIFIC GAS AND ELECTRIC COMPANY, SAN FRANCISCO, CA 

Ms. TON-QUINLIVAN. Chairman Baucus, Ranking Member Grassley, and members of the committee, thank you for having me here 

today. 

I am Van Ton-Quinlivan, director of workforce and development 

at Pacific Gas and Electric Company, California’s largest utility. 

As our sector looks ahead, we see an aging infrastructure, the 

advent of new technologies, and a workforce of approximately 

400,000 people with an average age in the mid-40s and 50s. Over 

the next 5 years, 30 to 40 percent of the industry’s workforce is eligible to retire. 

Utilities provide a range of employment opportunities for workers with various skills and education levels. We are unique in that 

we are located in every community across the country, from large 

cities to small towns. The need for a reliable stream of workers for 

our sector would touch every State and region of the country. 

At the same time, according to several studies, not only will our 

sector need to replace large segments of the existing workforce in 

the next 5 years, but we will also need to ensure that the workforce 

exists, able to fill new jobs that our industry creates, as well as 

jobs in sectors that support our industry. 

According to a study conducted by the Brattle Group, our indus- try is poised to make approximately $2 trillion in capital expenditures over the next 10 to 20 years to meet future demand and replace our current infrastructure. Many of the recent actions taken 

by Congress have been helpful with regard to advancing the new 

energy infrastructure, but they have been temporary or timelimited. 

For an industry that makes long-term capital decisions and deploys assets with long lead times, we need a clear, long-term national policy direction that builds off the strong foundation Congress has put in place through tax policies, loan guarantees, and 

other funding and policy initiatives. Doing so will further unlock 

more of this investment and send a signal to our industry regarding the types of expenditures we need to make, the workers we will 

need to hire, and the types of skills these workers will need to possess. 

As opportunities become available, we are focused on having the 

right people, in the right place, with the right training, at the right 

13 

time. The National Commission on Energy Policy’s Task Force on 

America’s Future Energy Jobs brought together diverse stakeholders to better understand and start to address this issue. The 

task force commissioned Bechtel Power to provide estimates of the 

workforce needed for the new energy economy. 

Key insights from that report are: a decline in career and technical education has stressed the power sector’s training capacity, a 

large percentage of the electric power sector’s workforce is nearing 

retirement, and creating a low-carbon energy system will require 

more workers than the industry currently employs and a new set 

of skills. 

The deployment of new assets will require new design, construction, operation, and maintenance skills and more workers than the 

industry currently employs. This is an important opportunity for 

job creation and economic growth. If too few individuals with necessary expertise are available, however, workforce bottlenecks 

could materialize and slow the industry’s ability to take on workers. 

It is the situation that our company is working to avoid. In 2008, 

building off successful training models, we launched the PG&E 

PowerPathway workforce development program. PowerPathway 

collaborates with the community college system and the Workforce 

Investment System to enlarge the candidate pool for our skilled 

craft positions. Program graduates have qualified at an unprecedented level on PG&E’s pre-employment tests, and over 50 percent 

of graduates have been hired by us or by our contractors. 

We are sharing 30 years’ worth of energy efficiency experience 

with the community college system to help deliver on green jobs 

training and support the massive investment being made in energy 

efficiency, including weatherization on building retrofits. We are 

working with the California State University system to create certificate programs in the power engineering and Smart Grid arena. 

When it is time to hire, employers go to where the talent exists. 

Policies need to focus on establishing a pipeline of skilled workers 

throughout the country. The NCEP task force made several recommendations with regard to these policies, which are included in 

my submitted testimony. 

We appreciate the efforts Congress has made to date. I look forward to working with the Senate to craft a comprehensive energy 

and climate package with a focus on those provisions that can 

quickly transition workers into the new energy economy. 

Thank you. 

The CHAIRMAN. Thank you very much, all of you. 

[The prepared statement of Ms. Ton-Quinlivan appears in the appendix.] 

The CHAIRMAN. I am going to ask a question of you, Dr. 

Thorning, in respect to your job loss projections and projected cost 

allowance in future years. There are a lot of projections around, 

probably because this is very difficult for this new ground, new territory—and it is difficult. 

Nevertheless, I did note—and I would just like your comments 

on it—that comparing your projections with those of EPA and EIA, 

for example, and CBO, say by the year 2030, your projected job loss 

is much higher than that of other projections, and, if I read your 

14 

chart correctly, you have projected an allowance cost of between 

$48 and $61 per ton by 2020 that increases to between $123 and 

$159 per metric ton by 2030, which is much above that of others. 

Now, much of one’s conclusions are because of one’s assumptions. 

If you could tell us what your assumptions are that led to that result. It is much different from the results of other projections. 

Dr. THORNING. Thank you, Senator, for that question. 

The assumptions that we used in our study are attached to the 

appendix. I apologize if that did not get to you last night, but I did 

send it, and it was inadvertently left off. But the reason the allowance costs are higher, as shown in Table 2, from our high-cost and 

low-cost case, is that we built in realistic assumptions about how 

quickly new technologies can be deployed. 

We assumed in our low-cost case that 25 new nuclear plants 

would be up and running by the year 2030. Now, we have not built 

a nuclear plant since 1978, so to get 25 new plants, 25 gigawatts 

up in the next 18 years, we think is, between 2012 and 2030, pretty generous. Our high-cost case assumed 10 new nuclear plants in 

place by 2030. 

In terms of carbon capture and storage for coal and natural gas, 

the low-cost case assumed 60 gigawatts, the high-cost case about 

30, and renewables, a similar spread between how quickly we can 

deploy renewables, and all of those assumptions are attached to my 

testimony. 

We tried our best to build in realistic assumptions about how 

much banking would be able to be put in place, how many offsets 

could actually be used. And, when we put in place what our consultants and experts from various industries thought were realistic 

assumptions, the allowance prices that are shown in Table 2 are 

what the NIMS model solved for. 

I would like to note that EIA’s case, which is also shown in my 

table—one of their cases where they limit international offsets, 

they limit how quickly new nuclear can be put in place—shows 

even higher allowance prices in 2030 than do our simulations. 

So, I think it is all, as you point out, a question of what assumptions you use. Some of the EPA work assumes 150 new nuclear 

plants in place by 2050. We think that is four a year between now 

and over the next 4 decades. We think that may be unrealistic, too. 

So, it is very important for you to look at the assumptions behind 

an analysis. EIA’s base case assumed, I think, more than 100 nuclear plants by 2030. We think that is not realistic to build four nuclear plants a year for the next 18 years. 

The CHAIRMAN. As we look at these analyses, what assumptions 

do you think are the most relevant? 

Dr. THORNING. I think the assumption about new technology, 

how quickly can we build nuclear, and how quickly can carbon capture and storage become commercial, because it is not commercial 

now. 

The CHAIRMAN. Any kind of technology in particular? Are you 

talking about CCS? What are you talking about here? 

Dr. THORNING. Well, CCS, exactly, and how quickly renewables 

can be cost-effective sources of energy, how construction costs 

change. And, of course, alternative energies we continue to hope 

will play a larger part, but right now, they are fairly expensive. 

15 

The CHAIRMAN. Are there assumptions that are particularly helpful to examine? If we are going to compare apples with apples, it 

is good to know what—— 

Dr. THORNING. Well, of course, when you are doing the basic 

modeling you need to be sure the growth rate assumptions and the 

baseline forecast are the same, and, in our case, our baseline forecast for growth is the same as what EIA used in 2009. So, you 

want to, as you properly point out, compare apples to apples, and 

also look hard at what the technology assumptions are because I 

think that is the driving force for what is going to be the cost of 

reducing U.S. greenhouse gas emissions. 

The CHAIRMAN. My time is up. One quick question. 

You are a bit of an outlier, based upon what I know. There might 

be many other projections out there I am unaware of. So, if some 

were to criticize your projections, what would those criticisms be? 

If someone had another point of view, what would the most legitimate criticism be? 

Dr. THORNING. They might say that our choice of how much offsets is too constraining, but we base that on some of the work from 

GAO, pointing out the problems with documenting and using offsets. Some of the constraints in the Waxman-Markey bill may 

make it hard to use those offsets. People could criticize that. 

Some people might say, well, renewable energy you have constrained, but based on the difficulties of integrating renewable energy into the grid and the difficulty in siting transmission lines, we 

think they are realistic. 

The CHAIRMAN. My time is up. Thank you very much. 

Senator Grassley? 

Senator GRASSLEY. You can call on Senator Roberts. 

The CHAIRMAN. All right. Senator Roberts has asked if he could 

say a few words. He has a very imminent appointment. 

Senator ROBERTS. I am not sure that ‘‘few words’’ and ‘‘Roberts’’ 

is not an oxymoron. [Laughter.] 

I apologize to my colleagues. I have an 11:15 appointment that 

I simply have to make, and so, I beg your indulgence. And thank 

you, Mr. Chairman. Thank you so much for holding this hearing. 

It is very timely. 

Dr. Thorning, you talked about the macro impact. I am going to 

concentrate on the micro, which is my State of Kansas and what 

it is all about. About 7 percent of the Kansas workforce is currently 

unemployed. We are very fortunate in that respect when we are in 

a 10-percent arena, an unemployment rodeo that we are going 

through that we would just as soon not go through. But we really 

do need an honest and open debate of cap-and-tax proposals, like 

the two bills we are discussing. So, thank you to the ranking member and of the chairman, again. 

I want to emphasize that Kansans have long supported renewable energy. That is not the question. We continue to make investments in these industries. Siemens will soon locate a wind turbine 

manufacturing facility in Hutchinson, KS. We have similar investments all over our State. 

Abengoa is locating a cellulosic ethanol biorefinery in a place 

called Hugoton, KS. These decisions are based on a mix of market 

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16 

and-trade legislation in the Congress. Cap-and-trade proposals, 

which try to ration domestic energy production, would lead to higher unemployment rates and a net loss for our State, both in jobs 

and also economic input. 

Let me give you a few examples, and really what we try to do, 

and I know many members of this committee do, is when you get 

a huge bill like healthcare, or like energy, or like whatever we are 

dealing with, we really appreciate the testimony of the panel, and 

we take it to heart. But, what I do is go right out to Kansas and 

I ask the people involved, is this going to work, tell me if it is going 

to work, will it be a benefit to you, or do you want it, or perhaps 

it will not. 

We rank nine, number nine, with oil and number eight in gas production, and together oil and gas contribute $350 million in 

State revenues—that is vitally needed in the situation we are in 

today—each and every year, and employ about 28,000 men and 

women. 

In each of the last 2 years, the Kansas oil and gas industry in- vested over $1 billion—$1 billion—into our rural communities, our 

small communities. You would be hard-pressed to find an industry 

other than traditional fossil fuels and agriculture that is able to do 

this. 

Additionally, three mid-sized communities, by Kansas standards, 

are home of a refining industry, small, but struggling and very industrious. In McPherson, with a population of 13,500, a small 

farmer-owned cooperative refinery employs 640 hardworking men 

and women. I said this was going to be micro. 

El Dorado, population 12,500, is the home of a small refinery 

that employs 460, with an additional 150 full-time contractors. In 

Coffeyville, KS, the population is 10,350, yet another small refinery 

employs 650 people. 

Now, under this bill that was—I do not know the word, some 

have said it was railroaded, perhaps that is a little harsh, out of 

the EPW Committee last week. These three communities, and 

many others in rural Kansas, have told us they will suffer very severe consequences: higher taxes, job loss, even a possibility of shutting down these three refineries, and a greater dependence on volatile foreign energy. 

I know the proponents of cap-and-trade proposals talk about 

green job creation. I think that is probably the topic of the day. 

Now, I am a seasoned newspaper man, and I get out my trusty, 

worn Webster dictionary, and I do not find a definition of a green 

job. 

So, my question is: what is a green job? And, why should the 

Federal Government, with their definition, pickpocket hardworking 

Kansans with an existing energy industry, as I have just discussed, 

if, at the end of the bill, there are little or no environmental benefits? Does the scrap yard owner who has Cash for Clunker cars 

piled up qualify as a green job? How about the steel worker whose 

product is used in wind energy generation? If that same steel is 

used in a coal power plant, is it treated differently? Is that a green 

job? 

How about agriculture? If you are the average Kansas farmer or 

Iowa farmer, or for that matter, Michigan farmer, and you are proVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
17 

ducing enough food for over 145 people and a whole lot more in a 

troubled and hungry world, does that farmer represent a green job? 

Or do you only qualify for a green job label if you participate in 

the Know Your Farmer, Know Your Food farmer’s market on the 

weekend at the University of Kansas? Ultimately, who determines 

what is a green job? 

Well, I really appreciate Dr. Thorning’s opening comment, this is 

like leading a horse over a cattle guard. I am going to use that, 

madam, and I will give you credit, something that does not happen 

very often in the Congress. 

What market signals do these two bills show to rural and traditional fuel-dependent States, including coal, oil, gas, and agriculture industries? What would be the ripple effect in the State and 

government field? I know this is a micro question, but I represent 

a micro State. 

Dr. THORNING. Thank you very much, Senator. I give you that 

remark, that analogy. 

But you might want to take a look at the analysis that the ACCF 

and NIMS study did on your State. Our study, based on macroeconomic analysis, shows that gross State product in Kansas would 

be $5 billion less in 2030 compared to the baseline forecast, and 

that there would be between 21,000 to 29,000 fewer jobs as a result 

of the Waxman-Markey bill. So certainly, for an energy-intensive 

State like yours, this bill has pretty serious implications. 

Senator ROBERTS. I thank you very much, and thank you, Mr. 

Chairman. Maybe, perhaps, we could find enough jobs to de-ice the 

wind turbines when they get iced up just like an airplane. They 

throw that ice about a quarter of a mile, by the way, so it would 

take a lot of folks out there to somehow do that. 

The CHAIRMAN. Thank you, Senator. 

Senator Kerry? You are next. 

Senator KERRY. Thank you, Mr. Chairman. 

I just might comment for my friend from Kansas, who knows his 

State better than I do, obviously. But, nevertheless, Siemens just 

celebrated a groundbreaking of a wind turbine assembly facility 

there which will employ approximately 400 people. 

Senator ROBERTS. I will be at the dedication, by the way. Thank 

you. 

Senator KERRY. I have six studies, which do not get referred to 

here, six studies: one by the College of Natural Resources, University of California, Berkeley; one by the Center for American 

Progress Clean Energy Hub; one by the American Council for an 

Energy-Efficient Economy; one by the Perry Group at the University of Massachusetts Center for American Progress; another by the 

U.S. Conference of Mayors; and finally, an RDC one; and these are 

among several. Every single one of them shows Kansas growing in 

investment, growing in net jobs, and a net reduction in household 

cost by 2020 on average, about $8.39 per household, a gain to your 

citizens. 

The reason for that—and I am not going to spend a lot of time, 

because we do not have a lot of time, 5 minutes, obviously. But, 

this question of assumptions, the question asked by the chairman, 

is really fundamental to this, folks, and we have to be realistic 

about them. 

18 

I would like to ask unanimous consent that a Washington Post 

op-ed by John Doerr, who is a very well-known venture capitalist 

in the United States, and Jeff Immelt, the chairman and chief executive officer of General Electric, be made part of the record. 

The CHAIRMAN. Without objection. 

[The article appears in the appendix on p. 157.] 

Senator KERRY. Let me make it clear: these are practitioners. 

They are not sitting in a theoretical study group. They are out 

there creating jobs and very, very successfully, I might add. And 

they wrote in this op-ed that the most basic thing we need to do 

to get American innovation and competitiveness moving is, number 

one, send a long-term signal that low-carbon energy is valuable, 

put a price on carbon, and a cap on carbon emissions. 

Now, countless companies—a bunch of them just dropped out of 

the Chamber of Commerce—have come to the conclusion that is the 

way you make jobs. We have to make an analysis of these studies, 

and, frankly, both you, Dr. Green and Dr. Thorning, I just find 

your studies are not credible. 

You do not take into account the cost of inaction. What is it going 

to cost our taxpayers in the United States if we do not act? What 

is your plan for meeting a 2-degree Centigrade maintenance of 

warming on the Earth’s temperature? Do you have a plan to do 

that? 

Can you price carbon and accomplish it without moving down 

one of the two roads that are available to us, either a carbon tax— 

which everybody here knows the U.S. Congress will not pass, because in order to change behavior it would have to be high enough 

that just nobody will accept that. 

But when you have assumptions that are so out of whack with 

every other study, for instance, your study, the ACCF study—and 

the chairman raised this question—your household cost projections 

are 3 and 4 times higher than the Energy Information Agency, 

which does this every day, professionally for us, for the government. The EPA, the CBO, on which we base now the healthcare 

debate and a lot of other debates, you range from $730 to $1,248 

as your household cost projection, compared to $80 to $300 for 

every other one of those studies. 

You have not only high allowance forecast prices, but then you 

make statements, Dr. Green, like the one where you said Europe 

is not working, the trading system failed. It did not fail. It is working. In fact, they have embraced it, and they are excited about how 

well it is working. They began a 2-year initial phase, in which they 

made some mistakes. They acknowledged the mistakes they made, 

and then they fixed those mistakes. 

Now they are in their second phase. In fact, they have an abatement in the first phase, as much as 5 percent down. There was a 

1.6-percent drop in EU–15 emissions, contrasted with an increase 

in GDP of 2.7 percent over that period. They have reduced emissions, they are growing their economy, they are on track to meet 

their Kyoto targets, and they are a leader in green global technology. 

Germany, today, has created more jobs in the green sector of alternative renewables. They have 280,000 people working at new 

jobs, more people than in their vaunted automobile industry. So, 

19 

how can you have a study that does not take into effect the impact 

of energy efficiencies, or of the cost of inaction in not doing it? 

We do not have time to go into all of this, but I will just leave 

you with this. I would like your comment to it. 

This is today’s Reuters, a story out of London: ‘‘The world will have to spend an extra $500 billion to cut carbon emissions for 

each year it delays implementing a major assault on global warming, the International Energy Agency said on Tuesday.’’ Every 

year’s delay beyond next year will add another $500 billion extra. 

Now, I would ask you. Did you take that into account in your 

studies? 

Dr. THORNING. Those are very excellent questions, and there are 

a lot of them. I will try my best to answer some of them. 

First, you ask, did we take account of the environmental impact 

of not enacting the cap-and-trade legislation? 

Well, EPA Administrator Jackson testified recently that, if the 

U.S. did achieve the targets in the Waxman-Markey bill, it really 

would not matter by the end of this century because other countries, China and India in particular, are not willing to undertake 

hard targets. 

Senator KERRY. That is not accurate. 

Dr. THORNING. Well, the Obama administration—— 

Senator KERRY. That is not accurate. You have to be accurate. 

China has said they are going to do a specific energy intensity reduction. It is a 20-percent target. They have set it, and they have 

exceeded it, thus far. 

Dr. THORNING. Well, we will see whether they are able to deliver 

on that. But until developing countries are willing to take on the 

same kind of targets that developed countries are, we really, according to EPA’s own analysis, will not see meaningful reductions 

in GHG concentrations. 

Second, if you take a look at the studies you mentioned, the Center for American Progress Study and the ACEEE study, which I 

cite in my testimony, they used input-output analysis. 

And let me read from my testimony. This is from the CAP report 

itself. They identify the problems with their analysis. They state: 

‘‘There are certainly weaknesses with our use of the input-output 

model. The most important is that it is a static model, a linear 

model, and a model that does not take into account the structural 

changes in the economy.’’ So they admit that there model is inadequate for analyzing the dynamic impact of sharp increases in energy prices. 

So, I think, when we look at potential consequences from capping 

carbon emissions, most experts feel a macroeconomic analysis is 

the most appropriate. And, once you have looked at a macro model, 

then you need to look at the assumptions. We feel that the assumptions we embedded in our simulations, using the NIMS model, are 

appropriate, given what we know about the future development of 

technology. 

So, another thing to think about, I would like to mention two 

studies, one from Denmark, one from Germany, recent studies looking at the cost to the Danish and German economies of putting in 

place solar energy. For example, in Germany, a new study by RWI 

shows each job in Germany is costing about 280,000 euros, each of 

20 

these solar jobs. There is a study from Denmark showing the wind 

power jobs are costing the Danish taxpayers approximately 160,000 

euros. So, I think we need to be aware of the cost of this type of 

initiative and balance how quickly we want to move in that direction. 

Senator KERRY. My time is up. I do not want to abuse it, but, 

Mr. Chairman, can I just—— 

Well, I would just say again—look, I respect that there are costs 

obviously with transition. But the fact is, the Commerce Department devotes a considerable amount of resources to maintaining 

the viability of its input-output analysis. And, obviously, there are 

structural changes that take place. We all understand that. But the 

ones that have been taking place are to the plus side of the economies of these countries, and to the negative of ours. 

For instance, of the top 30 wind-solar battery companies in the 

world, only 5 are in the United States of America. We invented 

those technologies. We are losing them to other places. And, I think 

in the end, your analysis that you just gave us did not answer the 

question of the costs of inaction, or of how you maintain a 2-degree 

Centigrade warming without pricing carbon. 

Senator GRASSLEY. We will move on. I am going to take my turn 

now. Senator Baucus is temporarily out. 

This would be for each of you, but I do not want too long of an 

answer, because I have more than one question I want to ask. 

The committee has heard testimony in the past from CBO and 

other economists on a cap-and-trade system that, by diverting resources to reducing greenhouse gas emissions through new technology or a more expensive form of energy that would not otherwise be economical, there is a net cost to the economy. 

In other words, carbon limits cannot increase total employment 

across the economy, with emphasis upon ‘‘total.’’ In fact, while 

there will be some jobs created in certain industries that produce 

low-carbon energy—and we have had Siemens move into Iowa, so 

I am well-aware that green energy brings with it jobs—high energy 

prices will result in a net loss of jobs that otherwise would have 

been created or sustained in the absence of a cap on carbon. Would 

everyone on the panel agree with that basic economic principle? 

[No response.] 

Senator GRASSLEY. All right. Since everybody is quiet, then you 

agree? All right. 

Dr. GREEN. I will say it out loud: yes, I agree with that principle. 

Senator GRASSLEY. All right. Do you want to comment, sir? Mr. 

Breehey? 

Mr. BREEHEY. Yes, Senator. 

I think it is impossible to not acknowledge that an economy-wide 

greenhouse gas program would have a net negative impact on 

GDP. But I think some of the studies, and some of the doomsday 

scenarios, fail to acknowledge the net negative economic costs associated with the energy efficiency solutions that Senator Kerry referred to, and that those represent some of the least expensive 

emissions reductions opportunities present in our economy and, 

over the long run, will have a positive economic impact. So, I think 

some of the doomsday scenarios that we are hearing are vastly 

overstated. And, I think, as Senator Baucus alluded to, the innovaVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
21 

tion that a cap-and-trade program encourages will result in lower 

costs than most predict. 

Senator GRASSLEY. All right. I have a question for Dr. Green. 

It is sometimes argued that a cap on carbon, which raises the 

cost of energy, will create the incentive to develop new technologies 

or undertake new projects to increase energy efficiency that otherwise would not be pursued, which in the long run will save consumers money. Would you comment on that possibility? 

Dr. GREEN. Well, that is a possibility that, indeed, if you raise 

prices, you will spur research. Consumers will attempt to reduce 

the cost burden by deploying new technologies. The question is, if 

those technologies are genuinely efficient—economists do not believe in the idea of $100 bills lying on the sidewalk. If there are 

efficiencies to be gained where the consumer truly benefits, the 

consumer will engage in that behavior spontaneously. It does not 

take the government to tell me that I should pick a $100 bill up 

off the pavement. 

And so, the question is whether these are real or whether they 

would happen regardless. But it does not offset the net effect that 

pricing carbon will have an overall net impact on the economy, it 

will reduce economic growth, and it will reduce jobs. 

Senator GRASSLEY. Ms. Ton-Quinlivan, I have a question for you. 

I understand that your company is one of the lead advocates of 

the 50:50 policy found in both the Waxman-Markey and KerryBoxer bills, whereby half of the free allowances are given out to energy companies based on retail electric sales as opposed to the actual need for allowances. This rewards companies like your own 

that have the good fortune to generate a large portion of their energy from hydro-electric. However, it comes at the expense of energy users, like my home State of Iowa, who will see electric bills 

go up even further if allocations are based solely on need. 

A question. Since companies like yours, who because of geography have the ability to generate low-carbon energy, will already 

be relatively better off under a cap-and-trade system, how can your 

company justify a policy that further exacerbates the differences 

between the burdens on constituents in the Midwest, as opposed to 

those who live in California or New England? 

Ms. TON-QUINLIVAN. Senator, since my area of expertise is in the 

workforce development area, let me constrain my answer to that 

area. 

What we know from California is that our regulators have given 

us a lot of certainty around the sequence in which we have to 

prioritize the source of our energy, with energy efficiency on top on 

the loading order before we can pursue demand reduction, renewables, and conventional sources. 

And, what I do know from the energy efficiency side is that, as 

a result of this certainty, our workforce has 600 people who are focused entirely on energy efficiency, and then we built training programs that have fed over 68,000 trainees into our third-party contractors to do that work. 

Senator GRASSLEY. All right. It is Senator Cantwell’s turn. 

Senator Cantwell? 

Senator CANTWELL. Thank you, Mr. Chairman. Thank you very 

much. 

22 

Dr. Green, I do not want to argue with you about whether Europe has succeeded in trading because, frankly, I do not think the 

United States has. And, the fact that the derivative market still 

has not had loopholes closed in it is, in my opinion, no reason to 

start a carbon futures market that might have the same loopholes. 

In fact, I do know that Europe did cut up carbon futures into 

tranches, just like we did on the credit default swaps, and it was 

very unfortunate. 

But, I do want to get to your point about SO2 and CO2 and the 

difference, because you were saying that there is something 

uniquely different about those two markets, and the fact that one, 

I am assuming, had a more limited impact, and thereby we could 

achieve results. And so, now you are almost saying a cap and trade 

is not the right tool. Is that right? It is not robust enough for the 

challenge that we face? And so, if you could talk about that, and 

then whether you think a cap-and-dividend model is a little closer 

to that flexibility that would be needed. 

Dr. GREEN. Thank you for your question, Senator. 

I would like to praise, by the way, your cap-and-trade bill for its 

remarkably admirable brevity and its close adherence to what an 

economist would say cap and trade should look more like. 

I would also like to applaud your concern over the financial implications of cap and trade and mortgage-backed securities. I call 

them, actually, poorly understood financial instruments, or PUFIs, 

because we are talking about a huge amount of the economy that 

would be put into these instruments, the energy economy. And we 

have really no idea what the end result is going to be. If the 

scheme is not sustainable, the government will burst the bubble, 

and that could be a very big bubble, indeed. 

Now, as to why SO2 and CO2 are different, there are many reasons. The first is, with SO2, you had readily-available scrubbing 

technology that was only marginally more expensive than operating without. Laws have been changed to allow low-sulfur coal to 

move across the country to plants that did not have access to it 

previously. You had a small number of players. You had a single 

jurisdiction, the United States. You had only one industry sector, 

so there was not intra-sectoral competition or rent-seeking possible, 

nearly as much as there is under cap and trade. You had an easily 

measured pollutant. SO2 is an active substance, easily measured 

directly, as opposed to being estimated through inventories or calculated based on the type of fuel input. It was a smaller section of 

the economy being affected as a whole. And, I would point out that, 

in fact, if you look at the modeling that was done on the SO2 trading system, some people say that the industry groups overestimated the cost, and the fact is, they did not. 

As they estimated the cost of early bills, the cost estimates were 

higher. The bills were changed in response to those estimates, and 

the costs were lowered. The final economic estimates of cap and 

trade turned out to be very close to the real cost because the earlier 

estimates had led to changes in the legislation. 

This is why the cap and trade—as I said, the economists who developed cap and trade and mathematized it pointed out that cap 

and trade is for discrete, local, constrained pollutant control. It is 

an excellent instrument for that, and it can be used for not only 

23 

pollution control, but also things like tradable quotas for fish, 

which is another implementation of a market measure, where you 

cap the withdrawal and you trade the rights to withdraw. But it 

is not appropriate for greenhouse gas controls. 

Senator CANTWELL. And so the point is, that with something 

where you need a more robust tool to have a cap but then have a 

price collar, the price collar acts as a more effective tool in keeping 

the price, and thereby is closer to the carbon tax that you are suggesting. 

Dr. GREEN. Well, several things. First, auctioning all permits. If 

you are going to do cap and trade, you really do not want to get 

into this freely allocated permit thing because it leads to overallocation, it leads to early inaction in the market. Full auctioning 

of permits is essential to establish their real value. 

Second of all, the price collar. Well, a price collar mitigates some 

of the problems of cap and trade, but not all. It does mitigate the 

price volatility element of cap and trade. Again, the difference between SO2 and CO2, one of the problems with that is that, when 

our economy grows, CO2 levels spike up, as they have spiked down 

as our economy has tanked. And, when that happens, those permit 

prices are going to shoot up and become quite volatile, and they 

will shoot down. A price collar prevents that, but at the same time, 

it also prevents you from gaining the benefits of a low permit price. 

You do lose the risk of a high permit price, but you lose the benefit 

of a low permit price. And, so, it is not a panacea. 

Senator CANTWELL. What did you say? PUFI? What did you say? 

Dr. GREEN. PUFIs, poorly understood financial instruments. 

Senator CANTWELL. All right. Thank you. 

Senator STABENOW. Well, as we proceed with our chairman and 

ranking member having had to leave, I will now turn to my own 

comments and questions, and then Senator Hatch, and any other 

members who come in. 

Welcome. We appreciate your comments very much. 

When I look at this, coming from a State that is known for making things, and doing a very good job of making things, designing 

things, I look at this whole discussion very much through the prism 

of jobs and how we keep the next generation of technology manufacturing in this country. 

I do not want to see what happened with the computer-age, 

where we make all the technology and then it is manufactured 

overseas, so that the President of the United States gives the latest 

technology in the form of an iPod to the Queen of England, technology from America, made in China. 

I think, if that happens around clean energy, we will all have 

failed, and so I am very much looking at this through the prism 

of how we create policies that create jobs here. First, a couple of 

comments. From my perspective, we can either do this well and 

jobs will be here, or do this poorly and they will not be here. 

And so, a number of questions: how we allocate allowances, as 

well as carbon credits, how we use those; what kind of a border policy; what kind of trade enforcement; what kind of price collar; and 

there are a whole range of issues that I think we need to be addressing. 

24 

I also think it is important, though, for us to acknowledge a couple of things that, while we do not yet have the technology readily 

available in a number of areas—and Dr. Green, you have spoken 

about this a number of times—we have the capacity to create the 

technology, which will create the jobs. Some of this is about timing, 

I think. 

And that is why things like energy efficiency become so important. When the McKenzie Consulting Company reports that the 

U.S. economy could reduce emissions equal to the entire U.S. fleet 

of light trucks and cars and save $1.2 trillion through 2020, I think 

that goes to what we have been trying to do in the Energy Bill 

around energy efficiencies, buildings, other energy efficiencies, and 

so on. 

The second piece of this is the role of agriculture and forestry, 

which, while they are not a capped industry under any of the bills, 

an incredibly important part of capturing carbon, holding carbon, 

is making sure we are not cutting down our forests, that we are 

managing them correctly, and we are managing agriculture effectively. 

So, I start from the fact that I think there are some bridges that 

allow us to get there, that allow us to capture carbon and move forward while we are developing the technology. 

My questions go to how we, in fact, compete in what I believe is 

a race with China and other Asian countries as it relates to clean 

energy jobs. We put a manufacturing credit into the Recovery Act. 

I was pleased to help champion that, but there is a cap on that. 

It is going to expire at some point. We have many, many more companies that want to use that than we actually have the amount of 

dollars in there. 

Senator Menendez and I are working on a solar manufacturing 

credit that would create over 200,000 jobs. I know in my own State, 

where we make one-third of all of the polycrystalline silicon for the 

world, and it is shipped overseas, a lot of that to Germany, a lot 

of that to Asian countries, incentivizing manufacturing means it is 

going to be here, and we are already starting to see that with the 

manufacturing credit, and so on. 

So, my question goes to the race with China and clean technology 

jobs. How do we ensure that we retain those jobs here for U.S. 

workers—and I am sure everyone thinks that that is important— 

and address our green trade deficit, which is billions and billions 

of dollars? How do we make sure that, in the end, we are leading 

in technology industries, including solar, wind, CCS, nuclear, 

across the board? I would ask anyone who would want to respond 

to that. How do we make sure we get there? 

Dr. GREEN. Well, thank you, Senator. 

If I may, I think it is a very important question, and it really 

comes down to the fact that our manufacturing is more costly than 

China’s is. Their labor costs are much lower. Their environmental 

standards, while they are good on paper, are often not enforced in 

practice, allowing them to do a lot more low-cost manufacturing, 

and it is a serious risk that we will, indeed, send our dollars over 

there to buy their technologies. 

The only thing that I would say could fix that is if China actually 

accepted a cap on emissions, which I have to correct, Senator 

25 

Kerry. An emission intensity target does not mean that your emissions go down. This was pointed out when the Bush administration 

tried to promote emission intensity measures as their approach to 

climate change in their Clear Skies proposal. You can become more 

energy efficient, and your emissions can still grow as your economy 

grows. So, to say that China has adopted a cap on its emissions is 

not correct. Until they do, we cannot compete with them on a level 

playing field. 

Senator STABENOW. Well, and I am going to stop at this point 

and say, what has been happening in America is, we are losing our 

middle class because we have accepted a race to the bottom. 

Saying to people, we can only compete if you work for less and 

lose your health care and pension, is not how we are going to keep 

a standard of living in America. There is a better way to do that, 

I would argue, certainly, if we focus on enforcing a level playing 

field on trade and if we make the investments that we need to 

make. But I am wondering if you would like to respond as well. Mr. 

Breehey? Yes. 

Mr. BREEHEY. Thank you, Senator, indeed. 

As I alluded to in my testimony, it is tremendously disappointing 

to the labor movement, those of us who represent workers and 

manufacturing, that we are seeing the investments—that our tax 

dollars have been made to promote jobs overseas, and we have to 

avoid those mistakes when we put together cap-and-trade legislation. 

While I know that there are some who will argue that it would 

be protectionist, we would argue that American jobs are worth protecting, which is why we would say that any technology manufacturer, any power generation company, any wind turbine manufacturer that receives an incentive through a cap-and-trade bill, either 

through an allocation of allowances or through revenue generated 

from an auction of allowances, should be required to adhere to domestic content requirements, through the application of laws like 

the Buy America Act, to the technologies that are going to be produced. 

Senator STABENOW. Thank you very much. I notice that I am out 

of time. 

I will just comment that China has adopted a ‘‘Buy China’’ policy. Every other country seems to get it but us in terms of the need 

to invest in our own jobs at home, so I hope our policy is going to 

include the ability to create those jobs here. 

Mr. BREEHEY. I could not agree more. Thank you. 

Senator STABENOW. Senator Hatch? 

Senator HATCH. Well, thank you, Madam Chairperson. This has 

been an excellent group, and I have really enjoyed listening to your 

testimony. 

I would ask unanimous consent that the Americans for Tax Reform’s statement be put formally in the record at this point, 

Madam Chairman. 

Senator CANTWELL. Without objection. 

Senator HATCH. Thank you. 

[The statement appears in the appendix on p. 152.] 

Senator HATCH. Now, Dr. Thorning, the Congressional Budget 

Office released a report this past September entitled ‘‘The EcoVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
26 

nomic Effects of Legislation to Reduce Greenhouse Gas Emissions.’’ 

I would like to highlight several findings from that report. 

The increases in the price of energy caused by the program 

would reduce workers’ real wages. The cap-and-trade program for 

carbon dioxide emissions would reduce the number of jobs in industries that produce carbon-based energy, use energy intensively in 

their production processes, or produce products whose use involves 

energy consumption, because those industries would experience the 

greatest increases in costs and declines in sales. 

The industries that produce carbon-based energy—coal mining, 

oil and gas extraction, and petroleum refining—would probably suffer significant employment losses over time. The process of shifting 

employment can have substantial costs for the workers’ families 

and communities involved. 

Now, Dr. Thorning, other witnesses on this panel have stated 

that the construction of facilities will create hundreds of permanent 

jobs in various parts of the country. Now, do you believe that ‘‘create’’ is the right word to use in this context? Should we not say 

‘‘shift,’’ if it appears that the coal, oil, and gas States would lose 

a significant amount of jobs and reduction in salaries? 

Dr. THORNING. Yes, Senator Hatch. It seems to me what we are 

looking at is a shift of where resources are deployed. Based on the 

study that ACCF and NIMS did, as well as other studies cited in 

my testimony, there would be a shifting of jobs. There would be 

new, renewable energy, energy efficiency jobs created, but overall, 

because of the loss of productivity, the premature obsolescence of 

the existing capital stock, there would be a slowing of economic 

growth overall, compared to the baseline forecast. 

Senator HATCH. Dr. Green, you mentioned that cap and trade 

has not worked well in Europe. Can you help us understand how 

and why it has not worked in Europe and whether the bill we are 

considering today in the Senate would have the same problems as 

they have faced in Europe? 

Dr. GREEN. Well, Senator Kerry pointed out that the first phase 

of the European Trading System was considered a trial phase. It 

is not clear if it was originally designed as a trial phase or renamed one after the first time the permit price collapsed. 

But, they had repeated collapses of permit price to virtually zero 

and massive permit price volatility. They had fraud and offsets 

where they exported quite a lot of money to China for false offsets. 

They have had protests by various sectors as they have tried to 

auction more permits, with the result that those sectors have gotten exemption from needing to buy permits, have gotten free allocation maintained for them, and I think all of these structural problems with the carbon market will play out here. We are going to 

allocate the majority of permits for free. We are not going to auction the majority of permits. We have offset provisions that are 

going to be problematic, as has been pointed out by others. 

Several studies of offsets have shown them to be plagued with 

fraud and abuse and illegitimacy, so I think we will see many of 

the same problems play out as has happened with the European 

Trading System here, but on a broader scale, because we have a 

very large economy and we have the opportunity to do greater mischief. 

27 

Senator HATCH. Well, I am very interested in how a cap-andtrade program would affect the poor. I have heard that the poorest 

of the poor spend as much as 50 percent of their incomes on energy 

costs. 

Now, in your view, is it possible to construct a cap-and-trade program that reduces carbon emissions, that is not felt by the poor? 

And, can you explain why it is possible or not possible to protect 

the poor under such a program, if that is possible? 

Dr. GREEN. Well, it is possible to shield them, to a certain extent, 

by redirecting, if you do auction permit revenues, that revenue to 

lower-income people. 

As you pointed out, low-income people use a disproportionately 

high amount of their income to pay for energy, not just directly as 

we have studied at AEI, not just directly in terms of flipping light 

switches and gassing up their car, but the products that they buy 

are infused with energy as well, and so their energy costs are disproportionately high. 

But on net, ultimately, the point of this exercise is to raise the 

cost of energy. It was pointed out earlier that a carbon tax is not 

possible because you would have to raise it so high that nobody 

would accept it. Well, cap and trade is a carbon tax, it is just applied indirectly, so the permit price will have to rise very high if 

you are going to see actual change in emissions. 

But, to sum up my answers, basically, you can shield them to a 

certain extent by targeting them with new resources, but overall, 

as they are going to be mostly affected by the downturn in the 

economy and the downturn in jobs, they will not be net winners in 

a cap-and-trade system. 

Senator HATCH. All right. Senator Kerry, they apparently did not 

start the clock when I began, but I have just three more questions. 

Could I ask those? 

Senator KERRY. Absolutely. 

Senator HATCH. All right. I appreciate your courtesy in doing 

that. 

Toward the end of your remarks, Dr. Green, you spoke about 

how under cap and trade we will have winners and losers. Is that 

true on the international scale? If we implement cap and trade and 

China and India do not, is there any possible way that our Nation 

could come out winners under that scenario? 

Dr. GREEN. The second question, first. No. If the United States 

implements cap and trade unilaterally, as Dr. Thorning pointed 

out, the emission reductions we can achieve as a country pale to 

insignificance with regard to the growth expected in China and in 

the rest of the world. There would be no environmental benefit, but 

we would, indeed, make ourselves considerably less competitive by 

raising our costs of energy goods and services and manufacturing 

across the country. 

There will be sectoral and regional winners and losers, as was 

pointed out. Some of the coastal areas have access to greater 

amounts of hydro, and they have more temperate climates. They 

have already had to switch to natural gas, in California’s case, for 

traditional air pollutant reasons, whereas the center of the country 

is more inclined to rely on gas or heavy crudes from Canada, which 

will be affected by the current legislation. 

28 

So, there will be many winners and losers, including internationally. We will impair our economy to the benefit of our competitors. 

Senator HATCH. Dr. Thorning, do you agree with that? 

Dr. THORNING. Yes, Senator. 

Senator HATCH. All right. 

Now, just one last question of Mr. Breehey. I appreciate your efforts for your union, and that is great. You mentioned in your remarks that industries such as steel, cement, and chemicals are 

more sensitive to energy cost increases than other sectors of the 

economy. Can you help us understand why this is the case, and 

also what the impact on jobs will be for those industries if S. 1733 

were to be enacted as written? 

Mr. BREEHEY. Yes, Senator. In the case of a lot of those industries, such as chemicals, energy inputs, both in terms of power use, 

as well as natural gas feedstocks in the manufacturing process, 

make them particularly sensitive to price increases and make them 

particularly sensitive to the impacts of a cap-and-trade program. 

I am sorry, sir. I forgot the second part of your question. 

Senator HATCH. You are concerned about it, are you not? 

Mr. BREEHEY. We are certainly concerned about it, which is 

why—— 

Senator HATCH. You would lose a lot of jobs. 

Mr. BREEHEY. There are certainly a lot of jobs. As Senator Kerry 

has pointed out, though, we do have some concern. We feel like we 

need to take into account the cost of doing nothing. 

I represent workers, for example, along the Gulf Coast. If climate 

change results in more frequent, worse storms, those workers are 

going to be negatively impacted. So we are trying to think of, what 

is the right balanced approach that will mitigate negative employment impacts across the economy, both considering the cost of action and the cost of inaction. 

But we believe that there are reasonable things that can be done 

within the context of a cap-and-trade program that would mitigate 

the negative impacts on workers and energy intensive tradeexposed industries. Those include a robust allocation of allowances 

to an output-based rebate program, such as has been proposed in 

S. 1733 and was included in the Waxman-Markey bill. We believe 

maybe 15 percent of the available allowances should be allocated 

to such a program. 

We also believe that, as has been indicated, it makes no sense 

for us to take action if major emitters in the developing world fail 

to follow our lead. We will only result in exporting both jobs and 

pollution to countries that fail to act, which is why we believe the 

Senate should certainly include a border measure that would put 

sort of a carbon tariff on energy-intensive imports from countries 

that fail to take comparable action. 

Senator HATCH. Thank you, Senator Kerry. I appreciate it. 

Senator KERRY. Thank you, Senator Hatch. 

One thing I might mention, Senator Hatch, because I had something to do with it at the time, I was at the Kyoto negotiations, and 

none of us was very happy with the outcome of that, and I joined 

in the effort on the floor when we did the Byrd-Hagel Amendment, 

because we felt we had to have everybody under the tent, and 

clearly, that was a failed process. 

29 

In arguing with the Europeans that they should undertake the 

concept of cap and trade, initially they were very opposed to it. 

They did not believe in it. They saw it as a gimmick by which people did not actually reduce pollution, and so they did not really 

wholeheartedly embrace it. That is the attitude that governed how 

they went at the initial execution implementation in Europe with 

that effort. 

The problem is that initially they allocated most of the allowances to emitters, created a windfall profit situation. They had 

some problems with what they gave to the cement industry, aluminum, others, et cetera. They also had a problem that they did 

not allow the banking of allowances between those phases, so that 

allowances became worthless at the end of the initial phase, so that 

drove the market down. They also had incomplete market data that 

was released at one point, which scared a lot of people, and it 

wound up driving the market down. 

So, it is fair to say they had some problems and they had a collapse, and I accept all of that. So did they, for that matter. But 

that is why they put in place a number of reforms. They have 

begun to transition the amount of auction that they will have, and 

it is working very effectively now. I have been meeting over these 

last months with the environment ministers and finance ministers 

and other leaders, all leading up to Copenhagen, with the idea 

that, indeed—and I say this to you, Dr. Green, you are absolutely 

correct—we have to have a global solution. We cannot sit here if 

the United States does this all by ourselves. We all understand. It 

is a non-starter. 

The President should never think of bringing a treaty here to us 

that does not have a global component. But it is not fair to say— 

and I have had this argument with the Chinese—that energy intensity does not result in emissions reductions. It can, depending 

on where they are reducing the intensity, and how. And you can, 

in fact, translate a reduction in energy intensity into emissions reductions. 

This is the big argument we are having with China right now as 

we go to Copenhagen, to make certain that what we get out of 

China, India, Brazil, the middle developing countries, the neardeveloped countries in some cases, is measurable, and reportable, 

and verifiable. Those are the key words that have to guide us. If 

we can get that out of Copenhagen, or beyond Copenhagen—I think 

we may hopefully get a political agreement there—then we translate it into a real treaty. 

I join with other people in saying that we are not going to disadvantage the United States. What is interesting, Senator Hatch, 

is that other countries are adopting this idea that, indeed, if under 

an environmental international agreement we all have agreed to a 

standard of behavior by which we are going to reduce emissions 

and invest in those efforts, if some country stays outside of that 

and says, aha, we are going to take advantage of this, and while 

you guys are busy making your products slightly more expensive 

or transitioning because you are investing in new capitalization to 

meet the standard, we are going to take advantage of it and sell 

in your country and undermine your market. We are not going to 

30 

let that happen, and other countries are not going to let that happen. 

And so, I believe we will for the first time be able to put together 

a global environmental protocol by which people are agreeing under 

international law that, if some outlier country decides to try to take 

advantage of other countries, they are going to be the odd person 

out, because their products are not going to come in cheaper than 

the cost of reducing that carbon. 

So, that is what a lot of folks have argued on that part of this. 

That is in the Waxman-Harkey bill. We have changed it in our bill. 

In fact, this committee will ultimately decide that language, and 

we need to make it WTO-compliant, and I think we can. But that 

way, we stand up for the American worker, American businesses, 

for a fairer playing field, and we have a way, hopefully, of addressing this question. 

The final comment I make is that we have to, in these analyses, 

take into account what happens if we do not do this. The cost of 

$500 billion a year cannot just be written off. That is going to come 

back to haunt the American taxpayer, one way or the other: crops 

that are more expensive to produce, rivers that are more polluted 

that we have to clean up. You could run the list: fires that are 

more intense in the west, insurance costs that go up as a result; 

water that disappears in Montana; agriculture, the heart, the 

bread basket of the country. These are all very, very serious issues, 

and they are going to result in massive infrastructure expenditure 

to pipe water somewhere, or to move whole agricultural sectors of 

the county to other parts of the country where things will still 

grow. 

What bothers me is, too many of the studies never factor in the 

benefit of energy efficiency. The MacKenzie Company—which I 

think, I am sure both of you respect—has done a superb analysis 

called the Carbon Cost Abatement Curve. That curve shows that, 

for the first 20 or 30 years of investment, it pays for itself. I can 

show you Hewlett Packard, IBM, Johnson and Johnson, BP. There 

are a host of companies across the country that are investing and 

have reduced their emissions by 20, 30, 50, 60 percent. We are just 

talking about trying to grab 20 percent over 10 years. They have 

reduced it in the last 5 or 10 years over that amount, and they are 

making money, and they have increased their market share. 

So, I would like to ask you to take a look at those companies, 

factor in that practical experience, because I think it speaks volumes to what the potential growth here is for us. And, what I fear 

is—I do not have the article still, we submitted it—but where a lot 

of business people are telling me, people like Lewis Hay, who is the 

chairman of Florida Power and Light, one of the biggest utilities 

in America, Jim Rogers, chairman and chief executive officer of 

Duke Energy, who happens to be also the head of the American 

Competitiveness Council—his job is to make America competitive. 

He believes that if we just sit here the way we are sitting here and 

do not do this, China, India, a host of other countries are going to 

clean our clock economically. 

China has set out to be the number-one country in electric car 

production. They have tripled their wind power targets for next 

year. They have set a higher standard for automobile emissions 

31 

than we have. Now, I agree with you, they do not always have the 

strongest enforcement, and we need to strengthen the enforcement 

structure as we go to Copenhagen and work at this. 

But the fact is, in terms of raw job creation and moving into this 

sector, if we do not go there, somebody has to explain, to at least 

this Senator, where America’s great job growth is going to come 

from and what products we are going to compete in, because the 

fastest-growing sector of every economy anywhere in the world 

today is in the energy alternative, renewable, and efficiency sector. 

And in the 1990s, when Americans made a lot of money, we had 

a technology boom. It was a $1-trillion market, and there were 1 

billion users. The energy market is a $6-trillion market, and there 

are 6 billion potential users. 

If we do not lead in this, I fear the naysayers are stopping our 

ability to embrace America’s next stimulus package, if you will, 

which is the movement into this pricing of carbon, and other countries are going to beat us to the technologies, and we are going to 

be sitting there sucking wind. 

Maybe you want to respond to that. 

Dr. GREEN. Well, thank you, Senator. First of all, I am very glad 

to hear you say that you do not believe in unilateral action, and 

I would welcome further discussion of the energy intensity question 

with you because it is entirely possible—as you said, you can reduce energy intensity and reduce the growth in greenhouse gas 

emissions. But, on that, you can still grow tremendously in your 

total actual output of emissions. 

I am all in favor of genuine efficiency. I have no problem with 

genuine efficiencies where there are both energy efficiency gains 

and economic efficiency gains. But, when you have energy efficiency gains that are not economic, you simply raise your costs of 

goods and services; it is essentially an argument. You can foster 

those changes through government incentives, but at the end of the 

day, you have taken a step that is non-ecomonic and you have, 

therefore, lost money to your economy that otherwise would have 

been better deployed elsewhere. That is what markets do, they direct capital to its optimum use. The more you distort those markets, the less optimal the use is and the less your economy grows. 

As for the cost of inaction, I was a reviewer on the third assessment part of the IPCC. I looked at the question of what the impacts are. At 2 degrees Centigrade there are very few impacts, in 

fact, negative, and there are quite a few positive. You do not have 

significant impact until you reach 3 degrees or higher Centigrade. 

And it is my opinion, in my assessment of the literature, that we 

are not likely to reach those levels. 

On the other hand, my latest study, which I will be glad to submit for the record, lays out an entire strategy of building social resilience. In the United States, building resilience is climatic resilience for exactly the issues you raised: what happens when that 

snowpack does not come in a certain area; what happens if sea 

level rises in a certain area; what happens if you have increased 

droughts or heavier rainfalls in certain areas? Those can be dealt 

with completely outside of the carbon control framework. 

32 

I have a study that details exactly how you would do that. I will 

be glad to submit it for the record and come to your office and brief 

you on it. 

[The study appears in the appendix on p. 125.] 

Senator KERRY. I would be happy to. Well, I need to run in a moment, but can I cede to you afterwards? How long are you going 

to be, do you know? Please, go ahead. 

Senator HATCH. What bothers me a lot is that, when I was chairman of the Labor and Human Resources Committee, now called the 

Health, Education, Labor and Pensions Committee, I used to go 

over to Geneva to the ILO, the International Labor Organization. 

Now, a lot of these nations signed up for all of the conventions. 

We did not. We only signed up for, I think, five or six of them at 

the time, and we have not signed up for many more since then. But 

they signed up for these wonderfully glowing conventions that they 

never lived up to. What I am concerned about, yes, I personally believe China may very well show up at Copenhagen and say, well, 

we are for all of this, but it is not going to make any difference in 

what they do. 

Now, on this committee, I have worked very hard to have tax 

credits for wind, solar, geothermal, nuclear, hybrid cars, plug-in hybrid cars, and electrical cars. This is something I have worked very 

hard on. And all I can say is, the more I get into some of those 

energy sources, the more I find they are extremely expensive compared to oil, gas, and coal, and that 90 to 95 percent of our total 

energy needs to come from oil, gas, and coal. 

So, as a practical matter, I am very concerned. I think it is wonderful to want to have the world to all live in accordance with the 

globalization approach towards this, but my experience in the 33 

years I have been here is that, if we commit to it, we will live up 

to it, but a lot of the countries do not. Is that pretty much the way 

you feel? 

Dr. GREEN. If I may, Senator, thank you. That is a very important question. I agree with you. I like all the new technologies, myself. I tried to distill ethanol back when I was a teenager so I could 

use it to run in our car in 1973, but the BATF would not license 

me. It is quite expensive. 

I am sorry. I just lost my train of thought there; thinking about 

ethanol now takes my point away. 

These technologies are expensive, and that will harm our economic growth. But your point about the treaties is vitally important. This is often misunderstood. Canada, for instance, can agree 

to a target, and, if they do not do anything, they cannot be sued 

into compliance by their own government. The U.S. is unique in 

the status it gives treaties. When we sign a treaty, we live up to 

it. Other countries can sign treaties and not live up to them. 

That is a fundamental difference that makes the United States 

hesitant to embrace treaties as a general rule, and I think wisely, 

because treaties have a very high status in American law that is 

not necessarily reflected in the other countries. 

Senator KERRY. Well, actually, Dr. Green, that is not entirely 

true. I am sorry. 

Well, let me tell you why it is not, Senator, because I was at the 

treaty signing, which we ratified unanimously in the U.S. Senate, 

33 

the 1992 Framework Convention which George Herbert Walker 

Bush negotiated, and we did it in Rio, and it has been 18 years 

since then, or whatever, and we have not done a thing to meet it. 

In fact, the last 8 years, emissions in the United States of America, in greenhouse gases, went up 4 times faster than in the 1990s. 

So, that is the reason we are talking about the need to move to a 

mandatory reduction, because we did not, and nobody else did either. A few people tried, here and there. So, you just cannot throw 

that stuff out there like that and say we do it, they do not, blah, 

blah, blah. 

Look, you do not accept that you have to hold it at 2 degrees. You 

may know something that thousands of other scientists do not. 

They won a Nobel Prize, you and I did not, and they won a Nobel 

Prize for their work that said we have to hold it to 2 degrees Centigrade. 

The G–20 just went to Italy and came out ratifying that we have 

to hold it to 2 degrees Centigrade. Now, maybe you know something I do not about where the tipping point is. But I have a lot 

of scientists whom I respect—from John Holdren, who is now the 

Science Advisor to the President, to Jim Hansen over at NASA, 

and a bunch of others—who tell us we have a 10-year window to 

try to meet the standard of keeping the temperature from rising 

over 2 degrees Centigrade or you reach the tipping point. 

Now, is the tipping point at 2.2, 2.3, 2.5? I do not know. I do not 

think they would tell you if they know. But they know, because of 

the consequences of every model that they have looked at, that that 

is what begins to happen, and all of the evidence is coming back 

faster and to a greater degree than they predicted, underscoring 

the predictions they have made. 

At some point you have to step back and say these guys are making sense, because what they said is going to happen is happening, 

and it is happening faster and at a greater risk. To wit, the Chinese, I think Senator Hatch said they do not want to abide by it 

or they do not care about it. The Chinese are petrified by what is 

happening in the context of global climate change. The reason? The 

Himalayan glaciers are disappearing, and the predictions are they 

are going to be gone by the year 2035. Now, do I know what will 

happen in 2035? No, but I know what has happened. Every prediction about when the Arctic ice was going to melt has been accelerated to the point now that, instead of 30 years down the road, 

it is now 2013 that they say we will have an ice-free Arctic in the 

summer. That is what their predictions are. 

Dr. GREEN. I think that has been withdrawn. You might want to 

look it up. 

Senator KERRY. I have not seen that withdrawn. In fact, they 

had an ice-free passage during last summer. I have not seen that 

withdrawn. You send me something that says that has been 

changed. All right? And we will make it part of the record here. 

Dr. GREEN. I will do that, Senator. Thank you. 

Senator KERRY. So, the bottom line. Every recent scientific update, and I get them periodically, I ask them to come in and say 

what is happening, is it less than, what is the rate, and without 

exception they look at me and they say, Senator, I cannot even talk 

about some of the things that are happening today publicly, beVerDate Nov 24 2008 15:02 May 09, 2011 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 R:\DOCS\65632.000 TIMD
34 

cause people will not believe it, like columns of methane rising out 

of the ocean floor that you can light a match and it will explode 

or ignite where it bursts into the open air because the permafrost 

is melting. We just voted $400 million to move Newtok, AK. The 

citizens voted to move it inland because of what is happening in 

terms of the ice melt. There are, I think, some 400 villages threatened now in Alaska. Ask Lisa Murkowski or Mark Begich what is 

happening in Alaska. 

So, all I can say to you is that we have to employ the precautionary principle here. If I have a few thousand scientists over 

here, and you have a few others over there, the weight is pretty 

heavy to say to me that, as a public person, I ought to implement 

the precautionary principle. And if I have chief executives, like Jeff 

Immelt and Lewis Hay and Chad Holliday of DuPont, and a bunch 

of other people who run Fortune 500 companies telling me, Senator, we have to price carbon and we want certainty in the marketplace, I am going to listen, unless you can give me an overpowering 

reason why those guys are all wrong, and I do not think you have. 

Dr. GREEN. All I can say, Senator, is I read the IPCC reports, 

the Science of Climate Change report, in its totality, cover to cover, 

and I follow the latest journals. My doctoral degree is in environmental science and engineering. I daresay I am capable of understanding the literature and forming my own opinion. 

Senator KERRY. Has your study been peer-reviewed? 

Dr. GREEN. No, I do not work in the peer-reviewed literature, 

Senator. I do not work for a university. 

Senator KERRY. So, you do not submit your studies for any peer 

review? 

Dr. GREEN. No. 

Senator KERRY. You realize that there are something like 2,000 

or 3,000 studies all of which concur which have been peer-reviewed, 

and not one of the studies dissenting has been peer-reviewed. 

Dr. GREEN. That is not correct, Senator. 

Senator KERRY. Show me a peer-reviewed study. 

Dr. GREEN. I will send you a list. 

Senator KERRY. Please, because nobody else has. 

Dr. GREEN. I will be glad to. 

Senator KERRY. And, in Al Gore’s book, he cites the same fact, 

that nobody has ever contradicted it with a peer-reviewed study. 

Dr. GREEN. I will be glad to send you some studies, Senator. 

Senator KERRY. I look forward to it. 

We stand adjourned. Thank you. 

[Whereupon, at 12:05 p.m., the hearing was concluded.] 

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