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98–184 PDF 2016

S. HRG. 113–793 

EXAMINING THE THREATS POSED 

BY CLIMATE CHANGE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CLEAN AIR 

AND NUCEAR SAFETY 

OF THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JULY 29, 2014 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys 

(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

BARBARA BOXER, California, Chairman 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

CORY A. BOOKER, New Jersey 

EDWARD J. MARKEY, Massachusetts 

DAVID VITTER, Louisiana 

JAMES M. INHOFE, Oklahoma 

JOHN BARRASSO, Wyoming 

JEFF SESSIONS, Alabama 

MIKE CRAPO, Idaho 

ROGER WICKER, Mississippi 

JOHN BOOZMAN, Arkansas 

DEB FISCHER, Nebraska 

BETTINA POIRIER, Majority Staff Director 

ZAK BAIG, Republican Staff Director 

SUBCOMMITTEE ON CLEAN AIR AND NUCLEAR SAFETY

SHELDON WHITEHOUSE, Rhode Island, Chairman 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

TOM UDALL, New Mexico 

EDWARD MARKEY, Massachusetts 

BARBARA BOXER, California (ex officio) 

JEFF SESSIONS, Alabama 

JOHN BARRASSO, Wyoming 

MIKE CRAPO, Idaho 

ROGER WICKER, Mississippi 

JOHN BOOZMAN, Arkansas 

DAVID VITTER, Louisiana (ex officio) 

(III) 

C O N T E N T S 

Page 

JULY 29, 2014 

OPENING STATEMENTS 

Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode Island ......... 1 

Sessions, Hon. Jeff, U.S. Senator from the State of Alabama ............................. 2 

Vitter, Hon. David, U.S. Senator from the State of Louisiana ............................ 3 

Wicker, Hon. Roger, U.S. Senator from the State of Mississippi ........................ 4 

WITNESSES 

Hedde, Carl G., CPCU, Head of Risk Accumulation, Munich Re America ......... 6 

Prepared statement .......................................................................................... 8 

Responses to additional questions from Senator Whitehouse ...................... 16 

Jacobs Hon. Kristin, Commissioner, Broward County, Florida ........................... 18 

Prepared statement .......................................................................................... 21 

Responses to additional questions from Senator Whitehouse ...................... 27 

Mook, Bill, President, Mook Sea Farm Raymond J. Keating, Chief Economist, 

Small Business and Entrepreneurship Council ................................................. 30 

Prepared statement .......................................................................................... 32 

Responses to additional questions from Senator Whitehouse ...................... 44 

Keating, Raymond J., Chief Economist, Small Business and Entrepreneurship 

Council .................................................................................................................. 48 

Prepared statement .......................................................................................... 50 

Responses to additional questions from Senator Whitehouse ...................... 61 

Lomborg, Bjorn, Ph.D., Adjunct Professor, Copenhagen Business School and 

President, Copenhagen Consensus Center, USA, Inc. ...................................... 87 

Prepared statement .......................................................................................... 89 

Responses to additional questions from Senator Whitehouse ...................... 101 

ADDITIONAL MATERIAL 

Article: Centers for American Progress; Groundhog Days, Utilities Wrong 

Again About Safeguard Costs, Daniel J. Weiss and Miranda Peterson .......... 123 

(1) 

EXAMINING THE THREATS POSED BY 

CLIMATE CHANGE 

TUESDAY, JULY 29, 2014 

U.S. SENATE 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

SUBCOMMITTEE ON CLEAN AIR AND NUCLEAR SAFETY

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:30 p.m. in room 

406, Dirksen Senate Building, Hon. Sheldon Whitehouse (chairman 

of the subcommittee) presiding. 

Present: Senators Whitehouse, Sessions, Vitter, Boozman, Markey. 

OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, 

U.S. SENATOR FROM THE STATE OF RHODE ISLAND 

Senator WHITEHOUSE. Let me welcome the witnesses and call 

this hearing of the subcommittee to order. 

One matter of technical business or procedural business, perhaps 

I should say, there is a vote at 2:45. So I think what we will try 

to do is try to get through the opening statements, break at that 

point so we can all go vote and then reconvene for the witness testimony and for any further opening statements that may have 

emerged. So that is the way I intend to proceed. 

I note that some of my colleagues are from States that depend 

on fossil fuels. And they argue that steps to curb carbon pollution 

will hurt their economies. And they understand that we want to 

protect jobs in those industries. This hearing is to ask that they 

look at the other side of the ledger, the damage to coastal homes, 

infrastructure and businesses from rising seas, erosion and saltwater intrusion, hospitalization and missed school or work for families when asthma attacks are triggered by extreme heat and smog, 

forests ravaged by beetle infestations and unprecedented wildfire 

seasons, farms plundered by drought and flood. 

A study called Risk Business Commission by former New York 

City Mayor Michael Bloomberg, former President George W. Bush 

Treasury Secretary Hank Paulson and former hedge fund manager 

Tom Steyer found that along our coasts, between $66 billion and 

$106 billion worth of existing property will likely be below sea level 

by 2050. By 2100, as much as half a trillion dollars worth of property could be literally underwater. Our side of the ledger counts 

too. And those costs are high. 

But you don’t have to take it from me. Take it from our witnesses. I met Broward County Commissioner Kristin Jacobs on my 

visit to Florida this spring. She explained to me how sea level rise 

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drives saltwater inland, threatening South Florida’s fresh water 

supply and fresh water canals. She says they will have to raise the 

head of the canals to keep saltwater out of the drinking supply, 

even though that ends up leading to more inland flooding. 

Inaction on climate change is not an option for Florida. And the 

longer we wait, the bigger the problem and the higher Florida’s 

price tag. 

We will also hear today from the global reinsurance firm Munich 

Re, which found a dramatic fivefold increase in weather-related 

disasters in North American from 1980 to 2011, racking up $510 

in losses. GAO repots that disaster declarations in the U.S. have 

increased sharply over recent decades and potential losses in the 

National Flood Insurance Program have created ‘‘substantial financial exposure for taxpayers.’’ Insurers like Munich Re are taking 

climate change seriously. 

Bill Mook is here to discuss how changes in the ocean are affect- ing the U.S. shellfish industry, which brought in over $2 billion in 

2012. Nearly 7,000 jobs in Rhode Island are directly connected to 

harvesting, processing, distributing and selling fish landed by 

Rhode Island fishing vessels. 

We know the carbon dioxide we dump into the atmosphere acidifies seawater. That is basic chemistry. You can do that in a high 

school lab. Scientists say that the changes in ocean acidity we have 

already seen decrease survival rates for shellfish larvae. In fact, we 

have already seen dramatic die-offs on the west coast. 

We also know the oceans are warming at an alarming rate. Ninety-three percent of the heat from climate change and global warming goes into the oceans. Warming temperatures may be to blame 

for the disaster that has been declared in the northeast groundfish 

fishery. And research has documented species in this region shifting northward. 

Rhode Island fishermen, who grew up fishing, in fact, one testified in the seat where Mr. Mook now is, he fished with his grandfather and he fished with his father. He said never in their lives 

did they pull up the fish that they are seeing now in Rhode Island 

waters: grouper, tarpon, tropical waters that have moved up as the 

seas have warmed. 

Climate change is stacking the deck against our oceans, against 

our fisheries and against our coastal economies. Carbon pollution 

is a challenge that can and must be solved. The committee has 

much to learn from our witnesses as we address this urgent threat. 

I thank the witnesses for joining us, and I turn to my distinguished ranking member, Senator Sessions of Alabama. In my remaining 30 seconds, I will point out that we have a chart that actually says that the solar photovoltaic potential of Alabama is just as 

good as any State around, it is not a problem. 

OPENING STATEMENT OF HON. JEFF SESSIONS, 

U.S. SENATOR FROM THE STATE OF ALABAMA 

Senator SESSIONS. All right. That would be great. Particularly if 

we had anything like a cost-effective utilization, that would be fabulous. I am for all of our alternative sources of energy. I think we 

should conduct research in those areas. But I don’t think we should 

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nologies that require them to pay considerably higher prices for the 

energy that they consume. So that is where we will be discussing 

these issues. 

Hopefully today we will have a good discussion about it. We have 

Dr. Lomborg in our hearing this morning. I thought he was very 

interesting at the Budget Committee. So there are a couple of 

things. 

First, do you believe science is sufficient to justify warming? My 

view is, it seems like it would, warming would occur. Although I 

would acknowledge the numbers haven’t borne out the computer 

models in recent years. Maybe 15 years, quite dramatically. 

So then the question is, if you share that view, what do you do 

about it and how do you react to it and what actions can be taken. 

So this committee hearing might help us discover that. Dr. 

Lomborg and our other witness this morning said, OK, we accept 

these change are occurring, this is our opinion about how to fix it. 

I thought it was a valuable discussion, so maybe we can do that 

today. 

But also we had testimony from Dr. Montgomery this morning 

that the way this Administration is doing this, a regulatory topdown method, would result in four times the cost for the same 

amount of environmental benefit you could do if you did the situation differently. 

Second, we continue to talk about storms and so forth. Dr. Pielke 

testified before our committee and said, it is misleading and just 

plain incorrect to claim that disasters associated with hurricanes, 

tornadoes, floods or droughts have increased on climate time scales 

either in the United States or globally. While we have droughts in 

the western part of the United States that are severe, the IPCC 

cites the Palmer Index to conclude that worldwide, the soil moisture content is actually more moist than historical norms. 

So I would just say to my colleagues, we look forward to this 

hearing. We look forward to your testimony. I think we need to establish policies in this Country that serve the people of this Country. And spending trillions of dollars now in a way that does not 

produce results and results in the future would be so little affected 

by what we do today requires us as policymakers to be very careful 

about what we do. 

I look forward to your testimony and I guess we will be heading 

to a vote soon. Thank you, Mr. Chairman. 

Senator WHITEHOUSE. Senator Vitter. 

OPENING STATEMENT OF HON. DAVID VITTER, 

U.S. SENATOR FROM THE STATE OF LOUISIANA 

Senator VITTER. Thank you, Mr. Chairman, and thanks to all of 

our witnesses. I also look forward to the discussion. I hope we have 

a rigorous, nuance discussion about the facts and specifically where 

they lead us. 

I am frustrated all too often by discussions here on the subject 

in Washington, even more so by discussions in the media, that 

jump from broad statements like climate change is happening, 

well, everyone agrees with that. Climate change is always happening. Or broad statements that human activity causes, is a sigVerDate Aug 31 2005 11:22 May 18, 2016 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\98184.TXT VERN
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nificant contributing factor to some climate change and some temperature rise. Lots of folks agree with that. 

Jump from there to what I view as a very extreme and very expensive regulatory agenda being pushed unilaterally by the Administration. 

So I hope we don’t have another sort of cartoonish discussion 

making those huge jumps. I hope we get into some rigor and nuance. I have been trying to do that on this committee as ranking 

member. I have made specific requests that serious statements of 

science be made with precision; precision in what the science shows 

and what the level of uncertainty and modeling has been in presenting what is indicated by empirical evidence. 

Since the beginning of this Congress, Republicans have invited 

many well-qualified scientists to testify at our numerous climate 

hearings. Each one has spoken to what the empirical evidence 

shows. It shows, among other things, for instance that hurricane 

and tornado activity has not been increasing in either frequency or 

intensity. And you would never think that from the cartoon presentations up here and in a lot of the media. It shows that global temperatures have not been increasing at any rate close to what was 

predicted 10 years ago. 

So I look forward to a rigorous, detailed discussion, including 

pointing out certain facts. First of all, carbon is an inaccurate term 

to be used in this discussion. We are talking about carbon dioxide, 

not carbon monoxide, for instance, a pollutant already regulated 

and a known danger. 

Another fact, the cost of the domestic economy from actions undertaken in furtherance of the President’s climate action plan remains unknown as the Administration utilizes and internally developed social cost of carbon estimate that captures the global benefits while ignoring the domestic costs. 

A third fact, without the co-benefit reductions in particulate matter and ozone precursors, actions to address carbon dioxide don’t 

pass a cost benefit analysis. 

Fourth important fact, abundant, affordable, reliable electricity 

drives economies and raises populations out of poverty. It drives 

our current manufacturing renaissance and our competitive advantage around the world. So if you take that away, families, communities and small businesses all suffer, suffering unnecessarily for 

no tangible gain. 

So again, I look forward to a detailed, rigorous, nuance discussion. 

Senator WHITEHOUSE. Senator Wicker. 

OPENING STATEMENT OF HON. ROGER WICKER, 

U.S. SENATOR FROM THE STATE OF MISSISSIPPI 

Senator WICKER. Thank you, Senator Whitehouse. I note the vote 

has begun. I will be brief. 

As Senator Vitter points out, is the climate changing? Yes, it is 

changing. It has always changed throughout tens of thousands and 

hundreds of thousands of years. The question is, what is the cause 

of this change? Is it a different cause now in the 20th and 21st centuries from the causes in the past? I think it is interesting to hear 

testimony about that. 

5 

I think a better title for this hearing, Mr. Chair, rather than Examining the Threats Posed by Climate Change, I think a better 

title would be Examining the Threats Posed by Climate Change Inaction and of Action. Because as Mr. Lomborg pointed out in the 

budget hearing today, there is a cost of inaction, but there is very 

much a cost to the poor of climate change action. Many of the proposed reforms set out by the United Nations, by the Administration, will have very much a detrimental effect on the poor, particularly in the short term. 

Also I think it is without question that climate action can and 

probably will, probably is having a negative impact on job creation. 

So we need to balance the costs of climate inaction against the 

costs of climate action. 

I also think it is interesting to note that the Intergovernmental 

Panel on Climate Change has been careful not to say that the recent cost of storms and disasters is attributed to climate change. 

As a matter of fact, the IPCC Special Report on Extreme Weather 

says, ‘‘Long term trends in economic disaster losses adjusted for 

wealth and population increases have not been attributed to climate change.’’ To me, Mr. Chairman, that means that the growing 

exposure of people and economic assets in the way of storms has 

increased the cost and not climate change itself. 

I think this is an interesting subject. Certainly we have had 

quite a lot of hearings on this topic. I think this will be one of the 

more interesting panels that I have attended and look forward to 

the testimony and the questions. Thank you, sir. 

Senator WHITEHOUSE. Very well. With the opening statements 

concluded, we will now take a recess while we all head over to the 

floor and vote. For your own purposes, I would estimate that that 

takes five to 7 minutes. So don’t go too far, but don’t feel pinned 

to your seat. We will be back shortly. Thank you all very much. 

[Recess.] 

Senator WHITEHOUSE. The hearing will come back to order. I 

thank Senator Wicker for returning. We will begin with the witnesses. We will begin with Carl Hedde, who is the Senior Vice 

President and Head of Risk Accumulation in the Underwriting 

Services Division at Munich Re America. The Risk Accumulation 

that he manages includes catastrophe management, risk accumulation and geosciences research functions. His responsibilities include 

oversight of corporate accumulation issues, including the use of catastrophe risk models, client catastrophe risk consulting services 

and portfolio management and optimization. 

He also manages a group of scientists that provide climate, seismological and meteorological expertise and research capabilities to 

Munich Re America and its clients. He has 30 years of experience 

at Munich Re America and is a past chairman of the Insurance Institute for Business and Home Safety and a founding member of 

the International Society of Catastrophe Managers. 

Mr. Hedde, thank you very much for being here. Please proceed 

with your testimony. 

6 

STATEMENT OF CARL G. HEDDE, CPCU, HEAD OF RISK 

ACCUMULATION, MUNICH RE AMERICA 

Mr. HEDDE. Thank you and good afternoon, and thank you for inviting me to testify. 

I am Carl Hedde, Head of the Risk Accumulation Department at 

Munich Re America, one of the largest reinsurers in the United 

States. Founded in 1917, we have over 1,000 employees serving our 

clients in the United States. Our parent company, Munich Re, is 

one of the world’s leading reinsurers. 

The insurance industry relies heavily on historical loss information to make business decisions. However, the use of historical data 

assumes that the risk we see today is the same as it was in the 

past. This is not always the case. Where we do see an upward 

trend is in regard to losses from weather catastrophes, which over 

time have increased in both frequency and severity. 

In the United States, socioeconomic changes have played a substantial role in this increase, but do not explain the entirety of the 

changes. It is likely that changes in climate, whether from natural 

variability or due to man’s influence are playing a role in these 

trends. 

Today we will provide an update on natural catastrophes, or Nat 

Cat activity, as well as examples of effective adaptation efforts for 

the extreme weather events that our Country will continue to face. 

Globally there were close to 500 loss events due to Nat Cats in 

the first 6 months of 2014. Extraordinarily hard winter conditions 

affected the U.S. and Japan while parts of Europe suffered from 

heavy rainfall, storms and floods. While it was cold in some parts 

of the globe during the winter of 2014, it was not cold everywhere. 

Alaska and Greenland were much warmer than normal, as was 

most of Europe, North Africa and China. The average global temperature in January 2014 was 1.17 degrees Fahrenheit, warmer 

than the 20th century average. 

Worldwide, direct economic losses totaled $42 billion and insured 

losses totaled $17 billion from the 6-month period, well below the 

6-month average of $94 billion economic loss for the last 10 years. 

In the United States, 67 Nat Cat events caused over $14 billion in 

economic losses and over $10 billion in insured property losses during the first half of 2014, accounting for over 60 percent of the global total. 

Insured losses due to thunderstorm-related perils, such as tornadoes and hail during the first 6 months of 2014 are estimated at 

$7.8 billion, accounting for almost 80 percent of the half-year total 

insured loss. This is the lowest half-year total since 2007, due primarily to prolonged winter conditions across the eastern U.S. 

which resulted in the late start of the spring thunderstorm season. 

Although drought conditions eased in some locations, conditions 

in California worsened and the State is now experiencing one of its 

worst droughts. 

I would now like to talk about the upward trends we see in relation to Nat Cat events. We see that worldwide annual totals of geophysical loss events like earthquakes and volcanic eruptions have 

stayed very constant over the past 35 years. Where we see an upward trend is the increasing number of weather-related events 

around the globe as well as climactic events such as drought and 

7 

heat waves. Our research also shows that since 1970 there has 

been an increase in the frequency and variability in the large scale 

atmospheric conditions that allow severe thunderstorms to develop 

over the eastern two-thirds of the U.S. 

Other perils we note in respect to notable upward trends are 

drought, flood and wildfires. While it is good news that Nat Cats 

in the U.S. have been relatively minor so far in 2014, we should 

not forget there has been no change in the overall catastrophic risk 

situation of the Nation. Our buildings and infrastructure are very 

vulnerable to Nat Cats and future large loss events are inevitable, 

regardless of climate change, though climate change would worsen 

the situation. 

Munich Re supports a smart, balanced approach that protects 

the public, does not stifle business or innovation. The insurance industry and the Insurance Institute for Business and Home Safety 

have been conducting research and promoting stronger building 

codes and stronger construction practices. Much of the findings are 

incorporated into the IBA Trust Fortified Program. In addition to 

the IBA Trust Fortified Program, Munich Re also supports further 

development of the Resilient Star program, a public-private partnership initiated by the Department of Homeland Security, with a 

goal to build and retrofit homes to be more disaster resistant. 

It is in the mutual interest of the Federal Government and the 

insurance industry to partner to find solutions in the areas of adaptation and risk transfer. This makes absolute sense from a macroeconomic perspective, as lower subsequent losses will generate savings of several times the investment. Most importantly, these solutions can protect human lives. 

I want to thank you again for providing me this opportunity to 

testify today. 

[The prepared statement of Mr. Hedde follows:] 

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Senator WHITEHOUSE. Thank you very much, Mr. Hedde. We appreciate that you are here. 

Our next witness is Hon. Kristin Jacobs. She was first elected to 

the Broward County Florida Commission in 1988, and she is now 

serving her fourth consecutive term on the commission. She has 

served as the commission’s mayor twice, most recently in 2013, and 

as the vice mayor twice. She serves on the President’s State, Local 

and Tribal Leaders Task Force on Climate Preparedness and Resilience, co-chairing the Built Systems subgroup. And she chairs the 

White House National Ocean Council Governance Coordinating 

Committee. She is also Vice Chair of an Energy Subcommittee for 

the National Association of Counties. 

In 2009, Ms. Jacobs brought together four southeast Florida 

counties, including Broward County, to sign the Southeast Florida 

Climate Compact, which was a bipartisan plan to mitigate property 

loss, make infrastructure more resilient and protect essential community structures like hospitals, schools and emergency shelters. 

We welcome her here and thank her for her travel from Florida. 

STATEMENT OF HON. KRISTIN JACOBS, COMMISSIONER, 

BROWARD COUNTY, FLORIDA 

Ms. JACOBS. Thank you, and good afternoon, Mr. Chairman. 

As a Broward County Commissioner and member of the President’s Task Force, I would like to personally thank you for your 

leadership and for convening today’s hearing. 

I am so honored and grateful to have been able to serve in one 

of the most progressive regional governments in the Country for 

nearly 16 years. I spent a significant number of those years tackling the challenges of climate change. 

As you know, Florida and especially South Florida is extremely 

vulnerable to the effects of climate change. Our extensive coastline, 

low land elevations, flat topography and unique geology combine to 

put South Florida communities on the front line for combating climate impacts. 

Local governments really are the first responders when it comes 

to addressing the hazards of climate change. These hazards include 

coastal and inland flooding, storm surge, saltwater contamination 

of our well fields, impacts on water and wastewater systems, beach 

erosion and threats to public and private property. We also are experiencing increased severity of storms, hotter temperatures, impacts to public health and threats to our natural resources, with 

cascading effects, geographically and economically. 

In South Florida we have chosen to undertake a regional approach in planning for climate change, one that emphasizes collaboration and join action. Our journey has been propelled by the 

shared reality of impacts that are already affecting our communities, especially sea level rise. Already, we experience extensive 

flooding during extreme high tide events, with neighborhoods inundated as seawater pours over seawalls, pushes up through storm 

drains and rises up through the ground. Iconic business districts 

are impacted, including Duvall Street in Key West, the famed 

Alton Road in Miami Beach and Las Olas Boulevard in downtown 

Fort Lauderdale. Miami Beach is now undertaking a $200 million 

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storm water master plan to address sea level rise, and Fort Lauderdale similarly estimated similar improvements at $1 billion. 

While these provide recognizable examples, in reality our entire 

urban landscape is at risk. The discharge capabilities of our regional flood control system has been reduced such that even minor 

storm events can result in extensive flooding. Severe storms further increase risks, such as the recent one in a thousand-year 

storm event when 22 inches of rain fell over Palm Beach County 

in less than 24 hours, flooding inland neighborhoods several miles 

in. 

Other regional impacts include the loss of potable water capacity 

within the Biscayne Aquifer, our region’s primary water supply. 

Replacement water sources and systems are estimated at $300 million just for Broward County alone. To reduce risk and the potential for significant economic losses, adaptation necessitates major 

investments and upgrading our infrastructure, coupled with an aggressive plan to head off the most severe climate change impacts 

through deep reductions in carbon pollution, the leading cause of 

global climate change. 

The economic implications of a failed response simply do not allow for inaction. With just one additional foot of sea level rise, $4 

billion in taxable property will be flooded in Palm Beach, Broward 

and Monroe Counties. At three feet, that figure rises to $31 billion. 

To provide additional economic scope, one-third of our State’s gross 

domestic product is tied to the economies of southeast Florida, and 

of course, nationwide with coastal counties, account for 45 percent 

of the national GDP. 

Critical assets, infrastructure, local business and households are 

the very fabric of our economy. As we know from risk analysis, investments and resilience pay off by a factor of four to one. 

In 2009, recognizing our collective vulnerabilities, the four counties of Southeast Florida, Broward, Palm Beach, Miami-Dade and 

Monroe, united in a historic compact agreeing to work across party 

and geographic lines to address climate change head-on with one 

voice. In the 6-years since the initial signing of the Southeast Florida Regional Climate Change Compact, the four counties have 

agreed to and are in the process of implementing 110 specific recommendations to reduce greenhouse gas emissions and adapt to climate change. Acting together, we are strong and we are infinitely 

more resilient. 

But at the end of the day, we couldn’t have gotten as far as we 

have without the partnerships of the Federal Government, all of 

which have included their support, including NOAA, in developing 

vulnerability mapping and conducting assessments; the USDOE, 

for the Florida Goes Solar Initiative, to help advance residential 

rooftop installations; and the USGS in developing advanced hydrologic models. 

Increasingly, it is clear that local governments and regional initiatives like the compact will play an important role in leading climate adaptation. But there remains a great need for the technical 

and financial support of the Federal Government, along with the 

transition to a clean energy economy. 

I am pleased to share with you that Broward County has already 

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mous bipartisan vote, our board supported the EPA’s Clean Carbon 

Rule. Climate change is one of the most important issues facing our 

Nation. As a grandmother of three, I can assure you the future is 

already here. It is our responsibility as government to act now to 

ensure that the resources and prosperity that we have so enjoyed 

will be there for our children in the future. 

I thank you so much for the opportunity today to speak to you, 

and I look forward to a lively and engaged conversation. 

[The prepared statement of Ms. Jacobs follows:] 

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Senator WHITEHOUSE. Thank you very much, Commissioner Jacobs. 

Our next witness is Mr. Bill Mook, who is the President and 

owner of Mook Sea Farm, an oyster farm founded in 1985 on the 

Damariscotta River in mid-coast Maine. He raises the American 

oyster from egg to adult size, producing 80 million to 100 million 

juvenile oysters annually for sale to other east coast oyster growers 

and for cultivation and sale on the U.S. half shell market. 

Mr. Mook was appointed to a 16-member commission created by 

the Maine legislature to study ocean acidification and its effects on 

shellfish. He has worked as a research assistant at the University 

of Maine, prior to his work in the shellfish aquaculture industry 

and previously spent several years teaching science and biology. 

Mr. Mook, welcome. 

STATEMENT OF BILL MOOK, PRESIDENT, MOOK SEA FARM 

Mr. MOOK. Thank you, Mr. Chairman. 

As already mentioned, I am President and Owner of Mook Sea 

Farm, founded in 1985. We are located on the Damariscotta River 

in mid-coast Maine. At our hatchery, we produce seed oysters. 

Some are sold to other east coast growers and the rest we grow and 

sell into the domestic half shell market as Wiley Point and 

Pemaquid Point oysters. 

My company employs 10 to 14 people, including myself. I will 

make a wild guess that I am the only one in this room whose paycheck directly depends on an oyster’s ability to make its shell. 

About 25 percent of the carbon dioxide we put into the atmosphere 

dissolves into the ocean where it forms carbonic acid. This process 

is called ocean acidification. It is occurring at a rate that may be 

unprecedented in earth’s history and will accelerate as carbon dioxide emissions increase. 

Ocean surface waters are 30 percent more acidic than they were 

at the start of the industrial age. Scientific study of ocean acidification is young, and we have a lot to learn about what influences 

acidification along our coasts, how marine ecosystems will be impacted or what those impacts will mean for people and communities. 

However, we know that regional climactic and oceanographic factors can exacerbate acidification of coastal waters. In the gulf of 

Maine, where my business is located, the problem is freshwater, 

which is more acidic than seawater. And in the last 50 years, there 

has been a 67 percent increase in very heavy precipitation. 

From numerous studies, we know that acidification of the marine 

environment will hurt many shellfish. We know that the combined 

negative effects of acidification and other climate change parameters, like higher temperatures and low oxygen, can be additive 

and sometimes synergistic. Not only shellfish are vulnerable. The 

survival, health and behavior of species like the cod, summer flounder, Atlantic silverside and even clownfish are also compromised in 

high CO2 conditions. 

At Mook Sea Farm, starting in 2009, we tried to figure out why 

our oyster larvae were having problems. Fertilized eggs sometimes 

showed poor survival. More often, larval growth would slow down 

and the larval period, which normally lasts 14 to 16 days, would 

31 

drag on for an additional week or more. Large storm events seemed 

to be the common denominator. 

We developed a suite of strategies. They all, and this is key, assumed that low pH water was the culprit. These methods were consistently applied to every group of larvae we produced this year, 

and for the first time since before 2009, we were 16 for 16. Every 

group passed through the larval phase in 14 to 16 days. 

Taking all this together, we know acidification is not a future 

problem; it is a problem now and it will only get worse. What are 

the fates of wild populations in uncontrolled conditions? Based on 

monitoring our intake water, the prognosis is not good. I believe 

that as acidification progresses, larval success will become increasingly sporadic, reaching a point where some natural populations 

won’t occur. As I explain in my written testimony, there are indications that this process may be underway. 

What are the stakes? Every day enormous quantities of calcium carbonate are trucked around this Country. The $2 billion annual 

landed value of shellfish increases substantially as it moves up the 

supply chain from harvesters to wholesalers, distributors, supermarkets, fish markets and restaurants. Even though lobsters and 

crabs make up half the value of the U.S. landings, we know little 

about the responses to acidification. This is of special concern to us 

in Maine, where lobsters are king of marine resources, sustain 

thousands of people and are the lifeblood of communities from 

Kittery to Eastport. 

Because this study of ocean acidification is so new, we don’t have 

the information needed to fully examine the threats it poses. There 

are two critical research priorities: water chemistry monitoring and 

understanding species and ecosystem responses to increasing carbon dioxide. 

Mitigating and adapting will only buy us time while greenhouse 

gases accumulate in our atmospheres and oceans. As an American 

businessman, I believe the greenhouse gas equation is solvable. 

Leadership with basic research and American ingenuity and innovation will yield not only greenhouse gas reductions but it will also 

yield many unanticipated benefits. With American leadership and 

unity to solve the problem, the outcomes become exponential. 

Thank you very much. 

[The prepared statement of Mr. Mook follows:] 

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Senator WHITEHOUSE. Thank you very much, Mr. Mook. 

Our next witness is Raymond J. Keating, who has served as the 

Chief Economist at the Small Business and Entrepreneurship 

Council since 1995. He is a registered lobbyist who writes, speaks 

and testifies before Congress on a wide range of issues affecting 

small businesses and the economy. Since 1995, he has testified before Congress over 15 times. 

He is also a lecturer at the Townsend School of Business at 

Dowling College. He has co-authored or authored several books and 

written articles and many publications. He holds a B.S. in business 

administration and economics from St. Joseph’s College, an M.A. in 

economics from New York University, and an M.B.A. in banking 

and finance from Hofstra University. 

Mr. Keating, please proceed with your testimony. 

STATEMENT OF RAYMOND J. KEATING, CHIEF ECONOMIST, 

SMALL BUSINESS AND ENTREPRENEURSHIP COUNCIL 

Mr. KEATING. Mr. Chairman, members of the committee, thank 

you for hosting this hearing today. My focus will be on the negative 

effects that regulations tied to climate change have on small business and the economy. 

I am pleased to submit this testimony on behalf of the Small 

Business and Entrepreneurship Council and our Center for Regulatory Solutions. SBE Council is a non-partisan, non-profit advocacy, research and training organization dedicated to protecting 

small business and promoting entrepreneurship. The Center for 

Regulatory Solutions is a project of SBE Council. 

I would like to start off by saying that the State of the economy 

must be weighed when considering any major policy endeavor, including, of course, significant regulatory measures related to climate change. After all, on the cost side the economics of regulation 

are rather straightforward. That is, regulations raise the costs of 

and create uncertainties for investment, business and entrepreneurship, thereby restraining critical risk-taking, along with productivity, economic growth and job creation. The wages and incomes of workers and families suffer as a result. 

Consider some facts on the U.S. economic performance in recent 

years. During the recovery we have averaged real GDP growth of 

only 2.1 percent annually. That is less than half of where we 

should be if you look at the history since 1950. And of course, GDP 

shrank by 2.9 percent in the first quarter. 

Critical here is the lackluster private investment. That is really 

the most troubling issue in this very troubling economy, given that 

private investment is idle for economic growth now and in the future. And if you look at the numbers, we are still below the recent 

high hit in 2007 when it comes to private investment. 

This is the worst possible scenario to be imposing an additional 

massive regulatory intrusion in the name of climate change. Indeed, from an economic perspective, when it comes to the climate 

change regulatory agenda, the only outcome that we can be confident in is that new regulatory and/or tax regimes will impose very 

real costs on and reduce economic efficiency in industries, businesses and the economy. All of that providing anything meaningful 

49 

in terms of climate benefits or reductions in global temperatures. 

In other words, it is all pain, no gain. 

When focusing on the threats posed and costs imposed by climate 

change, the clearest and most significant come from the resulting 

government actions. In particular, increased regulatory and tax 

burdens, such as mandating reductions in carbon dioxide emissions, mandating the use of cost and inefficient alternative sources 

of energy and/or imposing some kind of carbon tax. 

I noted several studies in my written comments that show significant losses in terms of economic growth, income and productivity due to regulatory costs. As for small business, which is obviously vital for our group, the SBA’s Office of Advocacy published 

an updated study in 2010 looking at regulatory costs at the Federal 

level. I would just like to highlight two points right now. 

For firms with less than 20 employees, the per employee cost of 

Federal regulations was 42 percent higher than firms with employees between 20 and 499; 36 percent higher for firms with 500 or 

more employees. Look on the environmental front, environmental 

regulations, the costs are even higher. So the burden of regulation 

on small business is significant and disproportionate. 

When we look at what has been going on, we have heard a lot 

of talk about the EPA’s war on coal related to carbon dioxide emission limits on power plants. I would argue and I have argued that 

this is really a war on small business as well. Just a few quick 

points. 

First, straightforward economics makes clear that whatever the 

details of the regulatory schemes that will be used, the costs, 

again, will be formidable. We are talking about big costs on the 

U.S. economy; we are talking about big costs on small businesses. 

Ninety-nine point 9 percent of all businesses, both employer and 

non-employer firms, have less than 500 workers; 98 percent have 

less than 20. 

Second, higher energy costs spell trouble for U.S. firms in the 

international marketplace. Again, that is not big business. That is 

very much a small business issue. Ninety-eight of U.S. goods exporters are firms with less than 500 employees. 

U.S. manufacturers face increased costs and reduce competitiveness. And guess what, 98.6 percent have less than 500 workers; 76 

percent have less than 20 employees. And again, 97 percent of 

manufacturing exporters are small and mid-size businesses. 

Finally, I want to touch on the fact that carbon-based energy sectors are overwhelmingly about small firms. Oil and gas extraction 

employer firms, 91 percent less than 20 employees. Among coal 

mining employer firms, 60 percent have less than 20 employees. 

And among the sector that supports activities in coal mining, 69 

percent have less than 20 employees. This is all about small business and they face real and significant costs. 

Thank you for this opportunity. I will be glad to answer any of 

your questions. 

[The prepared statement of Mr. Keating follows:] 

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Senator WHITEHOUSE. Thank you very much, Mr. Keating. 

Mr. Lomborg, welcome back. We saw one another in the Budget 

hearing this morning. So you have a two-fer going today. We welcome you. Please proceed with your testimony. 

STATEMENT OF BJORN LOMBORG, PH.D., ADJUNCT PROFESSOR, COPENHAGEN BUSINESS SCHOOL AND PRESIDENT, 

COPENHAGEN CONSENSUS CENTER, USA, INC. 

Mr. LOMBORG. I hope you are having the two-fer but yes, I would 

love to just show you a little bit. The question is really on the effects of checked and unchecked climate change in communities and 

the economy. I am just going to look at the economic argument and 

I think I am going to pick up from Raymond Keating’s point of saying that we need to make sure that we recognize there are both 

costs of not doing something and costs of doing something. 

So fundamentally, yes, global warming is a man-made, long-term 

problem. For the U.S., it constitutes a problem about 1.2 percent 

over the next five decades. So remember, this is a problem, but it 

is not the end of the world. It gives a sense of proportion. This is 

the total cost over the next five decades, so this is discounted back 

to today’s dollars. 

If you look at the cost of inaction over this century, it is a significant increase in costs. That is certainly an argument for doing 

something. But we also need to remember that there is a cost to 

that action as well. Here I have a graph of the GDP growth per 

year for a lot of countries and CO2 growth for a lot of countries per 

year. It shows that there is a very strong correlation; that is if you 

grow more, you will probably also have higher CO2 emissions. Likewise, if you want to cut back on CO2 2 emissions, you probably also 

will have lower growth. 

Now, this is not a one-to-one and it certainly is not that you have 

on growth if you cut your carbon emissions back. But there will be 

lower growth. So there is a cost, and that is basically the cost that 

I showed you up here. This is if we had the absolutely best outcome, one where all countries around the world coordinated with 

one perfect carbon tax increased in lockstep around all nations 

across the century. We would have slightly higher costs in the first 

part of the century and slightly lower, a little bit more lower costs 

toward the end of the century. So this would actually be a good policy. Of course, it is probably also a policy that is very hard to enact. 

I have also shown you, and I go through in my paper, why this 

is probably a much more likely outcome of action on climate change 

where we take strong action mostly in developed countries and rich 

countries and we do so in a way that we know we tend to do, which 

is less than economically fully efficient. And then of course, the cost 

of action actually ends up being phenomenally much higher, both 

because we pay many of the costs of the downside of climate 

change and a significant part of the costs of, a Raymond Keating 

mentioned earlier, in the regulation part. 

So what we have to do is make sure that we don’t end up spending lots of money on things that will not actually help the world. 

If I could also just, and I was asked to make a few comments on 

some of the impacts on specific issues. We have talked about hurricanes; are hurricanes increasing. Well, we don’t know this still 

88 

from the evidence. But we actually expect that over the next 100 

years there will be stronger hurricanes. I am taking, if you will, a 

slightly pessimistic view from one of the main papers that was 

cited in Nature a couple of years ago. 

If we assume that we are going to see stronger hurricanes, what 

will that impact be? Well, for now, it would be, the U.S. impact on 

hurricanes is about a loss of 0.1 percent of GDP. In 2100, because 

you will be much richer, even if hurricanes are much stronger, the 

fact that you will also be much more resilient, partly because you 

are richer, we actually estimate the overall damage will be lower 

at about 0.05 percentage points. 

So again, the point here is to recognize, yes, there is a problem, 

but it is not the end of the world. Again, I think that argues for 

possibly having a more relaxed kind of conversation and a more rational kind of conversation. 

Could I also just emphasize, and I think this is part of the information that is necessary perhaps, from Europe, we have had some 

experiments in making pretty poor climate policies. We have managed to cut carbon emissions, but at fairly low cost. If you look at 

the U.K., heating prices in the U.K. over the last 5 years have gone 

up 63 percent. This harms especially poor people. We now know 

that about a million elderly in the U.K. stay in bed longer than 

they want to in order to keep warm. A third don’t warm up more 

than one room. 

Electricity prices, for instance, have dramatically increased, 

about 50 percent. That has reduced consumption, which is what a 

lot of people argue, see, it actually worked. I think it is perhaps 

worth pointing that it reduces consumption for the poor, but not for 

the rich, because the rich could actually afford to keep using as 

much electricity. 

If I could just show you this one graph on electricity prices from 

Germany. Germany has the world’s second highest electricity price. 

I am sorry to say that Denmark leads that. But they probably pay 

about three times as much as what you do on average here in the 

U.S. As you can see, they have seen an 80 percent increase in price 

over the last 14 years. So basically this now means that about 7 

million households live in energy poverty and 600,000 households 

had their electricity cut, because they couldn’t afford it. 

This is just examples, again, of saying there is a real cost in action as well as inaction. What I want to make sure is that when 

we talk about this we don’t just talk about there are terrible things 

happening with global warming. Yes, there is a problem. But also, 

a real conversation about how do we make sure that the action we 

take will actually not be more costly than the inaction we are trying to leave. 

Thank you. 

[The prepared statement of Mr. Lomborg follows:] 

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Senator WHITEHOUSE. Thank you very much, Dr. Lomborg. 

Let me take a moment to put into the record a few documents. 

Two of them relate to information about the small business view 

on climate change reflecting that a majority of small businesses 

support the EPA regulating carbon emissions from existing power 

plants. And 76 percent are in favor of requiring new power plants 

to reduce carbon pollution. And other polling showing that small 

businesses believe climate change and extreme weather are an urgent problem that can disrupt the economy and harm small businesses; 57 percent of small businesses in this poll are described as 

an urgent problem that can disrupt the economy and harm small 

business. Four in ten strongly believe this. 

So there appears more than a single view of the small business 

community. 

[The referenced information follows:] 

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Senator WHITEHOUSE. I would also like to put into the record a 

report from the Center for American Progress called Groundhog 

Days, which relates to some of the testimony we had earlier in this 

committee from the four Republican EPA commissioners about the 

unfortunate track record of industry in predicting harm and disaster from environmental regulation, when in fact studies actually 

usually show that there are huge benefits, net benefits if you look 

at both sides of the ledger. 

So to my questions. Let me first ask Commissioner Jacobs, if you 

could tell me a little bit about what the specific threats are that 

Florida faces. What does it mean for your water supply and for 

coastal properties from sea level rise? First of all, there is no controversy in Florida that sea level rise relates to climate change, is 

there? 

Ms. JACOBS. In South Florida it is a bipartisan conversation. It 

is not the kind of conversation you are seeing up here in Washington. And I think that is primarily because we are all dealing 

with it. 

Senator WHITEHOUSE. Your colleague Sylvia Murphy is very ardent protagonist in this area. And she is a Republican one county 

south of you, correct? 

Ms. JACOBS. Yes. But when you consider in South Florida that 

you have over 100 cities in the four counties representing five and 

a half million people, all of these cities and the four counties are 

struggling with how to pay for the infrastructure needs, and knowing what is happening. 

I want to point out just some of the things that are happening. 

For example, in Monroe County, you have a drainage system that 

was designed to pull water away during rain and storm events. But 

what has happened is that it has actually become the conduit to 

draw saltwater in twice a day with the daily movements of the 

tides. It has become such a problem that Ford Motor Company is 

no longer honoring the warranty to the police vehicle fleet there, 

because of saltwater damage to the undercarriage, and the fire hydrants are rusting away in the roads. They have just paid to have 

one of the roads raised another nine inches as a result of one of 

these problems. 

In Broward County, we have a saltwater intrusion line that is 

marching ever inward. Now it stands between three and six miles 

inland. Every well on the east side of that saltwater line—oh, there 

is a map. Every well on the east side of that red line has been lost 

to saltwater. 

Now, why that is important is in Broward County, unlike our sister counties to the north and south, you have 28 water utilities. So 

each of the different cities has their own utility. Whenever your 

utility loses its water supply, they must then purchase it from the 

neighboring city at a cost of 25 percent increase. 

So when we talk about the ability for people to be able to afford 

moving forward, we know that saltwater is a problem. We know 

that we have to find ways to not only address the loss of well fields 

and potable water supply. But with 1,800 linear miles of canal systems just in our county alone, the issues are not just coastal, they 

are inland. There are 11 salinity structures, or flood control gates, 

that keep saltwater where it is supposed to be in the ocean, and 

109 

the freshwater in our canals. They are designed to lift those gates 

during rain events and allow that water to drain out. 

Increasingly as sea level rise has come up, we are not able to 

open those gates. They remain closed, which requires that the inland areas stay inundated with water, sometimes up to 2 weeks, 

which is what we saw in Palm Beach County. They simply had nowhere for that water to go. 

Senator WHITEHOUSE. Does the drainage system that would take 

the freshwater, the rain water off of the land, is backed up against 

saltwater and it can open the gate? 

Ms. JACOBS. Exactly. It would either be, the gates either lift and 

you let it drain out to the sea or it is backed into the Everglades. 

Neither one of those options available. 

And increasingly, there are 18 of them that the South Florida 

Water Management District, which has the authority over the 16 

southern Florida counties, has estimated that need to be replaced 

because they only have a six-inch head differential between the salt 

side and the freshwater side. Those all come at a cost of $50 million. 

The infrastructure needs in South Florida are herculean in scale. 

One of the things I think is important to understand is, at the end 

of the day, when the sweater has overtopped your canal wall and 

it has flooded your swimming pool with saltwater or your toilets 

are backing up, they don’t care what party you are when they call. 

They don’t care where they are in the economic ladder. They want 

you to answer. 

So that is way you see so many elected officials in South Florida 

pulling in the same direction. There is not an argument in South 

Florida that climate change is real, that the costs are out of scale 

and that we need to move forward. 

What I would think is one of the most important points that 

touches on many of the comments here today, and that is adaptation action areas. We were able to add into State law that they 

needed to be established throughout the State of Florida. We have 

asked for the Federal Government to engage in a similar undertaking. That allows you to figure out where are your vulnerabilities 

and how long it is until those changes come to you and allows you 

the opportunity to start prioritizing over what the changes are 

going to be in your future. 

The idea is, we are already, all of us, whether it is the Federal 

Government, the State or local government, spending significant 

sums of money. The idea is to spend them smartly, to understand 

what the future looks like and build accordingly. American ingenuity can pull us out of a lot of the scary scenarios that we are 

hearing about. But the only way that that truly happens is to recognize that it is coming, assess that vulnerability, create a 

prioritization of what you are going to do and then take your time 

in moving through the steps. 

Senator WHITEHOUSE. Thank you very much. 

My distinguished ranking member, Senator Sessions. 

Senator SESSIONS. Thank you, Mr. Chairman. 

Dr. Lomborg, I was looking at one of your charts. I believe is figure one. It indicates that at least for the next 70 or so years, the 

110 

global warming is a net benefit to, is that the United States or the 

planet as a whole? 

Mr. LOMBORG. Yes, that is for the planet. 

Senator SESSIONS. Well, that is a pretty long time. So would say 

the predictions of disaster today might be a bit overdrawn. 

With regard to Ms. Jacobs, when you have a huge population living in South Florida and it draws water out of the aquifers, that 

does allow saltwater to infuse itself, does it not? Is that one of the 

factors that might be causing the salt increase in your aquifers? 

Ms. JACOBS. Actually, sea level rise is why we are losing our 

wells. But I would point out to you that we have taken the amount 

of water used in Broward County seriously, and through a variety 

of changes made—— 

Senator SESSIONS. I just asked, was that one of the factors that 

might cause an increase in salt? You draw down your aquifers, 

water tends to move in, does it not? 

Ms. JACOBS. If you over-drew, than your permitted amount, then 

that is possible. That is why Broward County has reduced its future potable water needs by 50 percent. 

Senator SESSIONS. Dr. Lomborg, with regard to the chart, figure 

13, I am a little uncertain about that. But it seems to me that you 

are saying that over on this one, let’s take the other chart, you 

show a modest alteration in the actual, a modest cost if nothing is 

done. And in terms of the entire GDP, this looks like the chart is 

$650 billion and it looks like there is a very small extra cost if we 

did nothing over the next century. Is that correct? 

Mr. LOMBORG. Yes. 

Senator SESSIONS. Can you translate that into dollars? 

Mr. LOMBORG. There is an unavoidable cost. What I tried to show 

is that we are, over the century for the U.S., have a discounted 

value in GDP of about $650 trillion. If we have global warming as 

we believe it is today and don’t do anything, that is going to cost 

us about $3.4 trillion. If we are phenomenally good at how we do 

our polices, we can reduce that number by about $200 billion. 

That is not nothing. That would be great. But it requires China, 

India, everybody else to do all the right things at all the right 

times. That is very unlikely. 

Senator SESSIONS. All right, $200 billion over 100 years. 

Mr. LOMBORG. Yes. 

Senator SESSIONS. That is $2 billion a year, give or take. 

Mr. LOMBORG. Yes, you can’t quite do that, because it is discounted. But yes. Obviously the whole point here is to recognize 

that there is a significant risk that we are going to end up paying 

a lot more, and there is only a little upside. 

Senator SESSIONS. So what you are saying is, if we don’t watch 

it, we will spend a lot more on preventing than we get in terms 

of benefit, based on the science that is out there today. 

Mr. LOMBORG. Yes. 

Senator SESSIONS. And you accept IPCC’s basic scientific data. 

Mr. LOMBORG. If we look at the peer-reviewed studies on the cost 

of the European Union climate policies, which are well-intentioned 

but very clearly not well made, we estimate that the benefit cost 

ratio to the world, not to the EU, but to the world, is probably 

going to be in the order of every dollar we spend, we will avoid 

111 

three cents of climate damage for the world. I would argue that is 

probably a pretty poor climate policy. 

Senator SESSIONS. Now, Mr. Keating, I was really surprised 

about the percentage, or your contention that small businesses suffer more under the environmental regulations. Could you explain 

why that is, the regulations that impose costs, as they all do, why 

it falls more disproportionately on small businesses? 

Mr. KEATING. Regulatory costs fall disproportionately more on 

small businesses than big firms. Think about the day to day operations of your average small business. Regulatory costs come down, 

larger firms have what, they have lawyers, they have everybody 

that can, a whole staff to deal with these things. 

To bring it down to the small business owner’s level, they don’t. 

They are operating on thin margins. They are struggling to get by, 

most of them. These regulatory costs fall much harder on them. 

That is borne out in the economic analysis, the work done by the 

SBA and work done by a whole host of other people, that the regulations fall much more heavily on small firms. 

Can I ask this to be put into the record? We have a wonderful 

handout here. The chairman mentioned polls, and I love doing poll 

battles. But we did a poll on regulations ourselves and the American people, in terms of what they believe about regulations. And 

guess what? They think that it mostly hurts, 70 percent, the American economy, 67 percent of America’s competitiveness, 66 American workers, 66 percent small business. 

Senator WHITEHOUSE. Without objection, that will be a matter of 

record. 

[The referenced information follows:] 

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Mr. KEATING. I appreciate that. I can give it as a pdf or a handout. 

Senator WHITEHOUSE. Senator Markey? 

Senator MARKEY. Thank you, Mr. Chairman. 

So I am going to give a little good news to the committee, it is 

a little depressing hearing some of the testimony here. Just wanted 

to give you the history of the American economy since 1929. This 

is pretty much true every single environmental law that was 

passed in American history, Superfund, Clean Air Acts of 1970 and 

1977, 1990, you can see that we had pretty much uninterrupted 

growth all the way with a period of time where there was some 

regulatory relief given by the Bush administration to the financial 

sector, which did cause a big economic downturn with that regulatory relief for businesses across the Country. 

But we recovered from that, imposing some regulation and we 

continued on our growth and all through the incredible environmental laws that we now have on the books. So I just wanted to 

make that clear, about economic growth. 

I also would like to use as an example not Germany or Denmark, 

we know little about those countries on the committee, but we do 

know something about the United States of America. And we do 

know something about the Regional Greenhouse Gas Initiative that 

Massachusetts and Rhode Island and New York and Maryland and 

Delaware and other States are in. 

And here is the good news. Since the Regional Greenhouse Gas 

Initiative went into effect, Massachusetts has reduced its greenhouse by 14 percent. And we have created 80,000 new clean energy 

jobs. We are going to 90,000 by the end of this year. Our unemployment rate has been lower than the national average over that last 

six or 7 year period. And while electricity rates went up 13 percent 

for the whole Country, they actually went down 6 percent in Massachusetts because of this incredible investment we made in energy 

efficiency and other technologies. 

So I just want to give some people out there who live in the 

United States and not in Germany or Denmark that we actually 

have examples here in America that exist right now that you can 

point to if you would like. And know that it can work, it does work. 

And it is right now. We don’t have to point to other examples. We 

have no idea what the other factors might be in Germany or Denmark. 

And Mr. Keating, I agree with you that the impact on small businesses is disproportionate. There is a proposal to export our natural gas out of the United States, and the Energy Information 

Agency has said that that could lead to a 54 percent increase in 

the price of natural gas to small businesses across the Country. 

What is your position on the exportation of natural gas if you 

know that it is going to lead to a 54 percent increase in price for 

small businesses in the United States and that there is a way of 

avoiding that and keeping the benefits of that low priced shale natural gas here for small businesses in the Country? 

And knowing as well that that 54 percent increase dwarfs any 

increase in electricity rates that the proposed regulation at the 

EPA would be able to impose upon local small businesses? It is just 

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not even in the same league. How do you feel about helping us to 

stop that from happening, Mr. Keating? 

Mr. KEATING. Thank you, Senator. 

First off, the only period of deregulation that we have had since 

World War II was during the 1980’s. 

Senator MARKEY. I didn’t ask you that. Can you answer my question? 

Mr. KEATING. I am trying. Are you editing my response? 

[Simultaneous conversations.] 

Senator MARKEY. No, I am asking you to answer my question. 

Mr. KEATING. I am leading up to it. 

Senator MARKEY. No, I have limited time. Please answer my 

question. How do you feel about the exploitation of natural gas for 

small business which is going to result in a 54 percent increase in 

price? 

Mr. KEATING. LNG exports are a wonderful idea for small businesses. Your 54 percent number that you threw out there is complete speculation. It assumes, it is a zero sum outlook on the economy. And if anything we have seen in the energy sector, it is just 

the opposite. How many years ago, we just said that we felt we 

were depending on foreign sources of oil forever. And now we are 

an energy superpower. We are the No. 1 producer of oil and natural gas. 

Senator MARKEY. But no, for the record—— 

[Simultaneous conversations.] 

Senator MARKEY. I am reclaiming my time. You are a guest of 

the committee. We import 30 percent of our oil, sir, and we are 

talking about exporting oil while we are still importing 30 percent. 

If we were exporting wheat to Germany while we were still importing 30 percent of the wheat from other countries, perhaps Russia, 

I don’t think that we would be happy with that. 

So are you going to answer the question about the 54 percent increase? Mr. Lomborg is talking about 2100, which seems kind of 

speculative. What we have is near-term economic analysis of what 

the impact right now is of exporting natural gas. And if you could 

just give us an answer in terms of how that impacts small businesses today if the price went up 54 percent. 

Mr. KEATING. Well, first off, I don’t buy the premise, Senator, 

quite simply. 

Senator MARKEY. Well, there you go. 

Mr. KEATING. A 54 percent increase is pure speculation by one 

analysis. And if you look at the numbers—— 

Senator MARKEY. That is my—— 

Mr. KEATING [continuing]. we would see a benefit in terms of 

producing more energy here at home both for domestic consumption and for exports. 

Senator MARKEY. I am reclaiming my time because it is running 

out. I am reclaiming my time and I will just say, I am reclaiming 

my time. The sheer speculation, sir, is you projecting these impossible to shoulder electricity rates for small businesses when the estimates are that the export of natural gas is going to absolutely 

drive electricity rates up in the United States and cost small businesses a tremendous amount of harm. 

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So you ignore the economic analysis that you don’t like in order 

to advance an ideological driven analysis which you come here, and 

we would be better if you basically accepted both premises, it 

would add a lot more credibility to your argument. Because we 

have a New England Northeast agenda which is already working 

to lower greenhouse gases and electricity rates at the same time. 

Thank you, Mr. Chairman. 

Senator WHITEHOUSE. Senator Vitter. 

Senator VITTER. Thank you, Mr. Chairman. Dr. Lomborg, in your 

testimony you say that ‘‘Current global warming policies make energy much more costly. This negative impact is often much larger, 

harms the world’s poor much more and is much more immediate.’’ 

Can you elaborate on that, particularly on impacts on poor and elderly that you have observed, anywhere, Europe, anywhere else 

where this has been tried? 

Mr. LOMBORG. Fundamentally, if you are going to have costs and 

increase the cost of energy, because energy is something that we 

all need to use, it typically and predominantly falls harder on the 

poor. So it is a regressive tax in that case. 

Of course you can try to accommodate for that and some nations 

try to do this. But I think it is almost universal that it will end 

up being a regressive tax that harms the poor the most. 

So as I tried to mention before, we have stories and indications, 

for instance, from England that poor people, especially pensioners, 

have a very hard time because of the fact that energy costs have 

gone up dramatically. Now, this is not just because of climate policy, but it is a significant part of it. And there is a huge row, and 

I am going to leave that out of here, given that we just have 5 minutes, on exactly how much that is. But it is certainly in the direction that we would expect to see more of with harsher climate legislation. 

Likewise, we see this in Germany, as I mentioned before. It also 

erodes, in the long run, the willingness to engage in further climate 

policies. If we look, for instance, in Spain, Spain is now paying 

more in subsidies to wind and solar than they are spending on 

their entire higher education system. And clearly, that is not sustainable in the long run. You can’t keep telling people, especially 

if they are as bankrupt as Spain, that they are going to keep paying more and more in green subsidies. I think that is one of the 

indications that you really need to find a way to cut carbon emissions and do so at a cheap rate. 

If you will just allow me one more example, because we sit here 

in a fairly wealthy part of the world, and talk about other relatively wealthy nations, there has been a great study done, for instance, on helping Africa. If you fly from South Africa up to Europe, you basically a continent that is almost dark. There is virtually no electricity. They have as much electricity for 870 million 

as Arizona has. So it gives you a sense of the proportion. 

Now, for instance, Obama wants to help electrify Africa. I think 

that is a wonderful idea. But the issue here is if we do that with 

green energy, for $10 billion we can lift 20 million people out of 

darkness and poverty. But if we do it with gas, we can lift 90 million people out of poverty and darkness. 

116 

So we have to face up to the fact that if we focus on things that 

are costlier, it does have a real impact on poor people. 

Senator VITTER. OK. Also, Doctor, your testimony talks about the 

inaccuracy of the predictions and models over the last 30 years. 

You said it is becoming increasingly clear that if anything, nations 

should be focusing on preparing for the low end of what has been 

forecasted. Would you talk about that low end, why you come to 

that conclusion of serious problems in the science as it pertains to 

past predictions? 

Mr. LOMBORG. The simple point is that as many, I am sure, have 

argued here before the committee, we have seen a hiatus in the increase in temperature. There are a lot of different ways to describe 

it, but it is certainly a lot less than what the computer models were 

predicting for the last 10, 15, maybe up to 20 years. So the reality 

here is we are seeing less than we expected. 

Now, this does not mean that global warming is not happening. 

But it probably does mean that we are in the lower end of the sensitivity to CO2 rather than the high end. That simply indicates that 

I don’t think this is the kind of thing that we should just say, oh, 

then there is no problem, and just move away. But we should recognize that it makes it less likely that the scary scenarios that we 

hear are the ones that are going to come about. 

And of course, again, remember, the models that I showed you 

are actually based on a relatively pessimistic model of that. It has 

slightly higher, not lower, climate sensitivity. It starts off with a 

negative right off the bat, from 0.1, and so on. So if anything, I 

have shown you an argument that even when you use a +relatively 

pessimistic model, shows you that we have to be very careful in 

order to not actually end up getting worse. 

Senator VITTER. And Mr. Keating, quickly, because my time is 

running out, can you comment on other experiences? Others have 

tried this model, basically, Europe, Australia to some extent, et 

cetera. Can you comment on what you have observed and what has 

been quantified in terms of the effects on their economies? 

Mr. KEATING. Sure. And Dr. Lomborg quantified it perfectly I 

think in one of his charts right there. What I reference in my written testimony, Australia had a carbon tax, they realized the significant costs and the unpopular nature of that and recently got rid 

of that. When you look at the costs in Germany, in particular, what 

I highlighted in my comments were how much higher the costs 

were for businesses there for manufacturing and how non-competitive those costs make German manufacturers. 

This is one of the big benefits we have seen in this Country recently with our energy revolution and how wonderful that has been 

for domestic manufacturing right here at home. So why do we want 

to mess with that, I guess is how I would sum that up. 

Senator VITTER. Thank you very much. 

Senator WHITEHOUSE. Senator Boozman? 

Senator BOOZMAN. Thank you, Mr. Chairman. I would like to 

submit a letter for the record from Governor Beebe, my Governor 

in Arkansas. He recently sent a letter to President Obama expressing support for LNG exports, particularly Senator Udall’s LNG export bill. With your permission, I ask unanimous consent. 

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Senator WHITEHOUSE. Without objection, it shall be made a part 

of the record. 

[The referenced information follows:] 

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Senator BOOZMAN. Thank you, Mr. Chairman. 

I am curious about the discussion that we are having about the 

LNG export. You mentioned that you had problems with the 54 

percent, and then again, you were talking a little bit about the benefits of doing that. Could you, Mr. Keating, and you, Dr. Lomborg, 

could you tell us your thoughts concerning the exports and if that 

is a good thing or a bad thing for us and the rest of the world? As 

you mentioned, I am running all around Arkansas trying to figure 

out how we can increase exports. Exports seem to be a good thing. 

Mr. KEATING. Sir, I remember that it used to be both sides of the 

aisle were in favor of exports. I think we all should be. I did a 

paper on this last year, in terms of looking at the growth that we 

have seen in natural gas production here at home and the opportunity on the export front for small business specifically. 

So we broke out each State in terms of where this revolution has 

happened in terms of shale energy. And you see the numbers are 

unmistakable. Overall economy, the number of businesses down, 

the number of small businesses down for the period we looked at, 

the number of jobs down. Then you look at the energy sectors 

where this is happening and it is all up. In some States it is up 

incredibly. 

So this has been the one issue that I love talking about, because 

it is a positive issue, the economy for the last few years. But it is 

not only good news for the energy sector and the small businesses 

in that sector, but it has been good news for the economy overall 

and for small businesses in terms of the dramatic decline that we 

saw in natural gas production. 

My bottom line point is that when you look at the possibility of 

exports you can’t, as an economist, I am always leery of predicting 

the future. But I go back to economic principles. And it isn’t a zero 

sum game, which is what I started to say before. And we learn that 

in energy in a wonderful way. We thought that we were going to 

be dependent forever, and we are not. This is what happens in the 

private sector with innovation, technological advancement. And 

there is no reason to believe that that will not continue in the energy sector. When you look at the numbers, they are really quite 

staggering. 

The other thing about energy projections, they always come up, 

projections are always far short of what the eventual outcome is. 

Because again, technology changes and innovation happens. 

Senator BOOZMAN. The only thing I would say is I can remember 

being in class a long time ago and my physics professor, this was 

back in the late 1960’s, early 1970’s, talking about how we would 

run out of natural gas in 20 years. 

Yes, Dr. Lomborg. 

Mr. LOMBORG. I am not going to get into that whole conversation 

of whether you should export. But I think there are two things we 

need to recognize. One, natural gas and the switch to natural gas 

has become so cheap, from coal to gas has dramatically reduced the 

carbon emissions in the U.S. So we estimate, the latest here, we 

have good data, because obviously other things also happened in 

the recession and the fact that you have more wind turbines and 

so on, we estimate that the U.S. probably has cut about 300 megaVerDate Aug 31 2005 11:22 May 18, 2016 Jkt 000000 PO 00000 Frm 00124 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\98184.TXT VERN
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tons of CO2 per year and the year 2012 because of the switch from 

coal to gas. 

That is dramatic. That is more than all the wind and solar in the 

world, which is about 275 megatons per year. So you have done an 

amazing achievement. 

Now, remember, there is still a long, long way to go. But it is 

certainly one of the biggest reductions we have seen. 

So in that sense, if we can indeed get more production from the 

U.S., which seems likely and reasonable, I would imagine, but 

again, I am not an expert in that, then certainly wouldn’t you want 

to export part of this in order to make sure that other countries 

would also start to be able to reduce? Because they would get 

cheaper gas, which they would then not burn coal and substitute 

for. 

So if we are talking about global warming, that would probably 

be overall a good thing. But of course, in reality, the real solution 

will have to be to get other nations fracking as well. 

Senator BOOZMAN. Your statistic about Africa was amazing, with 

the analogy about the natural gas, the energy credit there versus 

the other. 

Thank you very much, Mr. Chairman. 

Senator WHITEHOUSE. Thank you very much, Senator Boozman. 

The hearing has come to its end. I appreciate very much that the 

witnesses took the trouble to come. Mr. Hedde, I am sorry that you 

didn’t get a question, but your testimony is a part of the record, 

and it is clear from your testimony that there is more going on 

than just more expensive property in the way of the storms. I appreciate that you were able to bring that perspective on behalf of 

an industry that has huge amounts of money, and I am trying to 

get this information right. 

Ms. Jacobs, thank you for coming. I appreciate it. You are dealing first-hand with a very challenging experience, as an area that 

you love and a way of live is being challenged in new and different 

ways. I appreciate that there are bipartisan solutions being found 

in Florida to try to address the problem. 

Mr. Mook, again, you struck out on questions, but thank you for 

your very thoughtful presentation. You bring to this committee the 

hard, practical ground truth reality of someone whose business is 

already being affected by the really undeniable effect of carbon pollution, which is ocean acidification. That is something one can replicate in a high school lab. So it is not a complex matter. I appreciate very much that you were here. 

Mr. Keating, thank you for sharing your perspective. I am very 

grateful that you were able to come. 

And again, Dr. Lomborg, this was twice today, and thank you 

very much. We appreciate the perspective you were able to bring. 

Senator SESSIONS. Thank you, Mr. Chairman, it was a good 

group of witnesses. I look forward to continuing to discuss these 

matters. Mr. Hedde, if you have any scientific data that shows we 

are having increased hurricanes to date, let me know, please. 

Mr. HEDDE. We will. 

Senator WHITEHOUSE. You can actually broaden that to refer to 

storms in case there is a trick to the hurricane word. Storms and 

damage, OK? You use your words. 

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Senator SESSIONS. Storms, hurricanes or droughts. 

Senator WHITEHOUSE. Thank you very much. The hearing is adjourned. Thank you to my ranking member. 

[Whereupon, at 4:10 p.m., the hearing was adjourned.] 

[Additional material submitted for the record follows.] 

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